All Forum Posts by: Tom V.

If you are one single person calling the shots, I agree it is easier to do one project. That said, you will have greater capital contribution and the price of being wrong will be higher in a concentrated bet. Generally I think fewer, bigger projects are better.

Uhhh, if your place is really worth $100K more than you paid for it, why are you worried about the small depreciation losses etc.

I think Laguna Nigel is a pretty nice place, right? You made the right plan and got appreciation. In a normal market, nice areas will always be lousy cash flow investments (people will pay a premium to live in a nice area).

You did the right thing by living in the place first, then renting it, though ideally you would have lived there for 2 years to get the full exclusion. Read up on section 121 exclusions.

Don't twist yourself in knots about your small tax loss (you didn't pay out depreciation, right?) If you want a better cash flow investment, you will be buying a lower quality asset in the 2014 market.

Sell this place and then find another asset that better meets your goals of either income or growth. I think you are right you will have a hard time finding a cash flow location in Southern California, unless you want to go manage mobile homes in the desert. That's fine for many folks, but a lot tougher than a nice condo in Laguna Nigel with a steady tenant.

No one strategy is right for every market in time or in place.

What are the zoning rules for your parcel?

What is the entitlement process?

How many architects have you spoken to?

How many contractors?

What is the construction budget?

What are comparable rents?

What cap rates do comparable rents represent?

Is land cheap? Will more people build more apartments?

Have you managed a construction project before?

How will you finance your project?

Why should you build instead of buying existing apartments?

Will you sell the building once it is complete? What is your goal? Buy and hold/develop?

Is this a full time endeavor for you? Do you have another job?

Hi,

I am curious if there are any well-informed accountants or investors who can help me answer a question.

I bought a house with the intention of fixing it up and moving my family into it. It took me 5 months to get the prior owner/tenant out, and then I spent another 12 months rehabbing the property (6 mos permits, 6 mos build).

During that 17 month time the fixer work was occurring, I lived in my then-current house and did not meet the IRS tests for 'using' the fixer house as my primary residence.

The IRS booklet 523 defines 'non-qualified use' as "any period after 2008 where neither you nor your spouse (or your former spouse) used the property as a main home"

http://www.irs.gov/publications/p523/ar02.html#en_US_2013_publink1000240774

If I am kicking out a deadbeat and then gutting a house (never collecting rent etc.) then I am not using the house as a personal residence, but neither am I using it as a rental or a vacation property. Do I need to exclude these 'first' 17 months in my calculation of qualified vs. non-qualified use?

Gracias!