All Forum Posts by: Jil Tin

I have posted the same/similar questions in many other forums. This is my first post in biggerpockets. I see best responses and analysis from this forum members.

Special Thanks to BiggerPockets and everyone responded here and future responses.

Sue,

Correct, prop 13 helps and keeps my current property tax at low rate (whatever price I bought level). The current primary home, property tax is appx $500/month. If I buy and sell the same home, the property tax goes to $1000/month. By renting this home, without selling, I get $500 benefit from CA property tax (It is hidden benefit).

This is one of the key factors I consider renting. Another factor is 50k commission and appx 20k other sale expenses. If I rent, I save all these expenses and get indirect $500 property tax benefit.

In san jose, I really do not see any good home, single story, less than 1M.

True, all my rentals and primary were bought between 2008-2011, at a lower price, from REO or short sale. All are SFH and single story, but less sqft appx 1200-1500 sqft level.

My primary home is appx 2500 sqft level and I find the new single story better sqft and lot and two streets away. I can make my rentals as my primary for two reasons. 1) Tax issues, it may wipe off some benefits 2) Homes are smaller than my current primary.

Since we both account 12 years work life, we are fine to go for this new home. It will not affect my retirement disposable income. Reason: I will sell the highest priced rental just before retirement. Whatever money I get at that time, after paying tax, it will pay off easily two rentals home loans. 

Then the total rent, tax free due to depreciation and cumulative accumulated depreciation losses, is around 7000/month (at present) will be used for my life along with Social security and 401k/IRA RMD. As per my calculations, I will be getting 100k/year counting Social Security, IRA/401k RMD (4%) and rent (two homes fully paid).

Bob,

My very first purchase home appreciation 1M and keep on appreciating 6% year over year. This is the home we decide to sell when we decide to retire. The current appraisal is 2M, by rule of 72, the home will reach 4M (I really do not have any doubt - it will appreciate) as this is in key area near by Apple , Google head quarters.

Greg & Bob,

The future home I am looking is 1.2M range, but not the current primary home.

I do not have 700k capital gain, the current home can be sold for 1.05M, with purchase price 500k. If I sell it, 50k will be commission and 500k capital gain tax free I can get.

The current home is built during 2005 and condition is so great that it is move in level. I can just touch paint and clean, that is all I need to do.

This home has 4% (lowest) appreciation potential.  Putting into excel, I really see positive in renting or even selling.

The real benefit of holding (renting) is property tax. It has low property tax $500/month (6k/year). High depreciation (home build cost is 400k) is benefit that I may get all income tax free for life.

By putting everything in excel, I see positive cash flow (except assuming 500k tax free gain investment return).

Yes, I took some sweet Heloc and using it as down payment for the new home. As such owning four homes, the total over all loan to value is 50%. All are with 30 fixed at 3.5% rate.

For next 12 years, I really do not see any issue for income. We both earn six figures good income with 33% IRS tax and 9.3% CA tax. Work stress is high and it takes appx 12 hours stressful work.

However, at the 55 age, is it wise to take risk or go for sale? 

Ryan & Greg, thanks for responses.

Ryan,

All my three rentals are professionally managed by property manager in san jose. Always real cash flow positive, but depreciation tax negative for the past 5-8 years.

All my homes, three rentals and primary, are locked with 3.5% fixed for 30 years. 

Greg,

True, by the time I decide to retire, I will be free from primary mortgage, for sure. Without making my primary home loan free, we do not want to retire.

How? We want to sell one rental home (appx 1M capital gain) that pays off either my future looking home 1.2M or pay off two rental home loans.

Hello BiggerPockets,

Basically we are looking to upgrade our current home to buy a single story home from current two story home of the same size in the same city san Jose. We are aged 55 and 50, we expect to work at least next 12 years and retire at 67 and 62. We have $500k in retirement account, growing at 6-8%, no loans except home loans.

The single story home costs $1.2M while current primary we bought $500k five years before. Current home loan is $350k. Current home can be easily rented for $4000/month or can easily be sold $1.05M. The current PITI is $3000/month which is $1000 lower than rent.

Right now we are debating whether we sell our home or if we rent it out for some passive income.

Here are additional info:

We understand the pros & cons of landlord as we own three rentals, all have mortgage with expenses equals rent revenue. Cash flow negative due to depreciation.

We are eligible to new loans at $1.2M level while keeping current one as rent. Qualifying and down payment is not an issue.

The real issue is our age and retirement.

We both work at San Jose, lot of work stress and takes 12 hours of daily life. Even though we are healthy now, cannot assume same at mid-60s, we need to take retirement or partial retirement to focus on our health and life.

If we sell current home, we can take 500k tax free capital gain and reduce rental mortgages (I can pay off one full mortgage and balance pay off 25% another rental).

If I rent out my current home, it is 30 year fixed at 3.5%, tenants rent will pay all expenses and we will have the home free after 30 years (it will be gone to our heirs as we do not know whether we will live 30 years).

What will you do if you were in our situation? 

Which way is better to be financially independent.