All Forum Posts by: Ari Bachrach

I invest in tax liens in my state (Maryland) but have no experience in other states. In MD, if the property owner wants to redeem they always pay the county or city, and then the county or city pays the lien holder. Is that true in all states? Are there some states where the property owner redeems by paying the lien holder directly?

Just something that came up in a conversation with a friend and I was curious how other states worked.

No one ever sells a tenant occupied property that's doing fine. If they're getting paid and the house is fine and not hearing any complaints, they keep it. If the house is a problem or the tenant is the problem, that's when they sell. You bought someone else's problem. That's not necessarily a bad thing though - see if you can figure out what the problem is (sounds like either the house or the tenant) and fix it.

The solution is simple: build more housing.

@Ashish Acharya - thank you

@Michael Plaks - that's a really well done walk through, thank you. Believe me, I'm more than happy to take credit for it. ;-)

This is awesome, thank you. If I can just request one clarification - can passive losses from one business be used to offset income on another? For example, if I'm in year 4 of syndication #1 and showing a gain, can that be offset by the loss being shown on syndication #2? Similarly, can losses from rental real estate offset gains from synidcations or vice-versa? (For this second one, assume the person passes the full time RE professional test).

Man, that would have been nice. Around here the county will take four tires per resident per year. So if I took 4, and my wife took 4, and I got my handyman to take 4.... I would still have 630 to deal with. 

Real Estate here in Silver Spring has really gone up a ton in the last ten years. MoCo as a whole is really expensive, so 300K, while It might be average for a starter home in the US doesn't get you started here. 

For a primary residence, my advice is to keep that a life decision and not an investment decision. (I know this goes somewhat against the grain here on BP). If you want to live in a certain neighborhood, then do it. Don't live somewhere just because you think it will appreciate, or you can house hack, if you're going to hate the area, hate your commute, and make yourself miserable. 

As for telling your realtor - just be straightforward. I'm sure you're not the first person to change your mind, and your realtor would rather know sooner rather than later so they don't keep wasting their time. Just call (or email if you're too non-confrontational) and say that based on your current situation and the state of the housing market, you've changed your mind and don't want to buy a home right now. Thank them for their time and say you'll be in touch if/when things change and you decide to try again.

I invest in both PG county and Baltimore county. As @Russell Brazil mentioned above, Baltimore is a very different market. It will cash flow much better than DC, but the city isn't as good. The schools aren't as good, the municipal services aren't as good, the demand is lower, rents are lower, expect less appreciation. Urban blight in Baltimore is far worse than DC. Baltimore city and county both require rental licenses and rental inspections but they're pretty basic - hot water, smoke alarms, everything works, railings on stairs, etc. There is also a Maryland-wide lead inspection that is required for any property built before 1978, but that applies anywhere in MD, not just Baltimore.

There is a very active investor community in Baltimore that I've found invaluable (especially as an outsider trying to learn the city). Search meetup.com for BWI meetup and search facebook for local REI groups.

I bought a terrible house in a good neighborhood about a month ago. No one else wanted this house so I was able to get it for a great price. The house is a gut rehab, but even more than that, there's one thing that scared off a lot of buyers: tires. The house was filled with tires (and also crack pipes, but that's another story). Tires are considered a hazardous substance by the state of Maryland and cannot be put in a dumpster. You need a special tire hauler's license just to transport them. I called my regular dumpster company and several others and none of them would take them. Eventually, I found a junk place that said they could take them for $5 each. However, the day they were supposed to come out they called to say they had double-checked and their tire hauling license had expired and hadn't been renewed yet by the state, so they couldn't come. The tire recycling place in Baltimore would take them, but wouldn't send a truck to a residential neighborhood to pick them up. I contemplated renting a truck, but I don't have a tire hauling license, and I'd need a very big truck. I found the state licensing office and got a list of everyone who had a tire hauling license in the state. I just went down the list and started calling until I found someone who could take them. I just had to get them out of the house and help load them into his truck. 

I knew the basement was filled with tires, but it's a medium sized house (1200 sqft). I estimated there were 200 tires in the basement. Boy was I wrong. It took a team of four (me and three people) about 4 hours to get all the tires out. The basement was full - every inch of the basement was filled floor to ceiling with tires. When we finally finished we had 642 tires stacked in the driveway to dispose of. I think of all the rehabs I've done, my happiest moment was watching that truck with all the tires in it pull out of the driveway.

I don't know why everyone is discussing IRAs here - there's nothing in OPs question that relates to retirement funds at all.

As to the question, as others have said a 1031 exchange only does like for like. You can exchange real estate for real estate, or a company car for a company car. However, a qualified opportunity zone fund may provide the answer you're looking for. You can invest capital gains into a QOZ and both defer the payment of those gains and reduce the total amount you'll need to pay. QOZ funds are generally set up like syndications, so most will want large initial investments - 50K or 100K are generally the minimum investment limits for most syndicators, and you might need to be a qualified investor. To get the full benefit of the QOZ fund, everything invested must be capital gains money. So that means you need to generate 100K of capital gains this year and then invest 100K into the QOZ fund.

If you want, you can set up your own QOZ fund and invest yourself. However, unless you have found the property already and it's both inside an opportunity zone and will pass the IRS' substantial improvement test, it's probably not worth doing at this time. 

I have invested in a few syndication deals in the last few years, and three of them are ending or have ended this year. How are the final distributions taxed? Assuming there's depreciation recapture, will the depreciation recapture and the final distribution amount be reported as regular income? net rental income? Long term capital gain? Something else? My intuition says long term capital gain, but I wanted to check so I can make sure to plan the rest fo the tax year appropriately.