All Forum Posts by: Daniel Blau

I have two lines of credit used to purchase properties which are adjustable rate ... and now given the increased prime rate they are not such great rates any longer.    if i sell an investment property is there is a way to use the money to pay off the mortgage on that property ?   what about to pay off the mortgage on another investment property ?   is this allowed or is there a "creative" way to do this ?  

thanks Dan   

As a new-ish investor one of the aspects of the process I've finding the toughest is when i am the seller of a property under contract that requires buyer financing (which are most deals).  Often I am waiting on money from the sale to purchase new investments as cash or as 1031s.  The settlement process is long (can take 2-3 months or more), I feel I am in the dark and don't have much control over it, and then often in the end it's unsuccessful -- the financing falls through.  As the seller, is there anything I can do about this buyer financing phase to make it quicker and more reliable ? 

Some things I can think of are : 

1) specify in the contract who are the allowable lenders or have the right to approve the selected lender  

2) require updates on progress of the loan from the buyer or the lender  

3)  is there any info I can get on the buyer to indicate how likely he/she is to obtain the loan?  Credit, income, assets, criminal history of the buyer would be nice but I don't believe it's legal to obtain any of this info …          

Dave - thnx for quick response .  

Yes, get that net gain is the net sale price minus the adjusted cost basis, and that net gain splits into capital gain and a depreciation recapture.

It seems the formula you are using for cost basis of the new property 

= adjusted cost basis of old property + purchase price of new property - sale price of old property .    

In your example, that's $100K + $250K - $200K = $150K as cost basis of new property.   Am I correct that it boils down to this formula ?   Final  question, in the above formula is the purchase and sales price gross or net of closing costs ?    

Thanks, Dan   

I am shortly doing a 1031 on an investment property and really there's not a lot clear on how you compute the cost basis of the replacement property or properties.   

From best I can tell the cost basis for the new property  = the adjusted cost basis of the relinquished property + the mortgage on the replacement property - the mortgage on the relinquished property.    So say the adj. cost basis of the old property was $100k, the mortgage on the new property is $80 and remaining mortgage on the old property was $30k. Then the cost basis of the replacement property is $150k (= 100 + 80 - 30).   Is this correct ?  

if so, I have two other questions: 

1.  if I purchase several replacement properties under the 1031 how is the cost basis allocated among these several properties ?   

2.  If I do a cash out refinance on the replacement properties say within a "quick" timeframes like 6 months, does the loan from the refinance count as a mortgage on the replacement property and thus serve to increase its cost basis ?   

Tricky stuff.      

Thanks.    Dan from Jacksonville FL.