All Forum Posts by: Bill B.

Any chance the current tenant could buy it? If you asked this question a couple months ago I woulda have said list it for sale and offer the tenant $2-$5k to move out early. Today it’s gonna be hard to close so fast to an owner occupant. If you have a property manager maybe ask them if any of their clients would be interested in a discounted property and can close fast. 

I use leases because I can do better planning and reduce turnover. I also remove vacancies during the school period when no one wants to move. With leases I can ask about renewals 60-90 days in advance and the tenant has always known if they’re going to renew or I’ve known I’ll have a vacancy and can start advertising. 

@Joe Szymczyk

Hey joe. You’d owe capital gains taxes on the $200k and then you’d owe a 25% tax on the depreciation recapture. (If you’re saying the house cost $100k you would have only depreciated the building, say about 80% of the $100k. If you’re saying you paid $125k for the building and the land it’s on then you would have depreciated $100k. 

So you either owe $20k or $25k in taxes for the depreciation recapture plus a capital gains tax on the $200k. The tax rate on which I believe changes depending on your total taxable income. 

@Matt P.

Check out @Dave Foster here on BP. A fountain of info. Your QI does not need to be local as they’re dealing with federal laws. Like you said, you just need someone you can trust. 

@John Matthew Johnston

John, flips aren’t eligible for 1031 exchange, the property has to be held for investment. 

@Matt P.

If haven’t sold the duplex yet, yes you could exchange in to the apartment building. But you can’t sell, take the money and reinvest it. You sell, the money goes to the QI, not you. Then you have 45 days to say I’m going to buy one of these 3 apartment buildings. Then you have 135 more days (180 total) to close on said apartment building. 

On $1200-$1500/mo rents I increase the rent $25-$50/mo. Their is a near-zero chance that anyone would put in the effort and spend the money to move over $300. If they move, they were going to move anyway. 

I’ve also started to take the same approach on renewals. I used to send them out 60 days in advance, I’ve moved to 90 days. I still get an answer within 1-2 days. as I assumed, the tenants know if they want to stay. I think they appreciate the heads up and I know I do. 

Think about all of our parents or grandparents that lived through the Great Depression and then spent the rest of their lives preparing for another. I grew up in the Midwest with grandparents that mentally never recovered. They spent their life worrying about the next depression and never really seemed to enjoy life. 

I can see the same thing being said about a certain percentage of people that lost their houses, or maybe more likely people who’s parents lost their house. They thought they were well off, they didn’t know how close to the edge their parents were living. Assuming 30 more years of economic growth they’ll still be talking, or in the Midwest just silently thinking about the next crash and acting accordingly. 

I use 60 days in Vegas, I know some people use 30. Think about it the other way around. Your tenants start to do something you don’t like and you have to give them 90 days notice. In reality, you’re probably giving more than you get with the 90 days. You try to violate it and you’ll be in court, most likely losing. They give 30 days and move out of state, are you chasing them down?

@Varinder Kumar

If you lived in the property 2 of the last 5 years you can sell and gain 250k as a single or 500k as a married couple. If you have over $100k in gains and you can complete sale before the five years expires I’d sell. You will still owe 25% tax on the depreciation recapture. 

Renting in California has lost most of its luster with possible rent caps, relocation expenses, etc...

Take your $200k and the easy/worst deal is buying a Vegas property outright. Suddenly you’re bringing in $1200 rent and netting $1,000 a month instead of $300. Or put $100k down on 2 $200k properties. Now you have $2400 in rent to pay a $200k mortgage. If you want to be a landlord. Otherwise cashout and move on. 

@Kyle Reynolds

If you can afford it, the cash flow doesn’t matter. If I cashflowed plus $100 or negative $100 will it make any difference in your lifestyle? I would say if you might lose the property because it cash flows negative $100 you might lose it if it cash flows positive $100.

I’m considering selling a property to pay off 2 others. If I do it, my cashflow will improve by $400/mo. But my income will decrease by $800/mo. The cashflow fans should be excited, I’m not, it’s a tough decision. 

I’ve given the example on i have a property that cash flow negative $400/mo while producing a $1,000/mo income. I’m not counting the $150k it’s gone up in 3 years, it’s simply paying off the mortgage at that rate. Too many people on here count the entire mortgage payment as an expense. 

Do a real costs/income spreadsheet and figure out if it will make you money. I’d be happy to meet sometime and talk real estate I have a spreadsheet for my properties I can share with you. 

Like planting a tree, in real estate the best time to start was 20 years ago, the 2nd best time is today.