All Forum Posts by: David M Trapani

Excellent analysis Collin. Good decision making. I would add, sometimes it's OK to sell at a (reasonable?) loss, esp if you've got other gains to off-set. CPA's are much smarter on those aspects. Best to check-in w/ them before choosing. 

1031 Tax-Free Exchange. Cash-out refinance. Sometimes incur losses to wash out-gains. Hypothecating ("walking") private money promissory notes. Convert high-equity residences (over $250k / $500k cap gains limit) to investment property & 1031 max equity. 

Hi Daniel,

Have some experience owning, operating, 1031'ing small mfh (duplexes) in & around midtown & out of state. Have traded into some commercial using agents, both residential and commercial. Feel free to PM me if you wish a referral. Cheers & Best Wishes! David

LOL ( ; 

No one said it was easy!

Still one of the last best ways to build wealth. 

First 20+ years made lots of mistakes. It's never too late to succeed. Never give up!

Saving money for down payments. Learning patience, as Nate points out, it's a get rich slow mindset. Living below your means (or even remaining a tenant, while simultaneously investing) can be super helpful in scaling. Learning cash flow & deal analysis. Learning to successfully manage properties & tenants. Learning neighborhoods. Building strong lender & realtor relationships in target markets. Navigating tax code & creative finance to maximize scaling (1031 exchanges, cash out refi, BRRRR, seller finance, walking notes - hypothecation, etc.). Maintaining sufficient reserves while scaling (harken back to living below one's means, if possible - can be a difficult challenge). Navigating State, Local Government & HOA regulations (rent control; STR moratorioum & bans, etc.). Learning to make proper & desirable improvements to maximize cash flow & return on sale / exchange. Learning commercial investment for diversification, NNN, etc. Learning to invest OOS which requires "boots on the ground" (stars) to succeed. Having numerous exit strategies in a constantly changing regulatory & tax environments. Life-long education reading, podcasts, learning from the experts, etc.

As Michael points out, it depends on location. City, county and/or state laws. I don't recommend condos or HOA's (although for the "right" property I've done them), as that often adds another layer of regs or bans them altogether - either now or later).

Some locations have / will / are in the process of banning them.

Alternately, you may see a sliding scale of regs in different areas - ranging from what you might call soft ball to hard ball (less STR friendly) regs, or somewhere in between.

There are also areas which are un-regulated (as yet) and it’s basically the Wild West: you make your own way. Being an early adopter and finding one (or more) in popular, high demand or resort style areas with soft ball regs (or no regs) is often profitable.  

Hi Terri, 

You may use seller's agent, your own agent or represent yourself. There should be no added cost to have your own agent, as commission is typically evenly split between the two agents. However, bringing your own agent may add complexity. 

If you have your own agent, they'll owe you a fiduciary duty of care. If you use seller's agent, their main duty is to the seller. The seller's agent only owes you an ordinary duty of care. Using the seller's agent creates a dual agency situation for that agent. Meaning, that agent has greater risk in case something goes wrong. 

If the deal is important to you and you want to explore seller financing, be sure seller's agent knows you will be paying the commission in cash together with your down payment as Aurelien points out.

I've done seller finance deals on small MF and SFH using my own agent. It's important if you use your own agent, that they know the market well and understand seller finance. In this way they can make the best presentation of your offer as possible, with highest chance of success.

Hope this helps. 

Best wishes & good luck!

I believe you must take title in the same name used for down-leg (property being sold) as for up-leg replacement property. Check with CPA and 1031 exchange intermediary. If the property has appreciated & has good equity perhaps consider (alternately) cash out refi on existing property to fund new acquisition & keep the existing property as well - assuming both have positive cash flow and are in up & coming areas. Run numbers & consider all variables as they relate to your goals.

Yes, if you qualify for conventional refinance loan. If you’ve owned the property long enough & have enhanced value and cash-flow look into cash-out refinance (tax free funds for more acquisitions & reserves). If you qualify, approach existing holder of seller carry back note (hopefully there’s no pre-pay penalty). You may be surprised that sometimes seller carry back lender  may not want to be paid off due to cap gains. In that instance, you may (sometimes) work with them to “walk” the note to acquire a new property in a conventional purchase or by 1031 tax-free exchange. This can be done multiple times over the years with the right seller carry back “partner”.

PS - 19. Use wrap around mortgage.

20. Sometimes starting small is better. Condos or small SFH. Improve, increase rents and cash out refi (BRRRR); 1031 into small apts (duplex, etc). Improve, increase rents, cash out refi or 1031 into NNN commercial.

21. House hacking.