All Forum Posts by: John Humphries

Looking for some advice on a way to sell a property in Canada without taking a big capital gains hit. I purchased a rental property for $193,000 a few years ago and our market has gone up considerably since. The property is likely worth around $375,000 or more right now. We have amazing retired tenants who are planning to stay there forever, which is great, but we have not been able to keep up with drastic market rent increases due to BC's rent controls. The property cash flows, but not much considering the equity we now have.
We have considered selling, but unfortunately in Canada there is no 1031 exchange to keep from paying capital gains. One thing I would like to know would be if it made any difference to sell it with seller financing? If sold to someone who would let us carry the note we could amortize over 25-30 years and be happy with the monthly payments. If the buyer put 20% down, we could easily pay off the remainder of our mortgage and carry that note. Would that spread our gains over multiple years, or would the sale trigger the capital gains tax regardless?
Any other ideas?

Another investor and I were setting up a meet up in the Comox Valley area in the spring. We got derailed by the COVID situation, but if people are interested in trying to get this going again, I am happy to help set something up. Seems like in person meet ups might not be feasible but perhaps something over a platform like Zoom for the time being until things settle down? If anyone is interested, please feel free to reach out.

Hey guys. Thanks for the insight. @Jamie Bateman, I'm curious how you removed Safeguard from the equation in order to deal directly with the borrower. I am not there yet, and hope to not have to go that route, but would be good to know all of my options. 

Curious to know how people are finding their experience with Safeguard Capital Partners now in the midst of COVID? I have just had my second month of missed payments from my note with little to no communication from the company (other than "because COVID." How is everyone else doing with their notes?

Again, that's a discussion for you and your partner. For me, it would depend on what you are bringing to the table. If your role was fairly minimal, I might only be willing to part with a percentage of cash flow. If you were bringing more value somehow (finding the deal, managing, etc.), you might be able to negotiate a percentage of cashflow and equity. There are really no wrong answers here.

Hey Alex, congrats on getting started! Like most questions that get answered on BP, "It depends." I don't think there is one right answer to how to split profits on a deal like you describe. I think it should be a conversation between you and your investor to determine what both of you will be happy with. If someone feels cheated here, that can turn a good investment bad.  
I've seen deals like you mentioned go 50/50, but as Michael mentions above, it can also depend on what kind of return you are getting on the investment. Personally, I have joint ventured on a deal where I put up the down payment and my partner manages the property for a 40% cut of profits and equity. I was willing to give away such a high percentage because of the way this property is managed, as a by the room rental for shift workers. Instead of getting $1200 per month on a monthly rental, this place is chopped up into 6 BRs rented at upwards of $750 per month per room.  This is much more intensive management-wise, and produces much higher profits. Because of that, I was willing to give up 40% of the deal. My partner also guarantees that I will never be asked for more money on the deal. Basically, if the place were to lose money for several months due to vacancy or whatever, he pays all of the expenses. The down payment is my only out of pocket.
If the cash flow was lower or the management was not as cumbersome, I would tend to expect more if I was putting the money for the deal. Because of the way this deal is structured, I am happy with 60%.
What will make you and your partner feel like you have a successful investment?

Hi Selina, things have slowed a bit here in the last few months. Houses that are priced well are still going quickly. The have actually been a handful of pretty good deals. Depends on what you are looking for though. If you are looking for a cash flowing buy and hold rental property, you will need to look elsewhere. If you are looking to get a decent deal on a property that you might want to live in at some point, now might be a good time if you can find a place that you like. In my opinion, prices here will not be going any lower as this is such a desirable place for retirees and lifestyle seekers. Hope that helps.

@Alina Trigub, thanks for the resources and pointing me to basically the exact topic that I put together! BP has gotten so big with posts now that I completely missed that one.  Some interesting commentary on that post as well.

Originally posted by @Aaron K.:

Personally I'd be slightly concerned about the NV syndication but the others sound just fine.  I like to have a bit more control so I likely would have gone into SFRs but to each their own.

Hey @Aaron K, just curious about your concern over NV? Care to share your opinion on that? I definitely agree with you that I would prefer to do it myself with either small multis or SFRs, but I am too short on time at the moment.  I've tried to structure a few passive investments with 3-5 year horizons so that I have money available when I dial it back at work at that time. At that point I would love to be a more involved and active investor.

Hey BP
I'm looking to crowd source some ideas for some inspiration.  If you had $200,000 in cash right now, what would you do with it? I know this depends on your current life situation, but let's hear it!
Alternatively, if you want to pick apart my situation and provide me with your two cents feel free to chime in...
My situation:
Owner of primary residence, one rental locally, self-managed, and one joint venture rental out of Province (I'm in Canada). I've got a decent job making ~$60,000 per year, but it's keeping me crazy busy at the moment without much free time or mental capacity for other projects. I'm hoping to dial back my workload in the next 3 years by replacing my income with cash flow, which will free up some time for me to be a more active investor. Earlier this year, I inhereted a house in NC, which was sold for a $200,000 profit.
What I did:
Since my workload is so heavy at the moment, I was looking for more passive investments. I would love to buy more property where I am and self-manage, but my market has gotten a bit too expensive for that to work realistically. Instead, I put $150,000 into two syndication deals. One is an apartment complex in Indianapolis. The hope here is to make a return on current undermarket rents while fixing it up and raising rents over the next 5 years. At that point, depending on market conditions, the managers of the deal will decide whether or not to re-finance and return principle or sell and divy out the profits between investors. In the meantime, investors should receive some return quarterly of around 8-10% on average with hope for 15% or better when the deal is closed. The second syndication is currently raw land in NV that a developer will be building out into a townhouse community and selling individual units over the next 3ish years.  The investment here is for a 15% return paid on the back end with a share of profits from the sales.
The last $50,000 was invested with a note provider. I chose a property in Philadelphia that a turnkey provider needed a loan on and was set up with a note that will pay out 9% per month over a 5 year term.

Anyone have any better ideas?