All Forum Posts by: Gregory Wilson

I love the mini splits. Talk about "zone" cooling. They really work. I like them so much I put them in my personal residence. I got Mr. Cool for that and my son did a 4 head install in a week with one helper. So much for the $10k install quote I got from my best HVAC guy.

I was looking for a serious answer. Not a "well people can do whatever they want, can't they?"

Of course they can. But it our responsibilities as trusted professionals to guide them away from harm and loss.

In the last few years I have had people call me to find a qualified intermediary for all sorts of frivolous reasons including because they don't want to pay the tax on $1100 of long term capital gain. Another at $5800 of LTG.

Do you think it is ethical to not tell them it is not ok? Or, do you take their money on the "hey, its their decision" theory espoused above?

How about a serious answer.

If its a partnership you can allocate by agreement as long as the allocation is the same for book purposes as it is for tax. Note that if only one partner gets the deduction it has to reduce that partner's capital account or it will be deemed not to have substantial economic effect - the precondition of special allocations.

Quote from @Julio Gonzalez:

@Gregory Wilson 

Thank you for sharing your perspective—it's a valid point that a 1031 exchange isn't always the most practical route, especially when the potential tax deferral is outweighed by transaction costs and loss of flexibility.

Julio: Thanks you for you execellent post. Do you have a rule of thumb for a cut off point below which the 1031 will not be worthwhile?

I have had many people wanting to do a 1031 who simply do not qualify from a pragmatic standpoint because their deferral is not worth the transaction cost and restrictions.

I think it would be helpful for some qualified intermediaries to weigh in on what they think isthe threshold of suitability. For my part, I don't even send them to the 1031 guy if the gain is less than a couple hundred thousand. And, I don't much believe in 1031 deferrals as a strategy in the first place.

Quote from @Robert Rixer:

Truth is you may have to show some flexibility depending on the area. We all want the A+ tenant but if you're in a C neighborhood, you need to manage expectations. 

More importantly however is where you set the list price at. If you're comptetitive enough versus the market, you're going to get several applications for which you can choose which is the strongest.

This is a good point to think about.  In my area, the average stay is about 2 years. We do not get families with children in school which anchors the tenants. We get upward mobile corporate types and medical and hospital people also prone to relocation. So a 3 month vacance cannot be recovered in a two year period without a significant rent premium.  Our 1 bedroom rent avg is $1800/mo and so being $100-$200 below market to avoid a month of vacancy is a good bet.

Quote from @Eric Blair:

Take this with a grain of salt as I'm a noob myself, but I've had a few tenants in my property. I always meet in person. You get a real good feeling for people in person. Don't listen to sob stories. Don't believe them when they brag about how clean they are. Pay attention to how the dress, timeliness, how they speak to you and who they show up with. Also, get a sudo number. Google voice or mysudo. Use a business email, not a personal one. Everyone else already laid out the criteria. Also check local laws to ensure you don't accidentally commit a crime

Actually noob, yours is my favorite answer. Meet them, talk to them and look at what they bring. Also, if a prospective tenant is employed by a prominent employer and have a business email they have already been well vetted.

No prior evictions. Once they learn that they can stay rent free for months and you will just roll over to get them out they will do it again and again. Its my only deal breaker.

What is your project? A 16,000 ft church  gymnasium or a 180 ft kitchen vinyl. Don't you see that you have to say something more than that to get a response?

Quote from @Sebastian Bennett:

Can I take rental loss on a property during the year of ownership if my intent is to flip the property?  What if the intent was to flip but it then does not sell and becomes a rental?

Your flip property is not a rental until you convert it to rental. My position is that when you advertise it for rental and are willing to rent it if someone wants it, no matter its condition, you are deducting expenses and depreciation. Pearl clutching conservative CPA's think you have to jump through a lot of other hoops. Take your pick.