All Forum Posts by: David M.

@J Newman

While the 1031 exchange does exist, its not always your best option in all cases.  Reference my post here of a real life example where its not, at least in my opinion as I laid it out.  Its a different case than yours:  https://www.biggerpockets.com/forums/48/topics/1169308-equity-rich-need-advice?highlight_post=6659747&page=1#p6659747

If you have commercial property for over 40years, I know the depreciation rules were different back then.  But, i'm guessing its still approx the 39year depreciation schedule.  So, they are probably fully depreciated.  However, take a look at your father's tax return and see how much PAL (Passive Activity Loss) may be built up.  When you sell, these carryovered losses help to offset your tax liability.

I've been a landlord for over 20years and I am liquidating my portfolio to more passive and liquid investments.  However, I have been paying very little tax mainly because of the PAL.

I guess I'm not sure "how" you are trying to achieve your goals.  My particular issue with being FULLY invested in real estate is you still can't pay a bill with Title to a property.  Its a very illiquid asset.  Doing a 1031 only just moves your equity in real estate around with deferred tax liability.

You have competing requirements.  To have increased cashflow to live on, you should have little to no leverage.  To build generational wealth, you should be max or lots of leverage -- however, you'd have little cashflow to live on.

you mention something about nearby investors having some situation.  That might be a good reason to move your portfolio.  My primary issue at this time is the lack of inventory and the 1031 timelines makes it difficult.

Some might say to 1031 into DST's or OZ funds, but there are so many arguments for and against, especially since some have restricting or stopping their distributions lately I've heard. Honestly, they aren't for me so I have done one.

I think to start, you need to layout a sort of budget (if you haven't already --- this is as public board so we don't need to know).  One bucket of cash flowing properties, and another bucket to continue scaling/growing for generational wealth.

Be sure to keep everything in his name to take advantage of the step up in basis when the time comes.  Perhaps look into some estate planning...  I believe trusts can be helpful to transfer the deeds without probate.  With 60 doors, not sure how many Titles you have, but that could become a pain to transfer via probate, AND don't forget that probate is public.

Well, hope this helps.  Happy to chat.  Good luck.

@Jake Barone

Pretty much that is it... Legal entities such as LLC's are not eligible for conforming loans, such as a conventional loan. That's part of the "price" you pay for the LLC. Lenders will advice buying in your personal name, then deeding the Title to the LLC. But, that leaves the mortgage in your name whcih I see as a layman leading you into issues with co-mingling and alter-ego...

So, learn how to properly operate the LLC to maintain your corporate veil.

One common loan being used is dscr.  Some residential lenders, such as mine, will originate them too.

Good luck.

@Colleen A Levitt Shouldn't be an issue to refi with a dscr.   However, check for your prepayment penalty on your current dscr.  That will be the main issue in my mind.  remember, these are NOT conforming loans, so all the consumer protections one might be used to having aren't there.

@Theresa Harris Oh right.  The OP's statement is odd, but i just figure that's what the agents wanted.  I was just going after using the listings to shop for an agent to use for buying..

Depends on what the agreement says.. I’ve known some where you sign for a day… that was before the settlement

So this is part of the turmoil.. why else would an agent work with a buyer without promise of compensation? 
sort of guess they can dissolve anytime but procuring cause would apply or something, albeit potentially difficult to track

Part why I think upfront payment will not work well, nor the fee-based where it’s more like attorneys.  What buyer can afford to be nickel and dimed…. A fixed commission instead of percentage commission… but with limitations on work, such as no more than 100 showings… idk

@Theresa Harris the ruling require exclusivity to the listing agent’s listings… one just becomes a client of the agent, who you happen to meet at one of their listings.  Then you go off and see whatever property on the mls or elsewhere.  
remember, agents go be bother listing and buyers agents here

as I'm catching up to this thread... couldn't there more use of variable commissions?  At least in my area its in many commercial deals.  For example, the listing agreement is 4% if the listing agent brings the buyer or its 5% (say 50/50 split) if there is a buyer's agent...

So, maybe if the seller is "anti-buyer's" agent, maybe its 4% if the ilsting agent brings the buyer, or else its 2.5%...  If the listing agent has to work with an "unrepresented" buyer, they get a little more commission for the extra work, to both bring the buyer and work with another party...  This example doesn't have the seller incentivize them to bring the buyer, however..  

Whatever, there are plenty of permutations to go over...

I think some MLS' are setup for this. For example, NJ has some 12 MLS' with overlapping coverage of the State. My area's site is actually setup to list a property anywhere in the state. However, this is no point to that since there aren't agents signed up with that MLS across the state.

I had a similar problem during covid where agents some 3 counties over would list a property in their mls all the way across the State by me.  So, I'd have clients wanting to see it, but I couldn't show it since I couldn't open their lockbox, and the listing agent wouldn't respond to me (and probably wouldn't want to drive some probably 3hrs one way..

A "single" MLS would be nice, but its a market problem, at least in NJ. I think all of them are commercially owned. So, they have cannot be forced or have no incentive to consolidate or change.

@Keeya WangJones comes to mind:  try calling the listing agents to try get a showing.  See what they have to say.  Especially if you are just starting to shop, you might be able to use these agents as your buyer's agent in the future.

@Keeya WangJones Probably effect of the lawsuit that NAR lost. TX being TX may have already passed a law....