All Forum Posts by: Bill B.

If at all possible go with the house or even the townhome over the condo. Too easy for the condo to change the rental rules or have a profit biting Hoa fee. 

A 1500sf townhome (1 of 2 attached) is about $230k where as a 1500sf house might run $255k. Both in decent neighborhoods. Bringing in about $1200/mo. SFR with no Hoa. Townhome is $65/mo.

If you’re ever in town let me know. I love to talk real estate. 

You have to spend at least $550k on your new property to defer all taxes. 

The depreciation will be almost nothing. 25% tax on 4% of the building value times 5 years. So 25% of 20% of the building’s share of the $140k original value. So less than $7k.

But the $400k capital gains is probably $80k in taxes? Plus any state taxes plus the 3.5% Obamacare tax may kick in. Could be another $40-$50k between them. 

So sell for $550k $20k in sales expenses? pay $140k in taxes and pay off $150k second. If that’s all you owe walk with about $240k to invest.  or 1031 with $530k-$150k or $380k to invest. 

Depends on what you can buy for $240k or $380k I guess. 

You could try selling them to an investor. You might get less for the properties but you wouldn’t have the vacancy expense and it might end up being a wash. A landlord might be less picky about the interior of an occupied property than an owner occupant as well. Every real estate contract I’ve seen includes a check box or language about this sale may involve a 1031 exchange the buyer/seller will help make that transaction smoother/possible. 

Exchanging 3-1 should be no problem, getting an apartment seller to hold their property in a hot market or if it’s marketed at a great price may be hard without some non-refundable deposit. Maybe if 1 sells fast you could get a 6month to 1 year loan from the seller to give you time to sell the rest. make sure you line up a 1031 Qi to handle all the money there are friend informative ones on BP. 

Not even a little. 

I suggest you connect with @Dave Foster   He can set you on the right track to keep you legal and tax deferred. 

Would you get same effect replacing the stick with a carrot?

Collect the full months security deposit. Raise rents 4% and tell them after they have stayed 365 days you will refund 1/2 of 1 months rent. 

You’re better secured with a full security deposit, you incentivize people to stay a year, maybe a forced savings plan for people not known to save well. 

@Keisha Andrew

Good luck with your search feel free to reach out to me if you want to sit and talk real estate while your in town. 

Awesome, thanks for involving us. I like to hear stories of people moving forward. I’ve been wanting to sell any 1 of my properties for a year or two. But I would only do a 1031 exchange as I have appreciationa and depreciation to account for. But my tenants keep accepting rent increases and I can’t kick out a paying tenant to sell, goes against my better judgement. 

Let us know about the new property when you get it bought. Take care. 

@Chris Mason

Thanks Chris. Was my first time I’ve ever seen something like that. Didn’t use a report button (thanks for that hint) simply put at moderators and hoped for the best. 

@Greg Clatterbuck

Hey Greg, thanks for the additional info. Let’s say you clear $200k so you have $65k capital gain, about $10k in taxes @ 15% for round numbers. If you calculated 80% of the $135k as building to depreciate that’s $105k give or take. 10 years of 4% give or take is anothe $40k to recapture at 25% or another $10k. 

So you’d owe about $20k to sell and walk away. Call it $215k sale, $200k net after costs,  $100k after paying mortgage, minus $20k in taxes leaves about $80k for better or worse if you sell.

Probably comes down to a judgement call and if the property is a headache or basically mailbox money. 

The first half dozen i did in Las Vegas specifically forbid the seller from getting any “benefit” including the option of buying the house at a future date. A year or two later and Suddenly the switch flipped and the pages of restrictions went away and it was wild Wild West. Luckily for me, of the 10+ I offered the deal to, half said no way, we’ll just rent or we’ll just move.  Even better, the other half rented for a year or two and then moved out to buy something else somewhere else. Leaving $100k in equity behind minimum each time. Sometimes they would even haggle about their guaranteed option price that was $50-$100k below market. I’d say no and they say fine, we’re moving.   Win-win if you can call it that.