All Forum Posts by: Jason Mak

@Gene Lee 

@Dave Foster 's response answers the question so I won't dive into it.  But yes, the 1031 exchange and timeline must not be taken lightly and you should start thinking months ahead of time to plan your strategy.  Start talking to brokers and lenders to let them know your strategy.

Some other ideas are to contractually give yourself extensions in case you need time to do a identify 1031 exchange.  

Also, if you are making a huge capital gain, analyze how much your capital gain tax will be.  Therefore, you also know how much you can afford to "overpay" for an exchange property. If you stand to pay $500,000 in capital gains taxes, then paying $2.1m for a $2m might not be such a big deal as long as that $2.1m purchase has long term potential.

Lastly (and on a similar note), there are tons of NNN deals on the market. They don't have magnificent cap rates but my worst case scenario for not being able to identify another multifamily was to simply purchase a NNN and collect the income.

@Jon Klaus

Thanks Jon.  I respect your work!  I'm currently exchanging into a 24 unit closer to Los Angeles and an interest in a office building in the Los Angeles area - buying interest from my partner

@Jim Keller

Hi Jim - Certainly

I underwrote the initial purchase very conservatively.  I ignored any pro-forma analysis that the broker provided.  My offer/purchase price was assuming that I would operate and run the business at its current occupancy and rent levels with little improvement (of course I was confident I could improve on this).  I would say it's hard to find a deal like this but the sellers were distressed at the time and I had cash.  

I also liked the scalability of the building.  Since all 81 units were located in one building, that meant that all investments (roof, painting, landscaping, elevator, etc..) benefit 81 units as opposed to dispersed buildings.  Same for management.

Finally, i liked the area, I knew rents were growing and UCR had a housing shortage among other things.  Felt confident that my downside holding multifamily in SoCal was pretty limited.

@Siraj Ahmed  Thanks Siraj and best of luck.  6 units is a great place to start!

Hello Brandon, 

I've done multiple 1031 exchanges in the last few years involving commercial deals (not residential).  Some with partners, some without.  

@Bill Exeter is the man with regards to 1031 exchanges but I can lend personal experiences.

Here is my latest deal that I am in the process of completing a 1031 exchange with (set to close in Aug)

http://www.biggerpockets.com/forums/223/topics/206...

@Account Closed

Thanks Sean.  Yes, Market timing was crucial and certainly helped me overcome several miscues.  Better be lucky than good!

Last 5 deals were all through brokers that I have had an long term relationship with or contacts within my trusted network

I agree with you on this one.  What do you constitute as "guest status" and how do you enforce this at your rental properties?

yes absolutely, this is one of the tax advantages to investing in real estate!

@Terry Schell

I just did a project with a drug zoned building....

http://www.biggerpockets.com/forums/223/topics/206...

Anyways, yes, it can be done but it takes work - here are some things that I learned

- starting building a relationship with a police and community and let them know of your intentions.  Meet neighbors and let them know that you are cleaning up the area.  Word spreads quickly.

- In my city, we applied for the local SAFE HOUSING ordinance and got our own petty officer assigned to our building

- you will need a very STRONG and incentivized onsite manager because he will be dealing with people everyday.  You can't have a pushover.

- underwrite for eviction costs, in my case in CA it was about $500-$800 per unit.  With a property your size, you will probably want to outsource this 

- plan to revamp the exterior to give the project a new look so people "see" the change

- establish ground rules, thresholds, within the law and stick to them

best of luck