All Forum Posts by: K S.

The 28% tax bracket seems high if your taxable income was negative last year. The capital gains tax rate should be 15%, is the other 13% assumed state income tax? Maybe you’d only be $27k federal plus $13k recapture or even less?

In September I did a 1031 to avoid $63k in taxes even though it involved spending $600k. So if you’re really over $60k and can find a $400k property that works it’s probably a good deal.

Ps. Are you already a CA resident? (I ask because doing a 1031 into California if you’re not means they will hold their hand out for the taxes for the rest of your life. Even if you exchange out of California…)

Oh you're right, $27,000 is 15% of 180,000 + the recapture. Perhaps there's more deductions somewhere like opening a Roth, buying an EV, purchasing Tesla solar panels before the end of the year so I can put it on this years tax deduction but I don't think that will work since I don't think they charge you until installation but I'll have to look into it. Taking the tax hit does sound a lot easier and gives me more flexability.

1 Vote

Thanks Jake&Bill,

Closing within the next month (TX). I think taxes are $63,000. Reinvesting in CA.
Federal Taxes at sale: = $50,000 + depreciation recapture of $13,000.

That's 330k(sale price) -120k(cost basis) -30k(closing costs) = 180,000 x .28). Depreciation recapture is $13,000. That's 51,000 in depreciation deductions x.25%

I can't remember if the $25,000 in renovations to get the home sale ready could be deducted from the taxible income?

One more thing, last year my taxable income was $-8,000 (negative) but I think this year would be even more due to the renovation. Although I think I'm capped at some of the renovation expenses. I'd have to look at my tax book again to see if I can apply the $25,000 in renovation against the 50k in taxable appreciation and 13k in deprectiation recapture. I just don't know at this moment. Plus there's 6 months of vacancy loss as well.

Lastly, maybe I can purchase an E car for the $7500 rebate, and maybe dump some cash into a Roth (already maxing out my 401k). Not sure how else to eliminate whatever is left.

1 Vote

Looking for ways to turn this into non taxable cash or just purchase something to avoid taxes.

I'm on my second 1031 exch but later found out that I can't use the funds to improve on already purchased land so I'm a little stuck finding something to purchase to avoid the hit on taxes and at the same time assist with the build if possible. I could purchase a condo and pull cash out using a HELOC?

If there's nothing one can do, would you just buy more land in cash to build on later or a small shack in the mountains for a 2 ADU Duplex build. Any advice?

4 Votes

I'm selling a SFH but not able to use the 1031 to improve my land because I already paid for it. So I'm stuck finding something like-kind to purchase in order to avoid the $80,000 in taxes. I would break even buying a condo in the 3 major cities I valuated with 50% down, so that doesn't feel like trading up.

Should I purchase another couple pieces of land or perhaps a small house that is already connected to sewer and electric in order to more easily build ADUs on, assuming I can avoid soil, geo, topo? The taxes on land is tiny but the money would be tied up and not working for a bit longer.

0 Votes

Quote from @James Hamling:

So here is the thing, your the perfect example of a person I really don't care to help, because you don't deserve the help. And with that your opinion means all but nothing to me, because you have also not earned that either.

Bryan's correct that your tone is condenscending with nearly every post you write. Just because our advice is free, does not give us a pass to talk down to others. Perhaps there's a definciency in your social acuity to read a room and consider these facts but I expect as much from someone whose responses are seemingly motivated to accentuate ones own superiority with stories of grandeur i.e. Goes to Mensa to laugh at how stupid people are.

So maybe you're the perfect example of a person who requires a thank you when you hold the door open for a stranger or for the teller to be watching before you tip. Nobody NEEDs your advice so if you're going to give it with caveats then don't respond at all. Nobody will miss it and my thread will be less cluttered with *** holes.

1 Vote

Quote from @Bryan H.:

Quote from @James Hamling:

If there’s a bigger jackass on this forum, I’ve never seen it. This is a forum for sharing ideas, spreading knowledge, and learning. I started with a valid question - not complaining about anything. I’m not stupid by the way as your tone seems to imply with every post. I have a life outside of real estate, but I have been netting around $225k annual off my real estate investments. But surely nobody can impress you with anything - that’s abundantly clear. What’s not clear is why you actually seems to have a chip on YOUR shoulder considering you’re self-proclaimed gods gift to real estate. 😂

If you’d paid attention you see that most of you’re ideas wouldn’t work for me, because of the time required.

I told you to ignore him but you didn't listen.

0 Votes

Quote from @Ryan Cousins:

Hi There!

My fiance and I are looking to buy a SFH as well as an investment property in San Diego. The only issue we have run into is the prices and bidding wars.

Every single home we have looked at for personal use or an investment seems to have 5+ offers and go MUCH over asking.

We are currently looking at Bay Park / Clairemont / Carlsbad / Oceanside.

I am curious if anyone has had success in other areas let me know.

We are thinking of relocating as it looks like there is no end in sight for this.

If you had 250k to spare or sitting in a non interest bearing account, you could look into the hard rock hotel condos. You have to purchase in cash and you can only stay in them 28 days per year because the HOA runs it like a business and leases the HRH name but you do own the deed. The returns have been about 7% or 16-21,000/year NET on my properties. The prices have gone up since you wrote this though. It's the ultimate "investor" property as it's designed for investors unlike some other condo or house in Carlsbad that you won't be able to visit because it will be on a 1-2 year lease and will only net you equity via appreciation, not cash. Depending on your goals, this might be a nice vacation property and to diversify your portfolio. I think the HOA is going up 10% next year so you might find some deals as some people will sell. Just my guess.

0 Votes

San Diego, California

Quote from @Lesley Resnick:

I will outline all the steps and processes to construct a build-for-rent home. It is not for the faint of heart.

I own four lots in Jacksonville and will be constructing 4 identical houses. The houses are 3/2 with a garage, 1293 sq ft heated, and cooled, total square footage 1292.

My goal is to have the house rented and completed by May 1.

Is this an SB9 lot split?
How long and $ to split? Can you split the lot if it's in a flag pole shape or does it have to be side by side lot split?
I just got a topo, geo and soil with the trees. Are you saying that I'd have to perform another topo, geo and soil if I cut the trees? But in effect, I can increase the density on my R3 zoned land because of the trees that was taking up the space? I'm in the process now so any info is appreciated.

0 Votes

Jacksonville, Florida

Quote from @Wayne Yahnke:

Hey BP Crew,

Just wanted to share our most recent success. We purchased a commercial property that was a residential home converted to 2 commercial units and an ADU. Essentially a duplex with an ADU. Closed in May 2021. Jumped through numerous hoops to convert this property to a 3 unit property (SFH, JADU & ADU).

Remodel consisted of full downstairs gut in the duplex. Adding 2 sub-panels, Added 2 kitchens, converted two 1/2 baths to full baths, removed the dated HVAC replaced with miniSplits, added LVP flooring, paint and fixtures in both units.

ADU needed carpet, paint and we added laundry services, upgraded the lighting and fixtures. Also added a new stove, furnished the place and added our personal touches with Art and Decor.

City had us add fire sprinklers to the duplex and a carport. Ugh! This essentially put us $30k over budget.

Duplex units are going for $2k each and ADU in the back could go for the same. However we decided to use this as an AirBNB and a crash pad for ourselves as needed.

AirBNB is tucked away behind a fence with a nice garden area and needed minimal rehab. The location is optimal as it is walking distance to downtown.

The AirBNB is booking 6 weeks out with a 70-80% occupancy. It is bringing in double the market rents for its size ($4k). All of the guest love it and the reviews continue to come in as 5 stars. We are automated with IGMS & Pricelabs.

$645k Purchase Price-Negotiated down from $689k. We used an environmental test to prove that the acoustic ceiling was asbestos and got quotes for mitigation as leverage to bargain down while in contract.

All in $830k (645k purchase, 130k rehab, $55k Private money note)

$954k ARV Appraisal (challenging appraisal as we speak hoping to break the $1m evaluation mark)

Most will think this is a crazy evaluation for 3 units. But this property is located in Wine Country, CA.

Rental income $8k

Total Monthly profit after expenses $1k-$1.5k

Not a home run by any means but this is in a desirable neighborhood and near the downtown area which is appreciating rapidly as well as experiencing significant new construction and development. We will most likely have to leave some cash in the deal (bring some to closing plus the $30k).

Thanks for this.
- Can you detail why the ADU and JADU was a pain? How much did it end up costing, how long and what did you have to do?
- What was your average price/sqft?
- Assuming you paid 20% for the construction loan or did you use the land value?
- Did the bank require a 1.25 DSCR when refinancing?
How long did the build take?

I'm building two duplexes, one side of which will be an ADU so any input is appreciated.

0 Votes

I feel vindicated

0 Votes

All Forum Posts by: K S.

K S. has started 22 posts and replied 295 times.

Post: Where to reinvest 1031 exch funds?

Post: Where to reinvest 1031 exch funds?

Post: Where to reinvest 1031 exch funds?

Post: 1031 exch into land or existing home +ADU?

Post: My 100k house vs 100k in the S&P 500 (16 years later)

Post: My 100k house vs 100k in the S&P 500 (16 years later)

Post: San Diego - Where to look?

Post: How to construct a build for rent

Post: 1st AirBNB with BRRRR ADU is a hit

Post: My 100k house vs 100k in the S&P 500 (16 years later)