All Forum Posts by: Allen B.

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.

Edit: sorry, meant to post in 1031 forum but cannot find a way to move or delete. 

Thanks,

Allen

Can anyone recommend an inspector for multi-family buildings in Chicago? The one I had planned to use is unavailable. 

I’m not interested in whether faucets drip, etc. Rather, someone who can look over major capex items (roof, boiler, foundation, brickwork, etc) and provide some insight. From there I’ll bring in an appropriate specialist if needed. 

Thanks,

Allen

Originally posted by @Jason Albasha:

I also do 5% maintenance and 5% CapEx, in line with what @John Warren recommends. Shoot me a DM if you want my proforma excel sheet for property analysis. 

Thanks, Jason, almost missed your reply. Good to hear another vote for those numbers. PMing you as well.

Thanks, @Larry Lemer, @John Warren, and @Crystal Smith! All three of these answers come at the problem in slightly different ways, so they're all helpful.

Definitely seeing the kinds of things John talked about. Some of the numbers just don't "add up" when I start digging in. My father (career in CRE) tells me that "pro forma" means "buyer beware" in Latin and that seems about right.

Starting to wonder if I can find a decent deal within the 1031 time limit. Gotta get my day job to back off for a few weeks (not likely!)

Cheers,

Allen

Hi All,

Are there any good ways to pull cash out of an already-financed piece of commercial property (in my case, I'm specifically referring to 5+ multifamily) without replacing the existing debt?

On my family home, for example, I can always get a "Home Equity Loan" or (my preference) a HELOC. None of this affects my first mortgage at all.

With commercial, options seem limited to:
1. Supplemental loans, available with agency debt under the right conditions.
2. Cash-out refinance, which involves paying off the existing debt and taking a substantial prepayment hit unless the timing is right.
3... whatever I am missing?

Perhaps this is one of those things where some small banks/credit unions can help, if the existing loan is already with them?

No doubt this is possible for nine-figure deals, but I'm talking about significantly smaller properties.
If the answer is "that's just not done by most lenders", that's fine too, then at least I can plan accordingly.

Thanks,
Allen

Hi All,

What sort of numbers do people like to estimate for per-unit maintenance? I'm specifically looking at medium-size (say, 12-50) unit, older but in good shape, class C buildings around Chicago and suburbs. Actual numbers I'm seeing are all over the place for various reasons.

Am thinking costs within a unit (so excluding roofs, boilers, etc) mainly come from kitchens and bathrooms, and then perhaps a smaller amount psf. At least that's my experience in smaller properties.

Any thoughts would be much appreciated, thanks!

Allen

Thanks again, @John Warren. I'm looking mainly at 7+ so it'll be interesting to see how that works out. Great info either way!

Thanks again, @John Warren and @Brie Schmidt. What a confused situation! I guess the only remaining question is, can even the best tax appeal be reasonably expected to drop the county appraisal back below a recent fair-market transaction? That seems unlikely, but then, government rarely works the way I think it ought to :-)

Thanks, @John Warren and @Brie Schmidt; this backs up the conclusion I'd reluctantly reached. I'm underwriting assuming the worst case -- assessment bumped to transaction price and no change in tax rate. Worst reasonable case, anyway.

Brie, wish I'd had you as my agent 20 years ago when buying a first home in Austin, TX. At the time, prices had changed pretty rapidly and the jump in taxes was a surprise to my totally ignorant young self. Nice work taking care of your client!

Thanks, @Crystal Smith, thanks @Henry Lazerow. It sounds like the best I can do is make some predictions and inevitably appeal the new assessments when they happen. Not ideal, but it's what we've got. Appreciate it!