All Forum Posts by: Ryan Copeland

Hey Mark, I thought your name looked familiar.  I am on your email list for Homeshire.  I'd love to have a one-on-one conversation with you.

Thanks for the response.  Your response as well as others have helped to provide more clarity on 1031 exchanges.  I can do a 1031 exchange into other properties and do a cash out refi if/when I need the cash.  Yet continue to do the 1031 exchange to defer the taxes.  

Let's say at age 70 I "retire" from REI. On my future RE portfolio, I do a cash out refi and pull all of the money out of the properties. I now have X amount of dollars to do with as I please and I didn't pay taxes. I will my portfolio to my children and when they go to sell the portfolio the taxes are basically starting over for them. Good strategy!

Thank you sir! A local agent called us 1st before this deal even hit the market, that's how we won on this deal.  Like you, I absolutely love this type of home as a rental.  I would want to keep it, but we will be able to accelerate faster by selling it and taking the cash.

Hello BP,

On Friday April 1, 2021 I closed on my 2nd investment property! I partnered with a family member on the purchase of this one.  It is a 3BR, 2BA, 1566 sq ft SF home built in 1965. It is 4-side brick too! It's a really nice property, has a flat back yard and sits on the end of a quiet street.

Now for what all of you investors what to know....what do the numbers look like??

Financial Breakdown

$54,000 = Purchase Price 

$16,400 = Down payment (30%)

$140,000 = ARV (could be higher, be we know we can get that)

$30,000 = Estimate Rehab Costs

5.66% interest rate on a commercial loan (financed under LLC)

Many thanks to all of the investors who share their stories, experience, knowledge and guidance in the forum.  Also big thanks to the entire community including podcast hosts and moderators to making this an incredible community for people to learn and grow.  Six months ago I was wondering how and when I would get my first property, now I just closed on my 2nd and am in communication to buy a 3rd!

You're right @Stephanie P., the numbers don't lie and everything with a RE deal is a math problem.  The numbers have to work for the outcome you're trying to have.

@David A Lisowski I stayed with the lender I’m currently working with. The numbers from Quicken didn’t make sense.

@Dave Foster thank you for the clarity.  In some instances I will keep properties and just keep doing cash-out refinances if I'm having good tenants and good systems in place.  Otherwise I guess I'll have to do a 1031 Exchange.

I do have a question about 1031 Exchanges though.  What's the benefit of deferring taxes if you're eventually going to have to pay them anyway?  Is it that you just keep doing the 1031 Exchange and never pay taxes, do cash out refis & HELOCs and then pass the properties to your heirs and I assume they won't have to pay taxes?

UPDATE:  I went through the process on my own.  Open Door will give you an initial offer, which for me was around appraised value.  Next they will do a drive-by appraisal.  Then you (or someone) will do a video walkthrough of the property with someone from their staff.  

Their fees are:  5% commission, $75 closing cost and any identified repairs that they note.

In my case, their initial offer was $182,100.  After all of the steps mentioned above, they came back with a new offer price of $173,900 and the repair fees were $3574.  So my net proceeds would be $161,556.

Now I understand how they make money.  They basically low-ball you on the offer, get their commission, throw in some repair fees and in my case would have about $24,000 in equity if I sold them my home.

I can see how this model will work for some sellers who just want to get rid of a property with no hassle and can close quickly.

You're right @Chris Mason.  If you simply look at the interest rate, you will be amazed.  However if you break down all of the fees associated with the loan it doesn't make any sense at all.  Thank you for your contribution to this post.  You are absolutely right, BP is an amazing source of info with a fantastic community.  

🤔 I was wondering if an investor can minimize capital gains by doing a cash out refinance before selling the property.

Let’s say I have $100k equity in a rental. The property is worth $200k. I do a cash out refi and get $80k out of the property. Now my loan balance is $180k.

If I sell the property for $200k, am I now only paying capital gains on the $20k profit?

(Note: The scenario was made to be simple just to get an answer.)

Please see the thread for the images. I’ve posted them.