All Forum Posts by: Allen B.

Hi All,

Is anyone using Buildium's eLease functionality for Chicago property? I was hoping to import the Chicago Association of Realtors lease into the Buildium editor, but alas... it does not accept pdf docs, only Microsoft Word (docx). Cutting, pasting, (and formatting) the entire five pages of lease (plus 19 pages of required addenda) does not sound like great fun, but may be an option.

Also need to find out how to include the required addenda but there appears to be a way.

Any input appreciated, even if it's just to say "don't bother, not worth the trouble", etc.

Cheers,
Allen

@John Warren -- Great, thanks! It does have quite a lot of blanks. I've looked at some existing leases and they are simpler, so that's something to investigate in the future. Funny thing, I've only got one vacant unit and was going to wait a few more weeks to jump on that (lots of initial setup going on), but there are also a few subsidized folks and turns out that their orgs want new leases when ownership changes. So priorities got adjusted :-)

Possible silly question, but do I have to be a licensed Realtor in order to use this lease?

My assumption had been "Yes" but, at least during a quick review, there is no obvious text confirming that.

With all the hurdles and pitfalls that Chicago provides for a new landlord, the lease is not a place I'd like to mess around.

Thanks,
Allen

Thanks to everyone who answered on short notice. It sounds like in the future, life is just a little bit easier with rent and property tax prorations moved outside of closing. Will keep that in mind for the next time around, thanks!

In this case, I was closing on two different properties yesterday. It ended up that the second closing was able to absorb the balance of the 1031 (and a bit from my checkbook) even with the first closing not being "optimized" as discussed.

Oh, and Dave -- thanks for the accounting notes. I'll probably share them with my CPA just in case.

Cheers,
Allen

I've run into some confusion at the last moment with my 1031 exchange and was hoping to get lucky and catch someone who knows the right answer.

In short, I've got a settlement statement for an occupied multifamily property. That statement shows a price of X (some of which I've paid out of my own pocket as earnest money and wish to have reimbursed from the exchange), plus various expenses. Some of these (various recording fees, attorney fees, transfer tax) are also eligible 1031 expenses. Let's call those Y.

My understanding is that I should be able to use exchange funds for all of X+Y (purchase price plus eligible fees) without incurring tax liability.

Where the confusion comes in is because of credits from the Seller to me. Those credits are prorated property taxes (call it A) plus prorated rent for the month of April (call it B). So naturally, the amount that I owe at closing is reduced by A+B.

However, it does not seem logical that the eligible expenses from the 1031 are also reduced by A+B, because A+B (prorated taxes and rent) are funds which should legitimately be mine regardless. Ie, if the prorated April rent were one million dollars (dream big, right?) then it would reduce the sum due at closing by $1M. Would I then no longer be able to use that $1M from the exchange?

Thanks,
Allen

Hi again, and thanks for your inputs! I had figured that this would ultimately be a networking issue, and also that not everyone will be ready to share their secrets :-) @John Warren, already had a good chat with you yesterday, and thanks again! @Jonathan Klemm, going to PM you about a couple of things. Short answer, though, I've got two buildings under contract totaling 40 units. Looking forward to closing. @Jingru Sui, @Andrew Schutsky definitely working toward the point where I can hire someone full-time. Although even then, until you're big enough to have two full-timers, there's always need for a backup.

Appreciate once again all of the help I've gotten to make this happen!

Cheers,
Allen

Hi All,

Am getting ready to own some 40 rental units in Chicago, in a couple of south side locations. I'll be self-managing, and have both the time and pretty solid experience. There's just one problem (ok, probably more than one) which is finding a maintenance guy or appropriate small group. Back in Atlanta when I was younger and single, that was usually me. In an emergency it still might be, but that's not exactly a path to success. Plus, my wife understandably hates the idea, especially during Covid.

So question to you multifamily owners, especially those who self-manage: How did you find your maintenance solution?

If you're in Chicago, I'd love to know specific references to people or firms. And even if you're not in the area, what approach have you taken?

Thanks,
Allen

Thanks, everyone, for the quick and helpful answers. I’m not planning on any boot at all (beyond incidentals) but one of the two buildings I’ve got under contract turns out to have rather more significant issues than anticipated.

As a result, I’m having to consider whether to proceed and deal with the unanticipated costs or back out and either identify a couple of potential replacements knowing that the identification period will close before I can fully vet them, or take the tax hit.

At the moment, not a huge fan of the entire 1031 process.

Thanks,

Allen

Thanks, everyone, for the quick and helpful answers. I’m not planning on any boot at all (beyond incidentals) but one of the two buildings I’ve got under contract turns out to have rather more significant issues than anticipated.

As a result, I’m having to consider whether to proceed and deal with the unanticipated costs or back out and either identify a couple of potential replacements knowing that the identification period will close before I can fully vet them, or take the tax hit.

At the moment, not a huge fan of the entire 1031 process.

Thanks,

Allen

Can someone give me a *rough* idea how I can expect any boot from my 1031 exchange to be taxed?

I know the general taxes involved (long-term capital gains, state income tax in GA (I think), depreciation recapture). But obviously not all of what’s in the exchange is gains (didn’t manage to buy at zero and put in nothing).

So if I do end up having some boot, do I somehow apportion it between the part of the sale that was “gain” and the part that’s just “getting back what I put in”?

To add that little extra factor, a total of 11 properties were sold to fund the exchange.

Know I can ask my CPA but just looking to get a rough understanding now.

Thanks,

Allen