All Forum Posts by: Daniel Dietz

Hello, 

I am looking to get some direction on the possibility of one of the loan programs geared at larger multifamily units such as HUD Fannie or Freddie but for say 10 duplexes all bought at once 'as a package' for say 1.5 million. They ARE on adjacent lots, but the zoning can NOT be changed to be 'one property'.

Is something like that every allowed? I did some googling but did not find this particular issue addressed.

What interests me is both the properties being valued on the financial performance and the longer loan terms with a fixed rate.

Thanks, Dan Dietz

Thanks for all the input so far. I did find this article now that I know more what to look for, 

https://www.accreditedinvestorleads.com/accredited... and it does a good job explaining the difference. 

The meat of it is this:

Sophisticated Investors

If you issue an offering under Rule 506 (b) you can accept investment dollars from non-accredited investors if they are Sophisticated Investors. This is the only exception to the accreditation rule. A sophisticated investor is defined as someone that has superior knowledge of business and financial matters. This definition leaves room for interpretation but it is important to define what that means to you and be able to back up your own personal definition. For example, it could be a CFO, CPA, accountant, business owner, banker etc. If they SEC were to ask why you thought this person was sophisticated you should be able to point to an internal set of standards so you can prove that caution was taken when making these decisions.

Dan Dietz

For future reference, how I handled it when I bought at an auction is a friend who is also an investor did the bidding, bought it, put the down, and then 'assigned' it to my IRA at closing. I *think* this was a clean transaction as we are NOT prohibited partners to each other.

There obviously needs to be a lot of trust there. It was a property that he also would have not minded owning for his own protfolio if he were looking to expand, and he/we got it at about 70 cents on the dollar in move in ready condition.

Dan Dietz

@Kirsten Braddock I think there are a lot of different reasons for people to sell using owner financing. I have been working on making contact with sellers where one of there main concerns is not paying what they see as 'high taxes'. Typically older, tired, want to pass on the wealth to the kids etc.... By doing a low down payment, they can deffer and spread out the tax burden. The tax basis 'steps up' once they pass on is one thing in the equation too. 

Dan Dietz

Can anyone fill me in how both the 'depreciation recapture tax' and long term capital gains taxes work when doing seller financing? There main goal is to defer or eliminate taxes due - they do not need the current income above replacing their current cash flow of about 40K per year. 

Say for example I find a seller who is willing to do seller  financing. They bought their properties 15 years ago for 600K, they are now worth 900K, and they have taken 300K in depreciation over the years, so have 300K of basis left which I believe would create a recapture tax of 75K due in the year of sale even if there was no down payment. 

If we agreed to say 100K down @ 5% for 30 years and paid 40K in interest per year and 15K of principal. If there other income is 30K from SSI, it seems that they would stay in the 12% tax bracket top of about 77K. 

As far as the principal part of the payments go, I assume that 1/3 of those would, 5K,  be taxed as capital gains since 1/3 of the selling price was capital gains? 

Thanks, Dan Dietz

Thanks for the advice all, it helps me have a lot of clarity. 

To summarize what I hear you all saying it sounds like the (c) vs (b) is the key difference. 

As far as the 'pre-existing relationship', would I be correct in thinking for example if I heard a Syndicater on a BP Podcast, then I contacted them, maybe met in person a time or two to talk business and get to know them, conversed on the phone about real estate a dozen times over a year or so, that that would at least be a needed start where I could then ask then about current opportunities? 

Thanks, Dan Dietz

Hello, 

Currently my partners and I have SFHs, duplexes and fourplexes. We have be researching going to more to maybe 8-16 units properties (the largest in our area for the most part) OR investing in other peoples deals like syndications. The issue with those is that none of us are 'accredited' but I think all three of us would qualify for the sophisticated designation.

I have found a couple of people who do allow for the sophisticated class of investor so far. 

What I am wondering is if there is a 'list' or website like Loopnet where a person can find syndicaters or other people who are looking for investors or partners that are do not meet the accredited but DO meet the sophisticated definitions?

Thanks, Dan Dietz

Thanks for the clarification guys. I cant imagine learning all this without all of your help and patience!

Dan Dietz

Dmitriy, it this last part of your answer, do you mean UDFI instead of UBIT, or am I misunderstanding?

I dont want others to be confused as taxation in Self Directed accounts is confusing enough already ;-)

Thanks for all you, and other plan providers on here also, do for the BP Community.

Dan Dietz

Hello All, 

I am new to the concept of 1031s and have a basic questions. I would be the buyer in this case, not the seller.

If the seller has a property that say is sold for 250K which he purchased for 150K. He has taken 50K of depreciation, so I think his basis would be 100K. If no 1031 he would be on the hook for Recapture Tax on 50K, and Capital Gains on 100K, right?

If buyer can get a loan for 80% or 200K and the seller carries a 2nd for 50K, how would that affect a possible 1031? Do all the figure just 'get reduced' by 20% (the amount of the second)..... meaning use a purchase from of 120K, depreciation of 40K and capital gains of 80K? I hope that makes sense.

IF that is the case, and the seller does a 1031 with the rest of it, would that mean recapture tax and capital gains tax would only be due on the 20% he is carrying a note on and the rest could be deferred with a 1031?

Thanks, Dan Dietz