All Forum Posts by: Anthony King

@Brandon Patrick Also, the 45 day turnover you mention, I think you have that confused as well. You have 45 days to identify up to 3 properties that you plan to purchase and apply the 1031 funds toward. You have 180 days to close on one, two, or all three of those properties. The 45 days and 180 days run concurrently from the date you sold your property. What many people suggest is to get a new property under contract before you close on the sale of your property so you don't get into trouble with the 45 day deadline. It is a firm deadline. Weekends, holidays, or natural disasters are no excuse. The deadline is the deadline.

@Brandon Patrick if you lived in one of them for 2 of the last 5 years you wouldn't have to pay capital gains. You can only use that exclusion once in a 2 year period. More than likely you will have to pay capital gains on both of these if they have been strictly investments. I suggest a 1031 exchange. I'm not a CPA, but have dealt with those exclusions and 1031's personally. Don't take my word for it, consult a pro.

@Kaleb Dodson if you choose to proceed and hold them to the contract, they could be setting you up to NOT ask for anything off the price post inspection. Taking away your leverage at least by making you think they have another offer higher than yours.

Quote from @Mike Finn:

@Anthony King Thanks man!

I've thought about selling, but I currently have a tenant in both properties. Have you dealt with that situation in the past?

Actually dealing with it right now. Selling one SFH and doing a HELOC on another. If you're thinking about selling, at the end of their lease put them on month to month and tell them you're thinking of selling and offer them first option to buy it. It's easier to sell vacant or on a MTM lease so the buyer can either move in or sign their own lease with tenant. If you're looking to scale, evaluating your ROE at least annually is a good idea.

Quote from @Mike Finn:

@Anthony King This breakout is a few months old, so I have a bit more. See below:

Property 1 - $188k 75% of that would be about $100k (75% would be based on cashout refi)

Property 2 - $108k 75% would be about $80k (75% would be based on cashout refi)

I ask because at some point your return on equity gets low enough that it makes more sense to sell. A HELOC is great if you decide to keep it, but if you're only making a couple grand a year and you have 100's of thousands in equity, you're probably better off doing a 1031 into more properties/doors. 

Skip to 55:54 of BP Podcast ep 662

@Mike Finn How much equity do you have in these rental properties? How long have you owned them?

@Shilpa Matlock my mistake. Looks like you did the 1% rule correctly. I didn't check the math until after I wrote my comments. The way I read it looked like you took annual rents minus vacancy.

@Shilpa Matlock actually the 1% rule is the gross monthly rents and it looks like you used gross annual rents minus vacancy? If the purchase price is $120k your monthly rent collected should be $1200 for the 1% guideline. No consideration for vacancy at this point. Once you start digging deeper I would then account for vacancy.

You also said you verified taxes. Did you verify what they CURRENTLY are, or what they WILL be after the sale? Most states I am familiar with trigger a tax reassessment when a sale happens. Estimate your taxes on the full purchase price to be conservative or go to your county website and they might have a tax estimator. Or take the millage rate and multiply by the purchase price. This is general advice. Each state and county is different.

And one way to estimate maintenance and capex is reviewing 2-3 years of the seller's schedule E's, T-12, etc. Even better way is to calculate an exact dollar amount that you should be saving each month, rather than using wildly inaccurate percentages. For example: If your average hot water tank lasts 10 years and yours is 5 years old then you should plan to replace it in 5 years. You determine that a hot water tank should cost you $1000 to replace in 5 years, therefore you should set aside $200/year for the next 5 years. Do that with every capex item and then figure out how much you need to set aside each month to be ready for those expenses as they reach the end of their service life.

@Jalpan Jangiani When I asked my lender if I could do a quit claim deed to put the title in my LLC, she said, "that's fine, everyone does it". Also, I'd skip the attorney and just call your county recorder. They send you a 1 page form and it'll cost you a couple hundred bucks.

@Ian Loonce Before you fire the PM I would direct them to get the person out of there, with cause, for drugs, and lying on their app if you can prove what you're saying above. Get your money's worth and make him clean up the mess he made. Once it's complete fire him and don't let him place a new tenant. Sounds like you're at the place and/or driving by it more than him so just manage it yourself.