All Forum Posts by: Robert Hetsler

I think you can get some good deals in northern Florida or south Georgia, basically anywhere along the coast. I invest in that area and I usually get around 10% cash on cash. If you have cash, you can still get good deals. Of course south Florida is really crazy but I truly believe cash is king in northern Florida. With the growth of the Jacksonville expanding, the growth should be expediential going forward. In November, I purchased two properties that wound up in a bidding contest and I was the lowest bidder for both and wound up winning both because I was the only cash offer on all offers. I paid 88,000 and 90,000 and they were listed at 112,000 and 119,0000 respectively and had them rented out within a few weeks of purchase for around $1200 a month. With two military basis and the Mayo Clinic located in Jacksonville, Florida, I think it should be something worth looking into. Just be careful not to get caught with high HOA fees as those will eat your profits away. God Luck

I am a native of Jacksonville Florida and I will tell you that I own properties in a few of the areas you mentioned and there are some good deals there but I will tell you they are not the most sought after areas of town.  I suspect if you are going to own absentee, I would suggest a few other areas of town but that is primarily because other areas tend to be less problematic in terms of needing maintenance and the tenants seem to need a little less hand holding.  Again, that is solely my person opinion based on my properties that I have owned.  However, I will tell you that I have great luck in the 32246, 32256, beaches for sure and then 32224.  Jacksonville is certainly a great area for investment but if you are not familiar with the town, I would definitely look for something close to the St. Johns Town Center as that is the up and coming area and the crossroads of most major interstates.

Of course, these areas are a little more expensive as I suspect your cash on cash return might be better in the other areas but make sure you factor in less vacancy and "headaches" as I have ended with properties in those zip codes.  However, what you do not see on paper  or just the numbers do not paint the full picture all the time. Just be cautious.

so if you have met the general guidelines of meeting the primary residence which, as a married couple, would allow the first 500K in capital gains to be excluded means that you should not even be thinking 1031 exchange.  However, if you are concerned for whatever reason there are issues on the requirements being met because you might not meet the primary residence requirements, you could still engage in a 1031 exchange.  That would provide you maximum protection but I do not think is really required in light of the facts. 

Having said that, since you are planning to meet all the other requirements of a 1031 exchange, for the amount of money at hand as compared to the expenses of doing a 1031 exchange, I guess it would only afford you more protection than needed and you would certainly have all your basis covered. 

Based on the above facts, I do not think you need to do a 1031 exchange but being that the house was investment property leading up to the sale, it is something worth giving some thought to as a traditional exchange is normally not that expensive and would afford you an additional layer of protection and we certainly can use any and all layers when it comes to the IRS sometimes!  Good Luck to you.  Let me know what you end up doing.

I have an attorney that I know that works in areas that I would be comfortable referring over should you want to email me outside of the website because I don't believe they allow referrals within the website.

@Jennifer Ceren tapp is correct.  There is a lot of opportunity here but like all cities I know, there a certain places to avoid within the city/county.  It is the biggest county, as measured by land, so there is a lot to see but also a lot to avoid.  However, having provided the warning, you do have a lot going on here and a lot of opportunity.  Just make sure you get someone, familiar with the area, to help you navigate the area as you start to enter the market depending on your goals.  Good luck!

It seems to me that your question is simply what are the requirements of improving previously purchased property that resulted from a 1031 exchange.  So I am going to assume that you are not trying to use proceeds from the sale of another property to make those improvements because if that is the case, my response is not applicable.  If you are simply looking to improve property that was purchased years ago with exchange proceeds and are wanting to ensure you are not going to do something to cause "issues" with the original exchange, I agree with @Dave Foster that you are still utilizing the property as investment property so solely based on the facts provided, I do not see any issue with it.  However, it will effect your basis in that property, assuming the improvements are capital in nature.  As Dave pointed out, and again a large part of my response could change if your definition of "several years ago" is 5 or more for instance, you do want to improve solely with the intent to sell but if you are going to make some improvements on a property you exchanged 5 years ago or more (just an arbitrary number but a number of years to which I personally believe is enough) and caught a luck rezoning break that allows you to significantly increase the value prior to selling it, then making improvements prior to cashing out I think would be ok.  Where you run into issues is when you exchange something and the very close to that time period, you improve the property and then sell, yes you have a potential to cause yourself issues in the event of an audit.  I hope I did not confuse you more but the bottom line is that a good part of the answer, as it is with most cases, is based on the facts and circumstances.

@Dave Foster is correct, as always!  If you are in the business of flipping houses, that is not what the law was meant to benefit.  However, you can do both.  For example, lets assume you are an investor in the stock market.  In this instance, you could be a daytrader of stocks in one account and qualify for the market to market election which provides certain tax benefits but at the same time you can also be an investor.  At the same time, you can have an entirely separate account that solely focuses on long term holdings and reap the benefit of a lower tax rate categorized as capital gains as opposed to ordinary income.  As such, while you can do both just be careful that it is readily discernable to the IRS in the unlikely event of an audit.  In other words, be able to easily articulate the difference in the separate but also similar type of transactions.  The important part is being able to easily distinguish the difference.  Always plan for the worst case scenario and hope for the best. 

Short answer is that if you want to take advantage of the1031 Exchange tax benefits, do not buy with the intent of fixing it up and selling it right away.  Further, certainly do not have that intent made clear to anyone and certainly not in writing especially if that is not the first and primary intent of purchasing the property.  It is possible to purchase an investment property and an unforeseeable change in circumstances leaves you no other alternative but to sell and that is something that happens but the burden would be on you to establish that change in circumstances.

Let me make it clear that I would never recommend that you do not follow the law, I am just pointing out that sometimes you are truly undecided on which way to go and if you end up engaging  in a transaction that would otherwise qualify, you do not want prior statements coming back to haunt you in the event you have to establish the intent.  I hope this helps

I never promote myself and both times, as recent as last week, it was taken down and I was sent an email stating I could clearly not do that.

Paul I did not receive your telephone voicemail last week 

good luck. I am a native of Jacksonville and I am very familiar with the market so if you need any help or you want to brainstorm feel free to reach out. I own many properties in Jacksonville myself