All Forum Posts by: John S.

@Bill Brandt

Thanks so much clarifying.

@Bill Brandt

Hi Bill B,

Thanks for calculating another scenario when trading up with 1031.

>> Original land $100k, plus building basis ($300k paid minus $109k depreciation = $191k) plus the $200k extra this property costs for a total of $491k on the day you buy it.

Should the total be $391k, not $491k? It’s $191k + $200k, no?

>>Then you start depreciating the new building using 3/4ths of that $491k or $368,250. (The portion not allocated to land)

I thought the new property would have 2 depreciation schedules. 1) Continuation of the original depreciation with $191k across remaining 17.5 year, ie $6.9k/yr. 2) $200k for add’l building cost spreads across 27.5 years, ie $7.27k/yr. So for the next 17.5 yr, $14.17k is the annual depreciation? After that, depreciation will only be $7.27/yr from the new building portion?

Why use 3/4th of $391k instead the whole amount? Is it so that the total amount can follow one depreciation schedule across 27.5 yrs instead of 2 schedules I mention above?

@Bill Brandt

>>new building value subtract the depreciation taken so far

Is your way above to calculate work because the land value is the same for relinquish and replacement property? Both happened to be $100k.

What if your example for $500k property split was $350k building & $150k land? Would the adjust

cost basis be total $250k? — $50k from the remaining depreciation of the relinquished property + $200k from the new replacement one ($350k adding value - $150k land).

Next year, I estimate ~$20k annual cash flow and want to find more depreciation. So I’m thinking to 1031 one of my rentals to trade up. Then, the higher depreciation & expenses can offset the $20k cash flow.

I also considered cash out refi the existing properties instead of 1031, then the mortgage interest can be an expense. But a friend suggested buying more real estate to get more depreciation. So I’m exploring 1031 to trade up.

If you have comments that may help me decided to cash out refi or 1031, that will be helpful too.

I have a tenant in San Jose, CA who pays rent on time, but recently they left opens statements on the table during a home repair. I saw their electric bill (PG&E) is ~$2500. The water bill (San Jose Water) shows the same amount. Even though the utilities are in the tenant’s name, I am worry it may affect my in-progress electric panel upgrade to 200A (ie new meters), solar panel system, and the next tenants’ ability to open a utility account.

Here are my questions for the community:

1) Am I at risk to pay their unpaid utilities if they move out?

2) Should I evict them if utilities are shutoff?

3) Will a new tenant be able to open a new utility

account?

4) An electric panel upgrade is needed for the existing home and my in-progress ADU, which requires solar. The solar company said the electric utility account holder will still be with the tenant. Because the unpaid bills are high, could the utility company (PG&E) decline to upgrade my panel with new meters and not connect my solar panel system?

Thanks all.

Hi BPers, I need help to determine the improvement portion for depreciation on my new construction home.  It was placed for rent on 6/19, and occupied 8/19.  The Property Record Card is not accurate.  It only shows the land value as $50k and no Market Value.  I bought the house for $289K.   Including closing cost and fee, the total cost is $300k.

1) I'm doing my own taxes, so do I list the land value as $50K?  Should the depreciation from improvements be $239K ($289K-50K) or $250K ($300K to include closing costs - 50K)?

2) What happens to the depreciation when next year the County increases the land value with the actual sales price of $289K?

3) One accountant told me if the County records are not accurate for new construction, he would use 80/20 or 50/50 depending on how expensive the house costed.  Has anyone else heard of these  rule of thumb?  How does one determine what is expensive enough to use the 50/50 rule?

Thanks all.

I received a flier from Great Jones. They offer 8% management fee, no yearly contract, and 37% leasing fee. Sounds like a better deal than with current property management team. So I am considering it. I would like this community’s comments.

One drawback is that they offer self showings with a simple credit card check. I think this method is risky, as anyone can ruin the place without an agent as chaperone. Your thoughts?

In Jan, I found a quad in Jacksonville, FL in the 32206 zipcode and referred it to my agent, who specializes in investment properties for remote investors. She contacted me in one of my earlier posts. She was initially attentive on our call and was to get back to me on followup topics (ie, viewing appt, rent roll clarification, photos). But she never returned my calls, emails or txt for 2 weeks now. That property is in contract now and I feel I missed out. I hope she is not suddenly ill. But I am looking for someone else, who focuses on multi-family properties for remote investors. Please let me know if you would recommend someone you have worth with. Thanks.

Thanks Katie.

Hi Community, I’m in the Bay Area and want to consult with a real estate accountant and attorney about how to best protect my property assets. I have multiple homes in CA and FL that are in my name. I’m not an active real estate investor, but want to be because I have some cash available. Not protecting my current assets is 1 of many excuses I give myself to not buy out of state property. And I want to overcome this fear by confirming with some BP &!professionals. Also, I hope to grow my portfolio with this person. So I’m not looking for someone who will retire in next 5yrs. I have talked with other REI. Many do not use LLC, because they say the cost and yearly filings are not worth it. They prefer to buy a large umbrella ($2-3million policies), which I think may not he enough because once plaintiffs know you have other property, they’ll will go after everythingSfFT. Does this not worry REI, especially in San Francisco area? Back to my original question for the community: “who have you worked with to protect your homes from tenants?” Thanks,

Thanks everyone (especially Lesley) for highlighting the risks with my purchase agreement and the opportunity costs of waiting 18 months to complete the 4plex.