All Forum Posts by: Alex Todd

@Basit Siddiqi and @Sean Graham let’s play this out a bit for discussions sake.

$3M MF property, depreciation and mortgage interest are ~$180,000. Cash flow in year 1 was $50k. If W2 income was $300k and losses are now $130k…we can write those losses off against the $300k making taxable income -$170k.

All hypotheticals but is this accurate? 

Hi all - my wife and I are planning on a April 2025 1031 exchange into a larger (for us at least...like 5-8 units) multifamily unit. An idea we have is, I am burnt out from W2 life, and wife makes great money (+$300k) , and I could take the year to repair/renovate, manage, rent, repeat the units in the MF qualifying for REPS status (50%, 750hrs, material participation, etc). 

This could have three fold impact ---> allow for writing off paper losses against W2 income, increase the property value by increasing monthly rent, and all the normal cash flow benefits for RE...right? Anything else I'm missing?

What we're struggling to understand is how to underwrite/estimate the paper losses that a MF would produce and IF this strategy is worth it from an income/tax savings perspective. Am I overthinking it, or is the underwriting...Depreciation (with or without Cost Seg), Mortgage interest, normal operating expenses? 

I appreciate the guidance! 

 Thanks @Becca F. - I totally agree with you on the location piece and that makes this tough.This isn't just about cash flow but a seemingly unique and great oppty for taking $500k of tax free Sec121 dollars off the table.

Curious if you see the the alternative strategy to be : 

- to hold the SFH long enough for appreciation + CF to cover the $500k + taxes on those capital gains if selling?
- Hold until the monthly rent increases enough over next 10yrs where with a cash out refi we would still be net positive cash flow but be able to pull out that $500k tax free? 
- hold forever and stack up W2 earnings invest elsewhere? 

@Dave Foster It was our primary, then moved to rental for last 2 years..thus fitting into both the 121 and 1031 options, no?

How standard is a floating close date? We're actively trying to structure our "buying requirement" checklist to walk through with our tenants/buyers and want to be crisp on our asks outside of asking price. 

6% in appreciation in 10 months, not likely :) 

 Thanks Crystal! Good call on proof of funds.

Were straddling between doing a 121exc and 1031 or just selling straightup with the 121exc and paying the remaining CG taxes to have some flexibility on where to reinvest v forced timeline of the 1031. 

Hey @Bill B.

Call in $800k in CG. Buy price $823, sale at market $1.75, sales costs ~$100k. 

If the realtor takes a transaction only fee ~$5k? (Idk if this is a still a normal practice) savings are real for both parties. 

We will be within the sec121 limits come April 2025. Roughly 6 months till that mark.

90 days - realistic timeline for them to sell their rental property to support downpayment. This is an assumption on my end. 

@Marcus Auerbach - thanks for quick response. What details would you want to provide for a better answer?

Good points on long term hold and let appreciation do the work! We struggle with this too on a strategy.

Hey BP - we have a SFH that has been a LT rental (only 2yrs) but with same tenants, who are asking if we'd be willing to sell off market, in the next 90 days.

Their current lease extends to  April 2025, which at that point we were planning on selling.

Why sell in the first place? ROE is so low (.6%) that at this point in our RE journey, we believe our $$ can do more for us elsewhere and we still sit within Sec121 exclusion to avoid some CG tax. 

Any strong positions to waiting? Moving forward? Things we should look out for, lobby for, strategize on? 

Thanks!

Alex

Found the split of the units (no sec8)

- 20 units affordable - low income

-50 units max 50% of annual average income for county 

- 100 units of 80% annual average income for county  

agree on all the inputs!! Thanks for the discussion 

Hi everyone - opening up a post to see what people's thoughts are on buying a 4 unit ((2) 2b/2b + (2) 2/1)across the street from a future 160+ unit net new affordable housing complex. Less about the "is the 4unit a deal (spoiler: it's almost a deal)" and more about the pro's/cons of investing that close to a LARGE dev project and would it be beneficial in the long run.

What I see so far :

- Pros - consistent tenant flow (waitlist for big complex) and market rental rates to build against and measure
- Pros - Affordable housing in Bay Area is still $2250+ for a 2b/1b apartment. 
- Cons - tenant experience during development and traffic congestion after
- Cons - unknown property appreciation as the new building changes dynamic of community

Thoughts? Thanks in advance!