All Forum Posts by: Terry N.

Newbie trying to understand 1031. I know much has been discussed but not finding answer to these particulars.  Any input appreciated! 

Say I am able to sell my current property for $400k.  

Loan balance = $200K. Purchase original price was $250K.  A gain of $150K. 

I need to purchase in kind a subject property also valued at $400K.  

Do I have to put $150K of the sale into the property since that was the gain?

Assuming 8% of sale goes to fees and expenses ($30Kish - would love that to be less!) 

$400k Sale minus loan balance ($200K) minus sale expenses ($30K) minus deposit ($100K) = $70K

If I have to put $150K into it that $70K is reduced to $20K...which I'd be OK with...$70 would be better though.

Any help appreciated!

TN

Thanks Rashad...

So 85% of $130K is $110,500 (minus closing costs).  Your all in is at $100K (purchase, rehab).  That leaves < $10,500 for down payment and rehab of next property? 

Many thanks!  Dave, stay at the fire pit!  When you come back inside I have a follow up...

As far as value.  So that I understand.  The value of one or more properties has to be $400K...But I can still leverage to get that value, yes?  Meaning that I can put down my 20+% downpayment(s) and still have the returns from the sale to put toward rehab, have as reserve, re-invest, etc. 

Incidentally, my note on the subject property is now below $220K.  How does that factor into what I can transfer into? or does it?  I'm wondering if I would have to finance at least $220K in order to satisfy the transfer requirements. 

Thanks!
T

Originally posted by @Bob B.:

@Dave Foster will answer your question soon.  It is Saturday night and he's probably taking a little well deserved time off.

No worries!  Thanks Bob and Dave in advance.  Next week is fine too! Have great rest of weekend!

"Property" not Propety...

Sorry if this is a redundant question.  I seriously searched for answers to similar question. 

I have a SFR that I've purchased in 2008 for $250K. After repairs It will likely sell for $400K.

This amounts to approximately $30K in capital gains tax. 

I want to utilize a 1031 exchange.

Do I have to find a $400k value property?  Because I'd MUCH rather find a property of much lesser value.  Like $150K. 

Can I utilize a 1031 for a property of lesser value and pay tax on the difference? 

Thx!

Thank you!
T

If you're interested in investing in a neighborhood that doesn't appear to have very many rentals, is there a method that you use to determine if an area would sustain rentals? Are you concerned if the area does not have that many rentals or do you see that as an opportunity area? Midwestern city, stable economy, education and employment nearby. Thx.

Thanks Levi...when you say you'll drop $20k and $15k...you mean as downpayment and rehab?  Just downpayment?  Just rehab? For someone starting out does it make sense that the first Buy wouldn't be financed...the R of Refi only makes sense if you aren't already financing that first purchase....Yes? No? 

I've heard there are no dumb questions, but this might qualify. In order to launch a BRRRR empire, the first B has to be purchased outright, not leveraged, true? or untrue. I've been looking at this and feel like I'm playing Chinese chess. Thanks..

How would you respond to application where the desired move in date is Oct 1 but we discussed Mid Sept? Good prospects but this date is later than I'd hoped. Not huge deal just wondered if anyone had this occur. Thx!