All Forum Posts by: Dylan Speer

Have you considered either exchanging into a DST or selling and receiving the tax exemption and parking that capital in a gas and oil mineral rights fund?

Hey Eric,

Sorry to hear about that.

Have you considered parking that cash into an oil and gas mineral rights royalty fund? These pay passive cash flow and range from 10-20% annualized with monthly distributions. I could see current cash flow being a nice cushion to cover expenses and bills while you search for another job. 

Happy to chat. 

I'd probably invest in a syndication that pays 10% cash flow with some appreciation on the back end. Or gas and mineral rights royalty fund at 10-15% annualized cash flow and just always have $100k passive income and no headache or phone calls. 

Who is the sponsor?

The cap rate is a measure of the return on investment (ROI) of a real estate property.. A lower cap rate indicates a higher property value relative to the income it generates, while a higher cap rate suggests a lower property value relative to the income.

 If you purchase a property using all cash, the cap rate directly represents the return on your investment. For example, if you acquire a property with a 5% cap rate, it means you can expect a 5% return on your investment based on the property's net operating income.

If you finance the property with a loan, the relationship between the cap rate and the interest rate becomes crucial. The cap rate does not directly consider the financing costs, so the impact of leverage needs to be evaluated separately. 

a) Higher Cap Rate than Interest Rate: If the cap rate is higher than the interest rate, the property's income is expected to provide a higher return than the cost of borrowing. This scenario is often considered favorable for investors, as they can earn a positive spread between the property's return and the financing cost, potentially enhancing their overall return on investment.

b) Lower Cap Rate than Interest Rate: If the cap rate is lower than the interest rate, the property's income may not be sufficient to cover the borrowing costs. In this situation, investors may experience a negative spread, which means the income generated by the property is not enough to offset the financing expenses. This scenario could potentially reduce the overall return on investment or result in a loss.

The owner-occupancy requirement typically states that a certain percentage of the units in a condominium or cooperative development must be occupied by the owners rather than rented out. This requirement helps ensure the stability and marketability of the property.

In the given scenario, the owner-occupancy rate has exceeded the maximum limit set by Freddie Mac and Fannie Mae for financing purposes. As a result, traditional mortgage financing options are no longer available for this property. Instead, the property can only be purchased with cash, meaning the buyer must pay the full purchase price upfront without relying on a mortgage loan.

This restriction can have implications for potential buyers who may have been relying on mortgage financing to purchase the property. Without access to traditional financing, the pool of eligible buyers may be limited to those who have sufficient cash on hand to make the purchase.

Got a link for an article about this? Curious to read up. KCK or KCMO?

1. 1031: Since you reside in one of the units, that unit is not considered investment property and may not qualify for a 1031 Exchange. You may be able to do a partial exchange for the other units that are investment property, but it's important to speak with a tax professional or real estate attorney to determine if this is feasible in your situation.
2. Section 121 Exemption: This exemption allows you to exclude up to $250,000 ($500,000 for married couples filing jointly) of capital gains on the sale of your primary residence, provided you have lived in the home for at least two out of the past five years. Since you live in one unit of the fourplex, you may be able to claim the exemption for that unit, but not for the other units that are investment property.
3. VA loan and primary residency: As a veteran with a VA loan, you were required to occupy the property as your primary residence for at least one year. Since you have lived in the property for three years, you have met this requirement. However, if you sell the property and no longer occupy it as your primary residence, you may run into issues with the VA loan. You should speak with your lender to determine what the consequences would be if you sell the property and move out.

Thank you for your service.

Hey Jack,

You might consider investing in Oil and Gas Mineral Right Royalty funds with that 160k. 

I work at a firm that can help with this.

1. Regarding the HELOC, the fact that it originated years ago may be sufficient to qualify it for the 1031 exchange, but this will ultimately depend on the specifics of your situation and the advice of a qualified tax professional.
2. However, drawing from the rental property HELOC and using those funds to pay down the primary residence HELOC could potentially create boot and affect the eligibility of the 1031 exchange. It's important to consult with a qualified tax professional to assess the specific details of your situation and determine the best course of action.
3. With regards to the 3rd lien, it sounds like the lender is open to allowing the lien to be moved to a new rental property as long as the proceeds are held in an interest-bearing account, used to pay down the loan, or used to purchase a similar property. If the lender is open to having the QI hold the funds and you make a promise to use them in accordance with the lender's requirements, this could potentially still qualify for the 1031 exchange. However, it's important to confirm with a qualified tax professional and ensure that all requirements are met. Feel free to reach out. Happy to chat.