All Forum Posts by: Allen B.

Is that meter out at the street? If so, I would expect that it's a leak in the underground line between the meter and the building. Had that happen more than once in Atlanta.

Ahhhh, I see. Thanks, @Dave Foster. So if I do get stuck paying tax, doing it later beats doing it sooner.

Will be interesting to see if any of the closing firms give me trouble about doing that. Residential closers don’t seem very familiar with 1031 exchanges... to put it mildly.

Hi All, got a bit of a last-minute issue here.

I'm closing on a number of properties over the next three days. The proceeds are being swept together into a 1031 exchange. My question is about how to complete the Form 1099-S that's required.

So far, the closing firms (in Georgia) are putting the proceeds of the sale in Box 2. However, the IRS instructions and a few Google searches seem to say that in the case of a 1031, maybe this should be $0? Here is the text below: (it's the 2021 form but presumably identical)

2021 Instructions for Form 1099-S

If you are reporting a like-kind exchange of property for which
no gross proceeds are reportable, enter -0- (zero) in box 2 and
enter an “X” in the checkbox in box 4.

Can anyone with some 1031 experience clarify this for me? My 1031 provider says that because it's not part of the exchange itself, that they cannot advise, etc, etc.

Thanks,
Allen

Hi, Chicago-area investors,

As I move closer to buying my first multifamily, one thing I haven't been able to learn much about is property taxes. Specifically, how are they adjusted after a sale on the open market? My experience with SFR in other places has been that the county appraisal immediately jumps up to roughly the transaction price. Which seems fair enough, unless every nearby property that didn't transact is appraised for much less.

Looking at some of these properties, the Cook Co. books have them at half (or even less) what they would sell for today. I've chatted with a few brokers about this, but not gotten satisfying answers. That's reasonable since they a) are not tax experts, and b) have a vested interest in the sale.

I've reached out to the atty who handles our residential appeals but hoping to hear from investors who've been through this, especially with multifamily.

Thanks,
Allen

Sounds good, thanks @Scott Wolf. And if you've got a commercial loan broker you particularly like, it would be great to talk with them. Cheers!

Thanks, @Scott Wolf, that's encouraging to hear, as is the note about making a good application. I've got to get started on that so I'm not caught out when things start moving with lenders.

Do you feel like the terms you got were any worse as a result of being "new"? Did you have to settle for lower LTV than you wanted?

Hi all, got another question as I’m preparing to step up to multi family. What options do I have in terms of required experience?

Background: I built up a portfolio of 10 SFR plus one triplex when I lived in Atlanta. Those are being sold in various closings next week. Funds are going into 1031.

Goal: to buy a single (or at most, two) larger 5+ multi family properties. Focus is on cash flow as well as value add over time through improvements and solid operation. 

Problem: I’ll be bringing enough funds that, in order to get any sort of leverage at all, I’ll need a good-sized commercial loan. Even aside from leverage considerations, I’ll need some sort of loan unless I can spend exactly the right amount from the 1031, else cap gains become a concern.

Now, I operated my portfolio by myself until moving away from Atlanta. I’ve got experience with tenants, leasing, repairs, taxes, etc. This feels like a pretty solid background for any sort of multi family. But what if it’s not?

Does anyone here have experience with concerns about insufficient experience for a given-size property? What did you do? Are some lenders more open than others? I assume that reduced LTV would buy some flexibility (say 60-65% rather than way up at 75-80)?

Have spoken with a few lenders already and everything on that front is kind of non-committal. Would like to get an outside perspective. 

On a related note, my (retired) father spent his career in commercial real estate management and leasing (mostly office). Would bringing him in as a co-sponsor be helpful, even if he’s only investing a token amount himself?

Thanks,

Allen

Thanks for the responses! @Scott Ratner, I've seen the term "cost segregation" a few times lately, but you're the one who finally prompted me to read about it. Sounds like an interesting technique! I'm probably past the point where it can work, as my sales close at the end of this month. Worse yet, most of them are properties bought for very little, in uninhabitable condition, years ago. So there's quite a lot of cap gains to be avoided. That said, the 1031 rules are awful.Whoever decided on 45 days to identify hasn't bought much real estate...

@Eric Van Deman, that sounds great -- would love to speak with her. Sending you a PM, thanks.

I've written elsewhere on the forum that I'm looking to invest 1031 funds into one or more multifamily properties. I'm discovering that some of the most attractive properties for my interests are at a price point below the amount that I have to place via the exchange. This leads to a couple of questions:

1. If I were to pay cash for two (or three) smaller properties, can I then wrap them up in a single cash-out refinance? These would be 5+ unit multis located fairly close to each other. Am pretty sure the answer to this is yes but would like to be certain.

2. If I find two (or three) somewhat larger properties which together amount to, say, 2x the amount of the exchange, is it possible to *acquire* them together under a single loan? This seems potentially difficult to coordinate even if permitted, unless multiple properties are coming from the same seller.

In both cases, perhaps the answer is different for Fannie, Freddie, bank loans, and other sources? I'm leaning toward Fannie/Freddie small balance because they seem to offer some of the best rates and terms, but still learning.

Thanks again for your help -- the people I've met and things I've learned from this forum have already been a huge help!

That definitely sounds right. Thanks, @Charles Seaman and @Don Nguyen!