I have a house renovated in Detroit Michigan

Most Popular Reply

Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges 路 St. Petersburg, FL 路 Member since 2013 路 9k+ posts 路 9k+ votes
4y

@Abinadab De la Torre as @Andrew Moore and @Alex Olson mentioned, a 1031 exchange is a great option for your situation whether you decide to rent or sell. If you decide to sell you can defer all taxes and depreciation recapture by doing a 1031, this would allow you to move into a property of equal or greater value anywhere in the country without limiting your buying power with taxes. On the other hand if you decide to rent it out you can always come back when you're ready and 1031 out of it then.

The 1031 Investor5137 Reviews
WebsiteView Page
1Reply
See this reply in the discussion

15 Replies

Jump to latestLatest
  • Andrew Moore
    Real Estate Agent 路 Grand Rapids, MI 路 Member since 2016 路 89 posts 路 51 votes
    4y

    @Abinadab De la Torre what is your "investment thesis"? Are you looking for cash flow, or appreciation? What do you stand to make from the sale of the home, and what would would you do with those funds afterwards? There are a lot of variables that go into which direction you choose, and it really comes down what you are looking for in a property. It might be right for one person to hold, whereas it makes more sense for another to sell. 

    Feel free to reach out directly if you want to discuss specifics in depth!
     

    0Reply
  • Matt Cartwright
    Lender 路 Newport Beach, CA 路 Member since 2016 路 68 posts 路 18 votes
    4y

    Hi @Abinadab De la Torre if you are at all interested a DSCR refinance loan may be a good way to go. No seasoning on pulling cash out and typically you can go to 80% LTV of the market value. Let me know if you have any questions or would like any guidance on taking that route!

    0Reply
  • Drew SygitBusiness Member
    Property Manager 路 Royal Oak, MI 路 Member since 2012 路 12k+ posts 路 9k+ votes
    4y

    @Abinadab De la Torre To what extent did you renovate it?

    If you went all-in, then you should probably focus on selling it because tenants will just trash it and you'll lose all those renovation costs.

    If you did a lower renovation, then run the numbers through the BiggerPockets rental calculator and proceed accordingly.

    [email protected]248-209-6824
    Logical Property Management4.9460 Reviews
    WebsiteView Page
    0Reply
  • Abinadab De la Torre
    OP
    Member since 2022 路 12 posts 路 2 votes
    4y

    @Andrew Moore great yes i normally buy and fix houses but for some reason I'm always on the same spot i would like to keep buying houses and probably rent it i would like to retire soon 馃か

    0Reply
  • Abinadab De la Torre
    OP
    Member since 2022 路 12 posts 路 2 votes
    4y

    @Matt Cartwright sure thanks I'm interested but which are the steps to refinance?

    0Reply
  • Abinadab De la Torre
    OP
    Member since 2022 路 12 posts 路 2 votes
    4y

    @Drew Sygit great point thanks and yes i put a lot of money and work

    0Reply
  • Andrew Moore
    Real Estate Agent 路 Grand Rapids, MI 路 Member since 2016 路 89 posts 路 51 votes
    4y
    Quote from @Abinadab De la Torre:

    @Andrew Moore great yes i normally buy and fix houses but for some reason I'm always on the same spot i would like to keep buying houses and probably rent it i would like to retire soon 馃か

    So you flip houses and roll over profits into the next thing from the sounds of it? Is that your primary source of income? Without knowing your job situation, retirement planning, etc. there are a lot of different variables at play here. 

    1) Renting the property would theoretically generate cash flow that would supplement your monthly retirement income. Downside to this is that your cashflow could be eaten up by living expenses, and you might not be in a position to continue to purchase more properties. If you have another source of retirement income that will cover your expenses, you could always throw it on a 15-yr note/pay extra on principal, so down the road your cashflow from that property will be much more much quicker.

    2) Selling the property would allow you to take the proceeds from the sale and roll it into a steadier asset, a larger property, or move it into an existing retirement account that you have. If you are going to sell, I would recommend looking into a 1031 exchange to roll your tax liability into the next property. It could have a compounding effect if you put the proceeds into an existing retirement account, but it might not be a long enough timeline to make a huge impact in the retirement distributions down the road. One thing to look at here would be what your tax liability would look like selling and rolling it into another property vs. taking the proceeds of the sale as income & investing it post close.

    To compare all of your options to one another I would look at the CoC return from renting the property, CoC return of another potential deal (continue to flip houses/or a larger more stable asset), and the return you stand to gain should you throw it into another investment vehicle. This in combination with some clarity of what your long-term goals might be, could help to determine what the best course of action is. I'm not an accountant, a financial advisor, and I'm not certain what state you are located in. Hopefully this helps give some insight into some things to look into in order to decide what comes next for you.

    0Reply
  • Alex Olson
    Real Estate Broker 路 Kansas City Metro 路 Member since 2015 路 2k+ posts 路 1k+ votes
    4y

    Are you thinking of going the multifamily route? You could turn that house in two several apartments and spread the equity. 1031 exchange is a good option.

    0Reply
  • Matt Cartwright
    Lender 路 Newport Beach, CA 路 Member since 2016 路 68 posts 路 18 votes
    4y
    Quote from @Abinadab De la Torre:

    @Matt Cartwright sure thanks I'm interested but which are the steps to refinance?


     I sent you a connection request 

    0Reply
  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges 路 St. Petersburg, FL 路 Member since 2013 路 9k+ posts 路 9k+ votes
    4y

    @Abinadab De la Torre as @Andrew Moore and @Alex Olson mentioned, a 1031 exchange is a great option for your situation whether you decide to rent or sell. If you decide to sell you can defer all taxes and depreciation recapture by doing a 1031, this would allow you to move into a property of equal or greater value anywhere in the country without limiting your buying power with taxes. On the other hand if you decide to rent it out you can always come back when you're ready and 1031 out of it then.

    The 1031 Investor5137 Reviews
    WebsiteView Page
    1Reply
  • Abinadab De la Torre
    OP
    Member since 2022 路 12 posts 路 2 votes
    4y

    @Dave Foster thank you for the help i think if i sale i want to buy at least 2 properties one on land contract and rent it and other one for rehab and repit if is possible i been doing this for few years and still in the same spot

    1Reply
  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges 路 St. Petersburg, FL 路 Member since 2013 路 9k+ posts 路 9k+ votes
    4y

    @Abinadab De la Torre Yes that absolutely possible! in order to defer all tax you have to purchase at least as much as you sold and use all your cash proceeds to do so, but it doesn't have to all go into one property, you can allocate those funds however you want.

    The 1031 Investor5137 Reviews
    WebsiteView Page
    0Reply
  • Dave Skow
    Lender 路 Seattle, WA 路 Member since 2014 路 2k+ posts 路 899 votes
    4y

    if you need a referral to a lender / loan officer in the  Detroit  area  for a rental property refinance -  feel free to send me a  message and  I  can  refer you  several to contact 

    0Reply
  • Gary Carver
    Realtor 路 Detroit, MI 路 Member since 2018 路 387 posts 路 129 votes
    4y

    @Abinadab De la Torre. I would need to see the home or know the how much work we done as well as know them area to give opinion on suggestion

    0Reply
  • Eliott Elias
    Investor 路 Austin, TX 路 Member since 2021 路 9k+ posts 路 5k+ votes
    4y

    People still buying houses for 2k over there? 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free