All Forum Posts by: Roy Mitle

We have rental property (H1), primary residence (H2) and plan to upgrade to a new primary residence (H3). 

We want to sell H1 to get some down payment for H3. Once H3 is closed, we will move into H3 and rent out H2. 

We bought H1 in 2015 at say 500K. We can sell it for 800K. Depreciation etc. over the years ~90K.

FAQs

We do not want to sell H2 due to emotional reasons.

We are doing reverse 1031 because finding H3 is going to be difficult. Market is hot (sf bay area). So we'd rather find H3 first and then sell H1 even though it'll cause us hardships to come up with an initial downpayment. H3 is likely in the ~2-2.5M range.

A few questions:

q) If we do reverse 1031 exchange we will have to call H3 rental as well. I think the only harm is that we have to pay a slightly higher mortgage for sometime. And then after xx months, we can convert H3 into owner occupied and hopefully re-fi at a lower rate

b) When we sell H1, we don't pay tax on the 800-500-90. Do we ever have to pay tax on this. H3 will be classified as owner occupied after xx months. 

c) Any pitfalls we are not aware of?

Hi

Is there anyone on this forum who invests in real estate LLC firms. These firms pool in money from investors, buy big appartment complexes, renovate them and re-fi to return money and then sell them for a profit. I have done investments previously in them as a means of diversification.

I was planning to invest in such an LLC which seemed quite good but the rising interest rates is giving me pause. Till now have only invested when rates were going down ie the past years. The sponsors say that is not an issue and they do have a great track record. So asking others who may have gone through this before whether rates would change IRR and cash-on-cash.

Thanks

@Paul Allen

How about the reverse situation...

I have a primary home and rental. I have paid off most of primary home so broker is not able to do re-fi (~212K) at lower rate with no point no fee loan. I have a large mortgage (~370K) on my rental but the re-fi rates on rental are bad.

My broker suggested this...
You can combine 2 loans to one loan and tie to primary property. Keep closing paper to show the cash amount amount it to payoff rental property. The portion of cash out amount can be applied to rental interest expense.

Does this make sense. 

@Shaun 

@Shaun Weekes

You are correct. I Can refinance but with that low principal I Will have to pay points to cover the "junk" fees.

I have a primary home and rental. I have paid off most of primary home so broker is not able to do re-fi (~212K) at lower rate with no point no fee loan. I have a large mortgage (~370K) on my rental but the re-fi rates on rental are bad.

My broker suggested this...

You can combine 2 loans to one loan and tie to primary property. Keep closing paper to show the cash amount amount it to payoff rental property. The portion of cash out amount can be applied to rental interest expense.

Does this make sense. Are there tax implications of such a thing.

Thx

FICO >750

Loan amount ~320K

Value ~700K

Its a townhouse

I want to take advantage of the lower mortgage rates to re-fi my rental. However, while the rates on owner occupied have come down a lot, I am not seeing the same for rentals.

The spread is almost 1% !

At what point can I say my rental is no longer a rental. If I don't have a renter for 1 mo and live there for 1 mo and then re-rent it can I claim an owner occupied rate. I doubt someone who rents their property later on actually informs the lender to increase their mortgage rate just because they started renting out their property...

Looking for real estate attorney who is well versed in CA laws.

Need to add an amendment to lease agreement to add/remove tenant and adjust rent.

 We are in the process of extending our lease on our townhouse. I wanted to see a few things

a) We are renting to a group of 4 individuals. One of them is moving out and another one is moving in. Rather than getting the full lease signed can we just do an amendment ?. I use the complete  C.A. R (california association of realtors) forms. This is quite a lot of papers and I want to prevent as much contact as possible.

There are just a few things we have to change - 

Name of new tenant and make sure all T&C of the original tenant transfer to the new tenant

Monthly rent change compared to before

New end date of June 30, 2021

b) Are there now docusign documents that can be used for contact less sign offs that one can use for rentals.

Thank you!

@Michael Plaks   Thanks. If I have K1 capital gains I'd like to keep that as caps gain instead of income. Right? 

So I what I should be looking for is some investment giving me short term cash. Does that make sense?