All Forum Posts by: Rhonda Louis

My husband and I are very new to commercial real estate investing.  We are looking at a property that is a triple net lease.  The way the lease reads it is very hands off.  On paper at this moment it looks great.  The cap rate is a little over 8%.  The lease is for 4 more years.  My concern with the property is it is being leased by a medical facility at this time.  It is in a smaller town, about 20-30 minutes away from a larger city.  This is one of 3 medical clinics already in this town, so there is a possibility they will pull out after the 4 years.  The estimated market value tax assessment is about $400,000 less than this property.  We have not actually got inside the building as we have our appt set up next week to see inside.  The outside could use a few maintenance things at this time from a drive around we did of the building.  We have not seen an inspection or appraisal yet.

Here is my question.  At this time it looks promising with the lease and cap rate, but it is only good for 4 more years.  How does that play into my offer price?  Does the estimated market value play into the offer price at all?  When we sold our residential real estate properties, we looked at EMV, and the percentage over what houses were selling, and that was how we determined what we wanted to sell them for.  Is there a way to look at this in commercial properties?

Thank You for any help/advice you can give!!

My husband and I are selling 7 duplexes.  We are wanting to do at least a partial 1031 exchange, but it is becoming very overwhelming.  We close in less than 2 weeks and we have not decided how many of the properties we want to put in the exchange.  My CPA does not have the time to meet with me, and told me to exchange all of them.  But if we put all of them in the exchange, we will have fees for each of the properties we put in, and we are pretty sure we would like to keep some of the profits out, pay the taxes on them, and pay our mortgage.  We would like to do this, so we can have a little more financial freedom!  My question is this.

If we are selling each one of the properties for $253,000 and I do a 1031 exchange on 5 of them.  Can I lump these together?  For instance I saw on roofstock someone is selling their portfolio for around 1.3 million.  Can I buy a portfolio that has many single family homes?  So I would be purchasing more than 5 homes. (I am not saying this is what I want to do, I am just trying to figure this out)

Likewise if I 1031 exchange 3 properties, but I see one multifamily property at $800,000 can I exchange all 3 properties into that multi-family property?

Also, this sale was not expected we were planning on these properties being our retirement income.  However, someone came up to us made us a good offer and we accepted.  So now it is a bit intimidating trying to figure out our next step.  What our next investment should be.  If anyone has any advice, we are all ears!

Hello, my husband and I purchased 7 duplexes during about 8 years ago.  We had unexpected offer for these duplexes and are now selling them on April 30th.  We did not have them listed and had no plans to sell prior to this offer.  However, we are now trying to figure out capital gains and a 1031 exchange.  Our CPA is unable to meet with us because of her schedule, and it is not easy to connect with my 1031 exchange company, and I am not sure they tell us our capital gain side of it anyway.  All of our duplexes were purchased for close to the same price.  I would like to give an example of one property and ask if I am thinking about this right.

We purchased one of the properties for $155,345 and over the years have added in improvements that total $14333.  Then over the years we have depreciated $44,843.

We are selling this property for $253,000.

So here is the question:

Is my cost basis $155,345 plus the improvements?  And I am just taxed 25% on the depreciation amount of $44,843 plus the capital gains?

Or is my cost basis $155,345 minus the depreciation and has nothing to do with the improvements?

Or is my cost basis $155,345, nothing to do with the depreciation or improvements?  And I am taxed the 25% on the depreciation amount and then whatever rate I will be taxed on the capital gains?

I am trying to determine if I want to do a partial 1031 exchange and which properties I should exchange.  

Thank You in advance for any help in understanding this!!!