All Forum Posts by: John Barnette

but you are over a 1 year hold...so regular taxes don't apply.  Long term capital gain. Not bad at all!

very easy.  Did you collect actual rent and can show proof to irs if needed ?  Did you depreciate the house as a rental?  If not, no 1031.

I do flipping and land lording.  Apples and oranges and different tax treatment.  Only way to semi-legitimately combine is to truly rent property A for a year plus before selling to acquire next in a 1031.  Basically a fix-rent-flip via 1031.  Slower process.

Even then... If you do too much of it there is risk irs will consider you a dealer/flipper and not a landlord investor.  

anyone have personal experience or advice regarding owning a laundry mat business AND building.  I would not want to own just the business.  Both.  I have heard that it CAN be extremely profitable but also quite time consuming.  I guess if you had a good location and owned the whole enchillada it would be a cash cow.  But rarely see them up for sale.

Can 1031 into the building and some improvements. But not sure where the line is drawn and becomes business expense. Maybe own building as a person and lease to an LLC that has the business?

Curious about anyone's experience or advice

Thanks

New Yorker's.  Very true. Manhattan still takes the cake. Followed by a mix of Bay Area. That being expensive urban/central city SF at $1200 a foot and up, and ground zero Silicon Valley that is very dependent on lot size, zoning, schools, zip code, etc.  Very family driven, and how long a commute to whatever tech company you are some sort of executive or high level sales position with.  Those with fat wallets have places in both locations.

Then various other NYC and surrounding locations and various other SF/South Bay locations. 

Of course LA has some exceedingly expensive real estate as well.  Not as familiar with it. Large homes, large lots, large views, large egos, large dollars.

Affordability rates: While important, it is hard to analyze this figure without some consideration given to 1. foreign buyers (from abroad and other states), 2. those who live in California and don't really need to work...but are very real buyers, 3. wealth from stocks and not salary.

I do agree that it is a concern though.  My biggest fear as an owner of several properties in the Bay Area:  Affordability being so horrible that tech companies are not able to attract employees, companies move headquarters out of Bay Area, R&D and management move away, etc etc.  Bay Area becoming so expensive that it hinders tech leadership and employment.

I do see a confluence of biotech, green-tech.  Hopefully energy technology development, and advanced automotive technology will also contribute.

Someone just needs to figure out how to make it rain.

@amit m, I do agree. Expensive market in SF and Peninsula to be buying investment property for cash flow or even short/medium term appreciation.  Maybe on a 1031 basis to shift assets, tax base, take advantage of low interest rates.  I have been buying small sfr in Richmond,CA.  Middle ground C level neighborhood and home. But a good deal on a short sale. 

Rents: interesting. I think very much influenced by demand and supply right now. Kind of over supply of $4000-$5000 two bedroom apartments in SOMA, Mission, etc.  Rents still increasing but depends on location and property type.  I am invested in 5 properties in Bayview and am seeing good gains in both rent and property value as the neighborhood improves and people see the value compared to areas just 5-10 minutes away.

And another thought - spring market is always overheated and crazy. Lots of buyers and low inventory.  It will most likely cool off come August like it usually does

SF buy and hold investor, flipper, and Realtor here.  It feels like we are in the high growth up leg of market cycles.  Not the crazy times yet. Lenders still quite conservative, lots of cash and "real money" being transferred into real estate.  Have not seen the truly crazy stuff of 2005-2007. 110% finance purchases, neg-am loans, etc.  Not hearing...this market has no end and will keep going up forever.  No irrational exuberance.  

My 2 cents: correction around 2018 based on historical trends and couple years removed from Presidential election.

SF buy and hold investor, flipper, and Realtor here.  It feels like we are in the high growth up leg of market cycles.  Not the crazy times yet. Lenders still quite conservative, lots of cash and "real money" being transferred into real estate.  Have not seen the truly crazy stuff of 2005-2007. 110% finance purchases, neg-am loans, etc.  Not hearing...this market has no end and will keep going up forever.  No irrational exuberance.  

My 2 cents: correction around 2018 based on historical trends and couple years removed from Presidential election.

Welcome to the norm of SF Bay Area real estate.  Feel very fortunate to live in a desirable, upwardly mobile, beautiful place. I used to live there 1994-1997.  In fact bought my first condo in Capitol Hill in 1995 for $86,500 and sold in 1998 for $153,000.  Did put in some sweat and elbo grease in some upgrades and whatnot to a 1890's building.  Denver is now one of a handful of elite cities in the US and perhaps the only non coastal city with such market conditions.  Probably a fair number of California buyers out there too. Always have been.  Only worry is over construction of condos and front range housing...

Denver is not as restricted geographically or zoning and building limitations as SF.

As a Realtor and investor I study the local market quite intently. We have a massive shortage of housing relative to population and job growth. Coupled with extraordinary tech wages, international buyers, and an estimated 11,000 units in just the city alone that are being marketed through airbnb, vrbo, etc. (not being sold or rented in traditional means).  So prices are blasting to $2000 a square foot in A locations.  And a rather shocking $30million condo sale for a 6000 ft place on Billionaires Row in Pacific Heights!!!!

What is driving the success in the Denver market?  Can it hold long term?  Who and where is money coming from?  Or just a massive lack of inventory?

I have always thought of Denver as ultimate 1031 strategy to trade out of high equity and super low cap rate properties in SF into small apartment buildings with better cash flow and still appreciation potential.  Not planning on that move anytime soon. My sf places are in up and coming areas and have lot of room to grow still.

realtor, investor, flipper here.  I do find having multiple income streams to be very helpful and prosperous.  As an agent you are or should be very aware of values and day to day market conditions and changes. This of course helps. Plus can brainstorm with other agents you work with.

However it can be a challenge to balance ethics and what is in the spirit of the law and looking for a good deal for yourself.  I have encountered situations where I could have gotten a "steal" from my market knowledge, condition of home, etc.  BUT would be in serious hot water plus have to live with my own ethical standards and reputation, etc.   Instead I put on my Realtor hat and listed the property and worked my butt off to get the seller the best possible price and best possible terms...a fiduciary duty.

In one instance a seller in need interviewed me, and didn't hire me. Then the agent he did hire did a horrible job, was not being marketed during holidays, etc.  I swooped in and picked it up a few days before Christmas for a very good deal representing myself. Got paid the commission.  Fixed and flipped and made another $20,000 or so.  That I have no problem with at all and neither does the code of the profession.

If a seller has other representation, go for the best to represent YOU.

Other possible conflict of interest situation could be where you have a buyer actively looking for property and 123 Main Street meets their criteria.  I always show first, allow buyer to (quickly) decide if y or n.  If N, or some really stupid lowball offer, then I make my move.  Can be a bit of a gray area here, so be cautious.

Remember if there is a regular old Joe consumer with a legal issue confronting you as a professional Realtor....guess who will loose.

Play fair and honest and should be in good shape.

all depends on 1. Area of the country 2. Where in the real estate cycle you believe the property is, 3. Market inefficiencies as discussed in a blog here,  4. Your own cash position and risk comfort.

1. I am a SF investor right in the city and in closer in suburbs. Getting anything to even break even now with 30% down is a challenge. So either "investors" are betting on rent appreciation and property appreciation or they have a lot of pride in their portfolio of non performing assets.  I think a fair amount of both depending on point 2.

2. Where in the cycle.  Buy when fear is rampant and blood is in the street. Buy on the upswing for current cash flow and future cash flow.  Maximize by buying distressed assets in marginal areas at steep discount. It is all about the future.

At mature stages of the cycle everyone and their brother will be jumping in and following the heard.  Getting in before it's too late, lining up to drop non refundable deposits on spec houses and condos, etc.  Rents are shooting the moon and rent multipliers are even more crazy.  At this stage the only buying I would be doing would be to dump I class c and below assets at extraordinary high prices and 1031 into the nicest thing you can buy. Best area, etc.  It will hold value the best when the market tanks and you will be in good position for next cycle up

3. Miss managed properties, long term out of state owners who don't ask market rents, poorly market properties, miss comped properties, Christmas deals, etc.  not efficient market=good deal in long term. Ways to push up cash flow or fix n lease or fix n flip.  

4. If you don't need extra cash flow but are playing in bigger pockets, go for the big opportunity that could profit big time.  

Sounds like you are doing just great though.  It is all a balance of greed and fear, protection and aggression, advance or hold your position.  Bad to go too extreme but those who do... Probably both a millionaire and bankruptcy at some point in their life. Maybe several times.