All Forum Posts by: Thomas Williamson

Thanks for the responses so far guys. I'm still curious if anyone out there is using this as a strategy on multiple deals, or as a way to build large cash sums.  

I think I'm like most investors in that I'm always thinking of ways to get more capital, or I feel like there's something I'm not thinking of, or some other strategy (creative) that I could be using.

I love hearing from other investors and how they're using creative strategies.

Do you get taxed on the money you get from a cash out refi?

I think I know the answer to this, which is no you don't get taxed on the money you get after conducting a cash out refi.  But I would like to make sure.

The reason I'm asking is because we've done quite a few cash out refi's this year alone, and I had a thought recently on one of the houses that we're currently cashing out.

The house is vacant now (tenant just moved out) and it appraised for 155,000.  New mortgage will be 120,000 with current cash out refi.  With the cash out we're picking up roughly 33,000.  That's money that won't be taxed since it's part of the cash out refinance.  Again I think I'm correct on the part, CPA's please advise if I'm not.  

It occurred to me that we could sell the house after the refinance is finished and take the new gain / difference between 120,000 and 155,000 which would be 35,000 (not including closing cost and commissions).  My wife is an agent and could list the house.  

Since we did the cash out refinance on the house prior to selling it, that will take away a sizable amount that would have been taxed.  Our new tax liability will only be for an amount (roughly 25,000).  15% x 25,000 = 3,750 in tax to pay (provided our expenses can't knock that down even more at the end of the year.  

Had we not done the cash out refi, our gain would have been around 72,000.  15% x 72,000 = 10,800.  That's a pretty good difference.

I know many may be thinking about a 1031 exchange.  I think 1031's are great as well.  But, the only issue I have with a 1031 are the time constraints, and whatever you buy is locked up by a 1031 forever.  Meaning (I'm assuming if you sell the property you must 1031 that as well, or pay the original tax penalty).

I know this isn't the greatest strategy, especially when you factor in closing cost, but I was wondering if others have done this in an effort to minimize taxes when selling a property.

I'd love to hear from others who have done this, or have other creative ways of pulling cash out with little tax consequences.

Dekalb and south of I-20 could be a hard sell

Man I know this is a people business, but I've been at it since 2010.  It's trends like this that really make me look at going a different direction.  I too have a strict no pets policy and something like this trend really, really, disturbs me.  I wish there was a way to stay in this business without having to deal with people.  I have two properties for rent now and I state very clearly no smoking and not pets.  Every other person that responds is a smoker, has pets, or both.  I know, management company, but still they can't stop stuff like this (ESA).

There's got to be a better way.

@Daniel Taylor Hey Daniel any update yet?  I know they were asking for H/B I think yesterday.  I'm really curious, I hope you can pick it up.

I guess I should have mentioned the MLS price is almost a million. Now, if you can pick those buildings up in that area for 500,000, that's a steal! Good luck to you.

I've seen these buildings on the MLS for a short while now. Love Peachtree City, but only 12 units for that price when the buildings were built in the 1960's. I just looked at 17 units for 1.1 million that are nearly new. The age and the cap x expenses scared me on this one. The other issue that I didn't like were all the window unit A/C on all the buildings. It appears that none of the units have been updated in a number of years. There's another potential expense.

I let YouTube do all my showings.  One video tour of the property, and done.  I got tired of a ton of people who 

1.  Don't take the time to read the ad and see exactly what the qualifications are.  When they e-mail or call it's clear that aren't qualified.

2.  I work a full time job, so this saves me a lot of unnecessary trips.

3.  There's no uncomfortable situation about not wanting to show the property to someone.

I state very clearly in my ads and the YouTube video that I do not conduct showings until the person has made it to the second phase of my screening process.

I don't understand why anyone would show a property to someone who is not qualified to rent / lease the property.  

No showings until the applicant has been pre-qualified.

I had a few of these early on, so what I started doing in the APPLICATION PHASE was have them sign and date a simple one sheet of paper with a small paragraph that stated something to the effect of, "I understand that if I intend to break the lease and not stay for the full one year period, I am responsible for paying the remaining balance of the lease regardless of how much time is left."  I make them sign and date that, and that's just in the initial application process.

It's repeated again in the lease when they sign the lease.  

I learned the hard way that if you don't take measures like that, then if you do have to go to court a judge won't give you anything.  This does not guarantee that a court would give you that still, but it will help when seeking a judgement.   

This way you can show that at least they knew and approved of your policy on two different signing occasions prior to moving in.

I list all the criteria in the ad, put a link to a YouTube video in the ad (The YouTube video states that I don't do showings until they've passed the application process) the video takes care of all the showings, and I ignore all the automated "this person is interested and would like to schedule a viewing" responses from Zillow and other sites. 

The voice mail on my phone tells every person when they call exactly what the criteria for renting the property is, and if they meet all the criteria, then feel free to leave a message.  This way no wasted time for me, the ad, the YouTube video, and my voicemail take care of all the rift raft tire kickers.

The only people who leave a message to call back are the real prospective tenants.  I started this system almost two years ago and it's like putting the rental process on auto pilot every time I have to lease a property.