All Forum Posts by: Cathy McNair

We've been working with a turnkey/property management company that has done a good job for us.  We would prefer to stay with them to manage our recent purchase, but unfortunately their PM agreement has become more onerous and non-negotiable and we are evaluating other options.  I'd welcome recommendations or referrals for Memphis-area property management, preferably unaffiliated with turnkey companies since we haven't researched those yet.

Because there are often posts asking about typical management contract terms, I thought I would share a comparison table I made of agreements from three Memphis-area turnkey companies frequently mentioned on BP.  As expected, there are slight variations in the managements fees and many clauses, but the differences in termination fees, mandatory commissions, and willingness to negotiate were surprising and could have a huge impact on exit strategy when the time comes. 

... for a well established home builder using conventional interest-only financing to purchase a property that they would hold for 9-10 months before they can start the demolition/building.  How about for hard money?  In case it matters, it would be in the Seattle area, and would be a jumbo loan with minimal down payment.  Thanks in advance.

I am a dual citizen and currently a long-time U.S. resident, but moving back to Canada this year.  I would like to do a 1031 exchange of one U.S. rental property into another U.S. rental property of slightly lesser value, and I would like to time the exchange to avoid paying capital gains taxes in Canada if possible.  (My understanding is that since Canada doesn't have a  tax law similar to a 1031 exchange and there would only be U.S. taxes paid on the boot, then if I was a Canadian resident at the time of the exchange, I would pay tax on the remaining gain in Canada.)  So I was wondering if I am correct in thinking that:

1. As long as the sale of the relinquished property closes prior to becoming a Canadian resident again this year, that I won't be subject to taxation on the gain in Canada?

2.  The purchase of the replacement property can occur either before or after the move to Canada as long as the 1031 exchange criteria are met?

Or, are there any tax consequences regarding the timing of the purchase, or the funds going through an intermediary, or the release of the boot relative to changing residency that I am unaware of?  

Thanks.

My husband and I have what we think is a good problem.  We own two houses in Kirkland, WA with a fair bit of equity. Both can be considered tear downs and are in terrific locations. Property values are increasing by double-digit percentage points annually, and builders and home sales are going crazy in the area.  Consensus seems to be we aren't at the end of the boom quite yet.  We see our houses as opportunities to further our goals of early retirement,  because although we love the area, we want to lower our COL.  We are having trouble figuring out what option(s) make the most sense both in terms of minimizing debt / maximizing cash flow when retired, but not getting in over our heads.

The two houses are:

1.  Rental that was our original residence; 100% equity, short walk to expanding Google campus. Very old and tiny 2/1, but no major upkeep needed in short term as roof, water heater and furnace are all newish.  Tear-down across the street recently sold last summer for $565K and ~3500 sq ft, high-end, new constructions nearby are selling as soon as they hit the market for ~$1.5 million.  

2.  Our current residence; view property; we owe $290K, and it has some deferred maintenance required in the next year or so (e.g., roof).  Tear downs in our neighborhood are currently selling for ~$1 million give or take.  New construction next door just sold as soon as it was listed for $2.2 million. Investor reportedly made ~10-15% (he purchased the tear-down almost two years ago for $850K).

Some of our options for each house include:

Rental house: Long-term tenants would happily buy from us and we could do owner financing, or we could tear down and build, or just keep renting it out (tenants prefer to stay). If we built a spec house we could either sell when finished and take the tax hit on gains or 1031 exchange it, or live in it for two years (before or after construction) and qualify for the full capital gains exemption because we lived there for a few years before it was a rental. We are also considering building for us long term which means we would build with an ADU so that it generates income (could get more than the current house rents for).

Residence house: Sell to a builder or investor (we get multiple letters a month looking for property in our area), or tear down then build spec home as investors, or keep it as a rental and either sell while we could still qualify for the tax credit or wait and 1031 exchange it down the road. (Note: rent would cover PITI with $2K going to P and an additional couple hundred to spare per month not accounting for maintenance.)

Obstacles/Questions: no construction experience and builders are currently asking top dollar; not sure if partnering is an option (not a request, just wondering if it is a valid option); what might be the financing options of whatever route we choose (e.g., HELOC on our current house, construction loan, etc.) with goal of being in a decent cash flow position preferably in a couple of years.

If anyone has ideas as to how you might move forward from this point, I would be much appreciative to hear and I'm sure it would also be educational.  We have some ideas, but would love unbiased opinions.  Let me know if there are any blanks I need to fill in.  TIA.