All Forum Posts by: Jon A.

Quote from @Bruce Woodruff:

Wealthy people pay very little in strict Income Tax. It always cracks me up when the press runs a story about, say...Warren Buffet and how his secretary paid more in Income Tax....duh, of course she did. Or when they were all over the fact that Trump paid $475 in Income Tax one year.....duh again, of course he did. That same year he paid millions in CG taxes.

Nothing to see here, folks, just move along......

I get your point - when people are outraged that Trump paid no taxes they're really outraged at a tax system that's rigged in favor of business owners in general and landlords in particular. But they do have a legitimate gripe about W-2 employees disproportionally funding the country.

@Chris Martin It's worth keeping in mind that, at least to my understanding, Trump transitioned out of primarily being a real estate developer years ago, and that he pivoted towards branding - hence, his name on a number of properties he doesn't own.

If you want to learn about real estate from a Trump, his father is probably the better one to study, as his father built the real estate empire. Donald Trump's primary skill was marketing, making himself seem like the richest person in the world when he wasn't.

Quote from @Anthony C Valera:

Probably unpopular opinion but he could put the portfolio in a trust and seller finance the whole thing to an investor willing to put the work in to bring it up to market value. Depending on what all those numbers look like, a decent down payment to get him started (and pay off some of that debt!) , and then provide him with monthly income without the hassle of doing the work. This would prevent capital gains or the need to 1031 since he would only be taxes on the money he is actually receiving each year.  

Granted this monthly number will likely be lower than his current rental income BUT the possibility is there to control the down payment and the interest rate, ideally netting him more through the life of the loan.

 What happens with depreciation recapture in this scenario?

I can't speak to legality but my attorney once set up a seller financing deal where i paid .001% interest. An easy workaround.

@Engelo Rumora I'm not a property manager, but in trying to do any deal I think it's always best to find the decision maker and speak directly with him or her. Even if that means politely showing up to the office unannounced to get a meeting.

Question - Are there certain books you'd recommend related to starting a PM firm and setting up the necessary systems? I'm considering starting something in-house as you did. Don't worry - I'm not in your market, won't be competition.

Quote from @Jordan Akins:

I think he should keep them because there’s nothing he can take that money out directly into something and get the monthly cash flow he is…that I know of. 

Quote from @Bruce Woodruff:

$2 mil in the right (safe) accounts could give your Dad plenty of monthly income to live comfortably for the rest of his life. Unless he loves doing the business (sounds like he doesn't) it might be better for him to hang it up and move on......

Why do you think he should keep them?

I'm not a 1031 expert. I think you're asking if you can 1031 into raw land, and I think a Google search would answer that question. That said, i don't see why worst case you couldn't 1031 into a tear down then build on the lot. Again, I'm not a 1031 expert...

... But if you own a construction company, what's the issue spending 200k on renovations? This is your line of work...

@Jordan Akins He can sell the entire portfolio and 1031 into an asset with less deferred maintenance. Or he can take out $200k and fix up his properties as they turn over. Either option is better than selling and paying the taxes/depreciation recapture.

@Tracy Graham I think most people do cash out refis as opposed to helocs. With a cash out, you have the money in your hand, to reinvest. The bank cannot come and take the money back. A heloc is simply a credit line, like a credit card; the bank can come at any time and trim your line by, say, $100k.

Keep in mind that you need not choose between refi and heloc. You can cash out refi for your money back then get a heloc on any additional equity.

Hi All,

I'm looking at a condo in Jersey City and have some questions regarding rent control there, as I'm not familiar.

The condo unit is in a building of 5 or more units and is presently rented out well below market rent.

I have two questions:

1) Are individual condo units under rent control in Jersey City, given that condos are individually deeded?

2) My plan would be to live in the unit for a couple years then rent it out. If it is that condos are under rent control, would I at least be able to set a new rent when I moved out of the unit and rented it out?

I understand that ultimately I would need to consult a local attorney before any purchase. However, I'm hoping someone here can answer these questions and give me a sense of it's worth even considering this property. Thanks.

Quote from @Haley Cisar:

Thank you so much for all of that info! I plan on reaching out to a loan officer soon. 

My next question then would be this: 

if we cash out refi on the purchase price of the investment property to pay off the primary home refi, then how do you go about getting another property quickly? Can you cash out refi again and again on your primary? That sounds like alot of time and $$$. This is where I thought the heloc would be beneficial. Because you can pay it off and keep using it as you please. Is there another strategy here that I'm missing? 

Either way you'll be cash out refinancing over and over if you want to keep doing deals. The question is whether you cash out your primary or get a heloc on it. You can a) get a heloc on your primary, use it to acquire an investment property, cash out refi the investment property to pay back the heloc, then use the heloc to buy another property. Or you can b) cash out refi your primary, use the proceeds to acquire an investment property, cash out refi the investment property, and use the proceeds to buy another property and so on. In the latter scenario, you don't cash out the investment property to repay the primary cash out; rather, you cash out the investment property to buy another investment property.

One more thing to keep in mind - when a heloc and the market turns, the bank can reduce the balance of the line, reducing your purchasing power. Whereas, the bank cannot come back and reclaim cash out proceeds.