All Forum Posts by: Bill B.

I did my only one last year. As I swap out of properties I’ve owned 5-10 years and are getting to be a little too old to me, say built before 2000. It gets to be a pretty easy decision on anything you’ve owned almost 10 years with values tripling or quadrupling. I delayed more than $60k in taxes even though I live in a state with no state income tax or it could have been closer to $90k

My TOTAL additional cost was $700 give or take. That was all QI fees, nobody else cared. But let me explain another reason besides trading out old properties, depreciated properties, or switching property locations/types. 

If I had moved in to that property and lived there 2 years I could have used sec 121 to avoid 2 years primary / out of 12 years total ownership, or 1/6th, call it $10k. If on the other hand I do a 1031 in to a nice new build property and a couple years later I decide it makes a bad rental. So I move in to it for 2 years. Now I permanently avoid 2/4yrs or 50% of that $60k I would have owed. Basically I saved $15k/yr for living there. After I sell my current primary 100% tax free. 

I can’t see a reason not to do a 1031 even if like me you’re “winding down”. I’m still “cheap” enough that I’ll live in a new build for 2 years to save $30k in taxes. It’s just so easy and hassle free I don’t see the downside. But to each their own. 

Any chance you can live in it for 2 years? You’d get paid to live there with the massive tax savings. You can’t pay more taxes than your current plan. 

How about rent it out for a year and do a 1031 exchange?

just hate to see you give away so much in taxes. At least you’re in Texas to avoid the state income tax kicker.  

I’d eat it. And by eat it I mean replace the stove. Unless it’s less than 3-4 years old buy a new one for $400-$600. Imagine how you’ll feel if a burner goes out next month for another $300. 

When the lease ends you had a “hassle factor surcharge” to the renewal rate. If market is $1,000 and you really want to get this money back you add $25/mo, if you don’t like their dog pooping everywhere or dealing with them in general you add another $25-$50, whatever it’s worth to you. If they choose not to renew you’re not the bad guy. If they renew, you’re being paid extra to deal with them. Spend that money making yourself happy when they depress you. Many people who are hard to deal with know it, and they don’t want to find a new person who will take their attitude. 

Ps. Check with a couple local PMs about what rent they would charge and what it would cost you. Make sure you’re not literally paying to play PM. There are plenty of small landlords that are collecting less rent while self-managing than they would if they handed it off to a pro and did nothing. 

Pps.  Be EXCITED that in this stage of your investing career you even stop to think about a $350 repair. Wait until you get that $3,500 main lien repair, or $7,000 for 2 x ac units and you’ll miss this repair. Good luck and keep going. 

The lease should have professionally cleaned at move out in it. Os if they didn’t do that, the $400 comes out of tenants security deposit. 

I had a family move out of a 3250sf 5bd/4bath home after 10.5 years. That cost me almost $900 in make ready. Because laws here prevent us from collecting for some wall damage/scuffs after a certain length. 

I had another family “destroy” the place (2200sf 4/3). Fixing broken cabinet doors, removing 2 dumpsters of trash, pressure washing house and concrete, r/r dead plants/tree, fixing all the landscape sprinklers, 1/2 a dozen blinds, a few new light fixtures/bedroom fans, and bunch of wall patching, cleaning/painting. That ran me $1,700. Took them almost five days where most turns are 1-2 days. 

First. Give a local property manager the addresses and ask how much rent they would charge, how long they think it would take to find a tenant at that rate, and what it would cost you.  This is to make sure you’re not literally paying to play PM. (You might find out you net more income with a PM than self managing.)

Second.  You really shouldn’t need to worry about any of the listed team members. You shouldn’t be calling any of them more than once every few years. With a dozen properties it’s rare that I need any of those trades more than twice per year. (So maybe every 5-6 years for 2 properties.) By the time you need the same guy again he may have moved, retired, or gone out of business. He certainly won’t remember you unless you were a major pain. 

Third.  What I use PM’s for is they have more time to keep on top law changes. (Paying interest on MN security deposits for example or notice time periods.) they’ve got systems for screening tenants and advertising/showing properties. They also have contacts for that team of service pros that want to keep them happy. Because they do business with them weekly instead of every few years.  Tenants also (IMHO) tend to take property managers more serious right from the get go  

Renters warehouse of MN found me a tenant for my only  MN property (Tonka Bay) about 9 years ago and they’re still there. What I liked is they offered tenant placement only and/or a low fixed monthly rate rather than a percent based on rent. (More important at $3,500/month rent than $1,500/mo). But at least interview a few to see if they offer you a good value. Good luck. 

Primary business language is fine, probably. Assuming all contracts are in English. I was pointing to a reason Costa Rica has done so well with Americans and Canadians. 

I don’t think a “trusted local developer” would work. How would they become trusted?  Can you imagine as an American you send lets says $200k to a foreign country. You check on your investment and nobody answers the phone. So you check with the bank and they say you or your “agent” withdrew the money days or even weeks ago.  What’s step 1 in getting that money back? You have the name you were given and a disconnected phone. Yes, that can happen in your own country. There just a lot more safeguards when you’re dealing in your home country. 

I’m probably not your ideal client, I’m just trying to help you get in their head. For me to invest in a country I’m not going to visit often and maybe/probably plan to retire in. The returns would have to be so high that I wouldn’t believe them anyway. I try not to get “too far over my skis”. I’d love to invest in Costa Rica or the especially the USVI where I could do a 1031. But realistically. I’m better off investing in mainland America and just spending my profits vacationing there.

My brother is a licensed sailboat captain and they have deals where you buy the boat and they’ll rent it out for 5 years. You get to use it and they make all the payments. Unfortunately it’s still a better deal to not buy one and just pay rent as expensive as it is and as cool as it would be to own a giant sailboat in the Bahamas. MOST people who buy a four wheeler, boat, jetski, snowmobile would be financially better off renting whenever they wanted. That’s how I feel about investing out of the country. BUT. That’s just me. 

Maybe you could go the other way around. Show people how great fixed rate debt on real estate is here and how people form other countries shoudl invest here. Though I’m not sure if we’re still handing out green cards to investors, that could be another incentive. I know plenty of other countries do. Good luck either way. Sorry to ramble on. 

@Becca F.. The ones I hate are the texts where the first contact is..

Are you still interested in selling property X? (Property I never wanted to sell.)

Did you look over my offer for property x? (They never sent one.)

I’m standing in front of your house, I love it, I have an offer for you.

Starting your sales pitch with a lie doesn’t instill a lot of confidence. 

And it’s kind of obvious when they don’t even cross check their contact info so I get 5 texts or calls in 15 minutes. 

It also has to be “better”. Can you get 30 year fixed debt under 7%? Is English the primary language? Do they respect the rule of law and property ownership? Do the foreign investors have any kind of chance against truly local investors who grew up there and know the laws, customs, neighborhoods, etc etc. Also, are the foreign investors seen a net positive for the community or are they hated for “driving up prices for the locals”? That happens to Americans by Amaericans, I doubt it’s much better when the investors are foreigners. I’m old enough to remember when Americans were supposed to hate Japanese investors, and now it’s the Chinese. 

You can have a massive advantage over other Americans. But still get crushed by locals, or step over better local investments chasing the new shiny object.

It happens maybe once a month. But I just click on the button right next to it that says report solicitation/span, whatever it says. 

Ps. I don’t know why salespeople are so enamored with phone calls. I’m almost never a “phone guy” and certainly not when I want an exact record of what was said/promised. 

@Dave Foster. Used him last year. Very smooth, very affordable. Plus you can see all the free help he provides on BP. Good luck.