All Forum Posts by: Bob Langworthy

In addition to what Natalie Kolodij said, the K-1 will report income or loss from the partnership regardless of any amounts that you take out of the partnership. Your accountant can explain the concept of basis to you. They can also explain whether the loss from the partnership can be claimed on your 1040 or not depending on other factors on your personal return. Take the time to find an accountant who will walk you through the basics of partnership account. Hope this helps!

Yes, it comes with this type of real estate. Just factor it into the deal when you run your numbers. The information that I got was very helpful in planning future CapEx needs.

Podcast 253. Just listened to it today.

I'm with Rod Hanks on this one. Unless you have other prospective tenants waiting to get in, I would take their offer. Commercial space is harder to fill than residential and the potential for an extra $200 per month in cash flow will get eaten pretty quickly by a lengthy vacancy. Build an increase in to the lease and I wouldn't go longer than three years. At that point you'll have an easier time making a case to bump the lease up to the market rates.

Cody, welcome to BP! Congrats on hitting the Portland market at the right time. I'm a buy and hold guy myself looking to do another deal later this year (read: after tax season). Apart from education, making connections will be the next most important part of your work. Hope it's a great year for you!

What a fascinating thread to read. It seems like many people who have replied are not trying to get to $20 million in real estate, because that is "too much" or "more than anyone person would need". Why set small goals? If I was given $20 million in real estate, I would evaluate the properties, keep the winners, and 1031 the losers into better cash flowing properties, probably commercial because that is what I am comfortable with. My objective would be to turn the $20 million of real estate in to $50-$75 million worth of real estate over the next 30 years. I enjoy my current work, so I would continue to work, but put in fewer hours so that I could travel a little more. I would continue to give 10 to 15% of my net income to charity each year. Short answer: grow it considerably, give a lot, and enjoy those things that I find to be the most for filling in life. Now I've got to get back to my regular job while continuing to work towards a $20 million real estate portfolio!

I'd go with the 4-plex. In addition to the comments on vacancy rates, think about the impact of a 3% per year increase in rents on four units v two. The CoC returns would diverge quickly.

Thank you @Matt H. and @Tyler Delbert. One other piece of information is that this is a long-term investment for me. I moved my accounting practice in to one of the spaces and am thrilled with the location. For now, I think I'll do the following:

1) Run the various scenarios in a spreadsheet to see the true impact.

2) Maintain the relationship with the second bank by referring clients to them.

3) Be thankful for the low rate that I've got!

Thanks!

This is such a simple question, but I'm interested in hearing from others who have been down this road before. Current mortgage on my commercial office building is at 4.125% fixed until August 2022, then variable at Prime +.375%. 25 year amortization. Outstanding balance of $245,000 with current value of ~$350,000. 

Three options:

1) Stay with the same bank. They will give me 5% fixed until August 2025, then variable at Prime + .125%. No fees, no appraisal. 25 year amortization. But I don't really like the bank and I get no business from them.

2) Move to a local bank with a loan officer who is referring business to me. 10 year fixed with 10 year term 5.25%. No fees or appraisal.

3) Same local bank as 2) but 10 year fixed 20 year term at 5.375%.

The property can handle the higher mortgage payment, although I'd prefer the longer term. I'm leaning towards option 3, but my brain doesn't like the idea of locking in at 1.25% higher than my current rate. I'm considering it, however, because I see inflation coming and rising interest rates along with it. And the client referrals to my accounting practice are a nice bonus.

Thoughts?

I can't say a single helpful thing about real estate in Penang, but having been their twice, I can say with some certainty that the best food on the planet comes from the little island of Penang. Chinese, Malay, Indian, and Thai influence makes for some extraordinary flavor combinations. My wife has family there although I don't think any of them are interested in real estate. It would probably be worth taking a 2-3 week vacation there to meet with realtors, learn the local regulations, identify potential neighborhoods, etc.