All Forum Posts by: Mark Creason

@Karen O.

Kay is not an exchange facilitator.

@Adam M.

Is the parent company on the lease?  Are they investment rated?  Are you building to suit for them?  The lease is what is valuable in a deal like this.  You need to watch out for lease clauses that will lower the value of the property.  Examples can be lease outs.  Government leases will have appropriation clauses, meaning if government doesn't fund lease, they can leave.  I have seen other leases when the tenant has a right to repair something and abate rent until reimbursed.  Not the kind of clauses you want in your lease.  Let me know if I can help.

Mark

@Willson Guimont

You can exchange into a Delaware Statutory Trust or a Tenant In Common, but not a REIT. I have seen DSTs that have an upREIT attached to them. In an upREIT, the DST converts into a REIT. Although REITs potentially invest in real estate, they are technically not real estate. In a 1031 exchange, you need to reinvest all the cash from the exchange into real estate for investment or business purposes. So no personal residences. You also need to reinvest an equal or greater amount than the net sale price of the property you sold. If you don't accomplish both of these requirements, you can have boot. Boot can be cash boot or mortgage boot. Boot is taxed as profit first, so if you have 50k in profit, but take out 30k in mortgage boot, you will be taxed as if you had 30k in profit. Hope this helps. Feel free to reach out if you have any other questions.

Mark

Ryan,

In your hypothetical, you need to purchase at least 350k.  It can be any form of real estate as long as it is for business or investment purposes.  So no personal residences.  You need to reinvest all remaining cash proceeds.  You can buy multiple properties.  If you take cash or mortgage boot, it will be taxed as profit first.  In your scenario, if you took 50k out, you would pay full tax on your 50k.  Hope this helps.

Mark

@Willson Guimont

If you invest in a REIT with the proceeds from your sale, you will be obligated to pay capital gains taxes. There are other ways to get where you want. Feel free to PM me to discuss.

Mark

@Mario Vucetic

We need more info.  Where are you looking to buy?  What price range?  How many units?  How much down?  etc.  I have a program that will consider a debt coverage ratio instead of a debt to income ratio.

Mark

@Fernando Corrado

Any chance this property would be knocked down?  How big is the lot?  

Mark

@Vinh Huynh

I want you to come back in two to three years and explain what happened.  When you sell this property for 700k, I will call it a win.

@Ari Newman

A better example would be if you bought the house for 60k, had a 50k loan, sold for a net of 110k, you would have potentially 50k in profit and potentially some depreciation recapture.  You would need to buy something for at least 110k and place your 60k cash into a new property.  If you take cash out, it comes from profit first and you have to pay full taxes on it.  Hope this helps.

Mark

@Sue Orr

The property is in the Houston market and the seller is in California.  I hope that clarifies.

Mark