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Think about a 1031 exchange.

A 1031 Exchange is a transaction under United States law which specifies that if an asset (usually some form of real estate such as land or a building) is sold and the proceeds of the sale are then reinvested in an asset of a similar kind (like kind asset), then no capital gain or loss is recognized, allowing the deferment of capital gains taxes that would otherwise have been due on the first sale. This law is defined under section 1031 of the Internal Revenue Code, 26 U.S.C. § 1031.

IRS rules control the length of time that the replacement property must be held before it may either be sold or used to enter into a new tax deferred exchanged. In highly appreciating markets, people may take the opportunity of selling their personal residence (where no capital gain is due below $250,000 for a single person or $500,000 for a married couple) and moving into a former rental property for a specified time period in order to turn it into their new personal residence, and thus avoid capital gains taxes.

In order to qualify for this exchange, certain rules must be followed:

1. Both the relinquished property and the replacement property must be held either for investment or for productive use in a trade or business. A personal residence cannot be exchanged.
2. The asset must be of like kind. Real property must be exchanged for real property, although a broad definition of real estate applies and includes land, commercial property and residential property. Personal property must be exchanged for personal property. (There are some complicated rules surrounding this -- for example, livestock of opposite sex are not considered like kind property for the purpose of a 1031 exchange.)
3. The proceeds of the sale must be invested in a like kind asset within 180 days of the sale. However, the property must be identified within 45 days, but up to three properties may be identified.

Frequently, the most difficult component of a 1031 exchange is identifying a replacement property within the first 45 days following the sale of the relinquished property. The IRS is strict in not allowing extensions.

With the timber thing, they can cut it all as stated above, or sort of thin it out. Either way, it is good to plant more trees (some timber co's will do this) to maintain the value of the land.

I just have one thing for you to consider. Look into 1031 exchanges. They enable you to KEEP up to (what is it? $250K??? ...guys help me out here...) TAX FREE by selling a property to buy another which is more expensive. That is a pretty significant thing to consider if you ask me.

I think it might be worth doing some analysis on that with your accountant.
What do the rest of you think of that?

I would be planning for a few things to go wrong during the year as well.
Here are a few that I have experienced:

Roof suddenly started leaking ($1600 to repair just that section)
Fridge went on the fritz (Replaced it - $460 includes delivery and setup)
Furnace motor went bad ($400)
Plumbing issue #1 ($220)
Plumbing issue #2 ($300)
Plumbing issue #3 ($245)

I haven't been able to get any tenant ever to do any lawnmowing or snow removal, so I was thinking of farming that out also...

Basically what I am saying is that you should be financially prepared for any problems that pop up, that's all. I am not a naysayer, just a cautious property manager (well investor, actually).

Sounds good!

I think tackleberry said it just right. That's pretty much what I do, and also the frequency I go to the house. That's also the way I think of it - $12,000 a year (mine is a duplex at $525/mo per unit) is definately worth about a week of work a year. After all, these people are buying me a building!!!

Oh, my vacancy rate has been 2 weeks per year per unit on average, and I couldn't be happier with that. Of course, you have to realize that I am MOTIVATED. When I get wind that someone is thinking of moving out, I start preparing for my pilgrammage to create occupancy!

Excuse me, miss, would you buy me a building? Heh heh...

I was inspired by FAILURE!

Casey Serin
iamfacingforeclosure.com

---
Just kidding... When I found out my new wife shared my lifelong dream,
we found and forced a deal (we could barely afford to do it).

For those of you who haven't discovered Casey (link above) go check it
out. It's funny, heartbreaking, maddening, and plain unbelieveable!

-Terrence

takleberry!

That's AMAZING! Very cool... thanks for that info (below)...

1) Find a company that will collect their fee (usually 30%-35% for single tenant's overdue rent) from the tenant upon collection, e.g. if they owed you $1,000, the collection agency would collect $1,300 and pass along the $1,000 back to you. Nothing out of your pocket and they don't get money unless they collect. PDLG is one such company. How they get the tenant to pay the extra is beyond me, but it's their business model, not mine!

Jennifer99,

I HIGHLY recommend you get a service to take care of landscaping/snow removal. I have bought lawnmowers, build sheds, supplied clippers, bags, and everything you can imagine including HD gift cards to get necessary items, and NO tenant has EVER lifted a finger.

If you have it done every two weeks, and they charge, say $50 a visit, then add it to the rent. You will be much happier.

Trying to get the tenants to do this is COMPLETELY pointless by my experience.

Luck!

I agree with the sheriff or constable thing, but I am out-of-state, and so it's not as convenient for me.

My tenants tend to be on the poorer spectrum, but boog people. I have noticed that the younger people are savvy, and use email and paypal, etc..

I welcome it because it makes it easier for me with collecting rent, and communication. Also if there is a needed repair, I get the tenant to take a digi pic of it vefore and after repair (I am out of state).

My older tenants seem to not be very aware of tech.