All Forum Posts by: Kenneth LaVoie

 Thank you! As it turns oout the deal we had to sell 3 of the 4 remaining fell through and I'm sorta kinda glad. The REASON we would sell is to be completely free of the responsibility (actual and psychological). We're probably the best property managers within 50 miles and I say this with complete humility. We just really "own" it. I owned a lawn care business catering to upper middle class doctors, lawyers and such for nearly 30 years and I carry that "No mistakes on my watch" attitude into this business (while still being unflinchingly strict on the other side when I need to be). So I honestly don't think we'll ever "PM" out. We sort of "hack it" now. That is to say our maintenance guy handles calls, we allow tenants to call the heating company themselves if they can't get hold of him, and I handle the landscaping, and minor things, even cleaning because I like it. So 22 units takes us on average 2-5 hours per week to manage. And much of that is sitting in the office. 

But the more I think and think ... and think (actually mind-f*** it to death!) I conclude more and more that these ought to be held forever and left to our uninterested daughter (as penance for so many sleepless nights!) I mean shoot, I can SELL and pay 25% of that to the government OR take out 50% of what I'd get for selling via cash out, and pay NO tax. I probably should do that NOW while rates are still reasonable but that's not a very conservative thing to do. What would I do with it?? I think I'm a 25% better investor than I really am, so I'd probably get myself in trouble with an extra 500K! But LATER ON I can see if making complete sense. Perhaps pull out 500K, put half in an annuity, half in Vanguard Wellington and call it a day (or take out 500K and get that dream condo!)

I think everyone's answered your question so just my two cents:

1. Yes, you are obligated by the clause "landlord's duty to mitigate" or something like that. In other words, you can't just bill her for the difference (in this case 4 months if there was 6 months left and she gave 2 mos. notice). 

2. But ... you can charge the "difference" ... in other words, if she stays and pays 8 months, you spend a month trying to fill, and it's empty one month, you can hold her accountable for that month. 

3. Another thing that happens is that landlords will reduce the price or give concessions in order to get the unit filled. YOU can charge her that. So let's say same scenario as #2 but you also reduce rent $100 per month, you can bill her the vacant month PLUS $100 per month x months remaining in lease. 

Of course, we never lease for more than one month, so we don't encounter this (I've had two landlord tenant specializing attorneys tell me that in the 25+ years they've been practicing they've YET to see a landlord benefit from a lease of more than month to month, and I wholeheartedly and unreservedly agree after 13 years trying both.) But outside that, our attitude is always that we don't like to hold people "hostage" if they want or need to go. But again, this is opinion only. 

@Amit M.

Thank you so much for these seemingly wise words. I too would be super hesitant. I've always been a "chicken" of sorts, opting instead for run down, locally situated apartment houses in my old mill town of Waterville Maine. So I find it difficult to hold my breath and plunge on some of these alternatives. 

I wish there was a such thing as a "self directed 1031X" whereby I could assemble a portfolio of various things like stock, bond, REIT and crowdfunded/P2P type issues and let it ride. But of course, there's no free lunch ... what I saved now would need to be paid at some point.

I'm starting to warm up to the idea of putting these properties into IRAs. We have enough in our Iris to just about put all of our properties in. I don't know what the timing looks like with that sort of thing though.. or the mechanics, I assume that you take all the money out of the IRA and replace it with the market value of the real estate. So for example an IRA with 250,000 would simply purchase my $250,000 building? Then that 250 in cash would simply go into a taxable account for our financial advisor or us to manage.

I like the idea, but I'm completely green behind the ears if that's the right expression in terms of commercial property direct ownership. What if 6 months after we buy it the tenant leaves and it sits vacant for 5 years? I do know a couple of investors here locally that have had such things happen. I know I'm probably sounding like a negative Nelly but I'm just trying to cover all the worst case scenarios. And thank you for this idea by the way.

@Dave Foster -- at this point we've got full priced offers on all our units, and the tax bite scares me. Scares me WORSE though handing over a good chunk of that to put into DST ... just because it's a "new" concept. It would kill us if we worked all these years, finally cashed out only to put the proceeds into something that locked our funds up and then handed us back 50% of it. I know a little due diligence goes a long way but I think we'll need some serious hand holding if we go this route. I do have your email saved that you sent, so weill review.

One idea is parking in a DST for 3-4 if possible then rolling into a VRBO in sunny local...and the rest is history. We're open to investigating.

WE're about to sell 1.4M in RE consisting of our 4 buildings totaling 22 units. Scary! They're our "final four" and paid off, giving us 6 figures in cash flow but we're 56 and want to move onto next stage. Turning them over to manager doesn't interest us. BUT ... shoot, we're going to pay Uncle Sam a quarter mil more or less! These buildings cost just over a half mil 10 years ago, so much will be gain (and 10 years of depreciation recap). 

We are NOT ready to buy in Florida though that's where we eventually see ourselves. We're just not ready. yes, we could do a VRBO but we're basically selling overpriced real estate then 1031x'ing into VERY overpriced RE down there. We were thinking of doing a 1031X into a DST, so that our money has a place to sit, protected from taxes, THEN when we're ready we can 1031X out of the DST into the Florida VRBO or whatever we decide.

The problem is I don't REALLY know how to assess the risk. I LOVE diversification. I like to be able to put 5K-10K into several crowdfunded deals vs. 100K into one, and DST's arent' great for that. It SOUNDS like most of them are very stable "core" or "core plus" which I'm just now learning the definition of. It's just scary and I could use some handholding here. I know nothing is risk free, but I don't want to tie up 100K or 150K for 6 years, then get 20K back after 10 due to malfeasance or fraud or mismanagement. It's just "new" to me, hence I'm unreasonably petrified, yet it sure would be nice to NOT pay out 200K or so in taxes...

Thanks for any bumps in the right direction, or slaps in the face to wake me up!

I did receive your email, thank you! One last question...I saw a thread on another forum where someone claimed that you can 1031 into a rental property but after ONE YEAR use it as your personal residence. That strikes me as too good to be true, OR an oversimplification. Can you comment on that at? Thank you. 

@Scott Wolf. I just submitted a connection request. Love to have a conversation. MIGHT not have time with this property but have 3 more to unload over time. 

@Patrick Eldridge - I have until 45 days AFTER closing to ID 1 or more props concurrent with 180 days from closing to purchase, but I have to at least submit some sort of "intent" BEFORE closing I assume (and I haven't even hinted at it yet). My main question is, now that I've signed a P&S, can I still get a 1031x jump started, and I think the answer I'm getting is "yes" as long as I do so before closing. In this case, that's mid march.

Good morning. 

We own a 4 unit we've just signed a purchase and sales agreement on to sell. is it too late to commit to a 1031 exchange? We want a condo in Florida and we're thinking that even though prices are high, the deferment of the cap gain would offset the price premium. 

I THINK the rules state that we'd need to rent out the new property at least 14 days during the 12 months after purchase, and NOT occupy it ourselves for more than 14 days during same (with the exception of staying there while doing work on it). 

I've dismissed 1031X recently, thinking it was just too complex and expensive to warrant but I want to be clear on all options.