All Forum Posts by: Daniel Dietz

@L S I have also seen mention on hear of using a method where it sounds 'similar' to a 1031 but the facilitator hold the property for YEARS (I think determined by the seller/buy) and makes yearly payments to the seller. 

I dont remember the name of it, but maybe others on here can chime in. 

Dan Dietz

@Dave Foster, let's see if I am understanding what you are saying about 'replacing the note with cash' in a 1031.

Let's say I have Property #1 that I want to sell with Owner Financing for 400K. I took 100K depreciation and have 100K in appreciation, so let's say 25K in recapture tax and 20K in capital gains tax due. 

I sell Property #1 for 40K down as 'boot' to cover the recapture tax (40K - taxes + 25K) from the buyer and he/she also brings a bank loan for 180K and I carry 180K of seller financing over 20 years. 

Now enter Property #2 that I own. I do a cash out refi to get 200K from it (or it could come from other sources for that matter) and I put THAT 200K into the 1031, and take the seller financed note for 200K out in exchange for it. 

I then take the 360K and reinvest that into a new property, and still have the 180K seller financed note which is now 'outside of' the 1031 and collect payments over time? I assume that this would then be taxable with the interest portion as ordinary income and the principal payments would be taxed on 25% of that payment (the same as the ratio at sale time of property #1)? 

@L S. It sounds like you have multiple properties to sell maybe? Can you spread the sales over a number of years to help you achive your goals?

Dan Dietz

@Brian Eastman,

Wondering if what you are saying about EACH SDIRA (or I assume SOLO401K also?) setting up it's own 'single member' LLC applies to doing deals with 'disqualified parties' too? I thought that you could not 'do deals with yourself' because you are 'a disqualified party to yourself'? Probably my misunderstanding :-).

What I hear you saying is if EACH of a person's SDIRAs - in this case one Traditional and one ROTH - did a deal together withOUT doing the LLC part of the puzzle that then that would make it so neither SDIRA could ever add more money into that first deal if needed, particularly if those SDIRAs did a partnership instead of just a simple 'tenants in common' arrangement?

@Account Closed as far as finding an SDIRA provider (or SOLO401K if you qualify) the best way is to call up a few providers like Brian and others who are likely to chime in here (you can tell who there are by there 'tag lines' in their signature lines)  and see which one would be the best fit for you. In my experience, ALL of them would be a better option that some of the 'big guys' out there with the added personal touch. 

Dan Dietz

@Dave Foster or @Logan Allec,

Am I understanding you guys right as far as the depreciation portion of the puzzle?

The way I am understanding : I have a property that I bought for 100K and it is fully depreciated, but has appreciated in value to 200K. I know sell that one and do a 1031 into a new property.

If the new property that is only 200K in price, I *wont* get to take any more depreciation since I 'used it up' in the first property. But if I buy a new property for 400K, I would now have 200K of 'new basis' that I could depreciate? If that is accurate, is that 'new basis' done over the full 27.5 years just like normal?

Thanks for all the knowledge you guys share here on BP too!

Dan Dietz

Hello, 

I am wondering if a seller of an existing property, say a 4 plex, can do a 1031 into a 'new' property with the same person or entity that he sold the 'old' property to? 

Think of it this way, I buy 4plex from 'Frank' for 300K, and he and I partner on a new different property(s) that cost 600K where he puts in the 300K from the sale and I come with 300 K cash or financing for my share. Would there be an issue if my share were a 'seller finance' on share of things?

Thanks, Dan Dietz

In our state there are 'standard offer to purchase forms' that have been reviewed by the Realator's Association attorneys. We used those to buy 3 duplexes and a 4 plex all at once. One of my partners is a Realtor, but not acting in that capacity on this deal. I do believe the buyer had his lawyer look over things but not sure. This seller has bought and sold dozens of rentals over the years so was very familiar with the process. We had the local Title Company take care of the closing paperwork on all of them.

Dan Dietz

@Jim 

@Jim Hiler we (2 partners and I) used one of the lawyers in Mark's office to set up our 3 way LLC where each member was a SDIRA. Great service and fair pricing I felt. We had already set up each of our SDIRAs with @Dmitriy Fomichenko firm which we also had great service from. My personal recommendation would be to call up a few of the providers here link him, @Brian Eastman, @Carl Fischer or @Justin Windham and see which one is the best fit for you. My feel after talking to a few of them was that ALL of them would give more personal service that some of the 'big firms' out there.

Dan Dietz

It was a 'regional small bank', meaning about a dozen or so branches. They are actually about an hour and a half from me, but actively reach out to investors to recruit them and keep the loans in house. 

Dan Dietz

We are able to get commercial portfolio loans for our LLC owned properties at about a 5.125%, 25 year amortization and 10 year lock right now. After the 10 years, it is a max of 1% rise per year with a maximum increase of 6% over the life of the loan.

A lot of people on here say they have not seen better terms, but at least it will give you something to shoot for.

Dan Dietz

Hello All, 

I have been talking to a property owner who is interested in bringing on a partner (me?) to a handful of existing rental properties that he has fixed rate loans on at under 4% and on average about 40% equity in. He would like to hand over management to someone but still keep the cash flow and have the lump sum of buying 50% of the equity for other interests that he would like to pursue.

Obviously he/we would love to keep the long term low rate financing in place. 

Is there a way I could 'buy half the equity' (20%) using a partnership agreement somehow that would not affect the 'due on sale clause'? I am assuming we would not want to form a new partnership and have him sell the whole thing to the new partnership as that would loose the loan terms and likely trigger a tax event for him too. 

Thoughts on how to accomplish this?

Thanks, Dan Dietz