All Forum Posts by: Enzo Magliozzi

Hi all, I’m new to BP and commercial investing and have a question about an agent’s fee. My brother and I own a C class restaurant space that is in need of renovations. Our current month to month tennant always pays on time but is selling his business to a new restaurant operator who wants a new lease with us, including first option to buy. The new business seems like a solid plan and they will do big improvements to the building for 4 months of T.I. The new tenant’s agent approached us to begin this negotiation. She is asking us what her fee will be. What would be fair considering our property was not on the market and she is not representing our best interests? We’re thinking of offering her 2% and having that credit toward her commission if we sell to the tenant. Monthly or yearly payments as the lease is paid. No payment on renewals. I get that everything is negotiable, but just wanted to see if that seems like a good starting point. Thanks!

@Duc Ong  

Thank you! I didn't realize that was proposed but I see it now will probably be signed into law. I think I am still in the clear though as I bought and lived in that house Oct, 2010 to Dec, 2015.

I am new here and Iooking for advice to decide what to do with a particular rental property in Chico, CA. I have about 150K in equity in it now. Market value is about $340k and I feel the neighborhood is peaking. Typically I believe in holding, but now that I have inherited more rental properties in Southern California and Hawaii, I am considering selling the property in Northern California and purchasing something else when I relocate to another owned property in Hawaii. This would give me a very large down payment and move more of my properties to within a manageable distance from each other (2 locations instead of 3). I have been renting the place for 2 years now (moved out 12/15) but have yet to claim it. If I sell in 2018, I could avoid capital gains taxes which would be about 20k. Current tenants are willing to sign early termination because they want a dog. 

The current rent just covers the mortgage, landscaping and repairs. I do have the opportunity to raise the rent another $200 / month. I could also start to depreciate the house, but from what I understand I would pay that back when I eventually sell. My brother currently lives in the same town and helps to manage the property but he may move in the next few years also. I make trips about twice a year to look over things. The house is in great shape for being built in 1962 but the hvac system is going out. I feel that I could put in more sweat equity into something closer with more growth potential in Hawaii. 

The biggest thing holding me back from selling now is what to do with the gains. I don't necessarily need it for another rental investment but it could help to bring down my payments. Since the other properties are just now coming into my posession, I do not have the the tax history of their income to show a lender. I quit my day job earlier this year to move from Texas to manage these properties and my father's estate but will be back to work this spring. 

Should I sell and sit on the gains while building my proof of income and shop around? Or hold for another x years and still buy something else with a lower down payment?

Any advice appreciated. Thanks!