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All Forum Posts by: Adam Ward

Adam Ward has started 2 posts and replied 34 times.

Post: 1031 Exchange into Tenants in Common

Adam WardPosted
  • Investor
  • Raleigh, NC
  • Posts 38
  • Votes 30

@Bill B. I think you hit the nail on the head here.  62.5% would keep things straightforward and allow the purchase to be fully tax deferred.  Also appreciate you continuing to push the skin in the game issue.  I'm currently learning first hand how important it is.

@Alex Stariha Thanks for chiming in.  So it appears a portion of your purchase was taxable.  Not the end of the world by any means, especially if it was a good buy.  Good luck with the new acquisition!

Post: 1031 Exchange into Tenants in Common

Adam WardPosted
  • Investor
  • Raleigh, NC
  • Posts 38
  • Votes 30

@Bill B., @Whitney Nash, @Dave Foster

Thank you for the feedback.  Ultimately, the two objectives are to defer tax on the sale, and participate in 50% of the profit/loss and appreciation of the new property.

Perhaps a better way would be to use the $250K proceeds to purchase a 25% interest in the $1M property and have my parter get 75% interest while being solely liable for the $750K mortgage? I imagine we could write up a separate JV agreement stating that NOI/appreciation would be split 50/50 and that capital contributions would be recouped before proceeds were paid out.

@Dylan Speer - I like the idea of being hands on and having the ability to influence the outcome of the deal. I assume I would be giving this up with a DST?

Post: 1031 Exchange into Tenants in Common

Adam WardPosted
  • Investor
  • Raleigh, NC
  • Posts 38
  • Votes 30

I'm interested in doing a 1031 exchange out of a couple SFRs and plan to use 100% of the proceeds to purchase a 50% TIC interest in a larger commercial deal that will have a mortgage. The SFRs are free & clear. My question is regarding whether the debt on the replacement property will cause a portion of the 1031 exchange to be taxable.

Using hypothetical numbers for simplicity:

Proceeds from relinquished properties = $250K

Replacement property purchase price = $1M

25% down payment on replacement property = $250K (all of which come from relinquished property proceeds)

The replacement property would have a $750K mortgage, and ownership of the property would be 50/50 tenants in common.

From a tax standpoint, is my 50% interest treated as $125K equity + $375K debt (in which case I believe a portion of the sale would be taxable)?  Or would it be completely tax deferred since I used 100% of the proceeds for the down payment?

Open to any and all thoughts/suggestions.  Thank you!

Post: allowing a sublease Airbnb

Adam WardPosted
  • Investor
  • Raleigh, NC
  • Posts 38
  • Votes 30

@Kia E. did you ever find a solution for this?  I'm in the same boat talking to a tenant who wants to run my property as an AirBnb and I am looking for a subleasing addendum specific to short term rentals.   The property is in Durham, NC.

Post: Is 1500 enough to start in real estate?

Adam WardPosted
  • Investor
  • Raleigh, NC
  • Posts 38
  • Votes 30

You would be wise to find a money partner starting out.  In general RE is very capital intensive so that $1500 can go out the door real quick.

Can anyone find where the CARES Act addresses mortgage forbearance?  Despite a number of news articles stating automatic 6 month + additional 6 upon borrower's request, I sifted through it briefly and could not find anything straight from the horses mouth.

Here is a link to Fannie Mae's COVID-19 updates.  Likely to be updated next week.  A few highlights from the single family lender letter published on 3/18, updated on 3/25:

-loan can be primary, second home or investment property

-servicer is not required to obtain documentation of borrowers hardship (only attestation)

-insight into what payment deferral or loan modification options might look like after forbearance period (looks like there will be options to spread over 60 months)

IMO, as landlords we should take both defensive and offensive measures to manage cash flow.  Defensively, we should set aside ample reserves to deal with situations like this.  Offensively, we should recognize that today's dollars are far more valuable than tomorrow's dollars.  Potentially deferring payments up to 12 months and paying back over the following 60 months could be a pretty sweet deal.  Be prepared to pay back as a lump sum if it's required.

Any negative unintended consequences of forbearance would likely be in the realm of obtaining credit down the line.  I think the risk is minimal as long as you play by the lender's rules and prepare to pay the accrued balances if needed.

Post: Portfolio Lender in Raleigh, NC

Adam WardPosted
  • Investor
  • Raleigh, NC
  • Posts 38
  • Votes 30

The three I have experience with are Mechanics & Farmers, Providence Bank (out of Rocky Mount) and Peoples Bank NC.  Overall I have been pleased with all three.  Feel free to PM me if you want the lender contacts.

Post: Why did the price on these homes drop so substantially?

Adam WardPosted
  • Investor
  • Raleigh, NC
  • Posts 38
  • Votes 30

I’m willing to bet multiple properties were purchased together in 2018 (one settlement statement, one deed) and now they are being pieced off and sold individually.  The Durham county property records have a link that directs you to the deed which would have more info on the original transaction.  Or yea talk to the owner or listing agent to get the full scoop.

Post: Am I obligated to tell HELOC loan

Adam WardPosted
  • Investor
  • Raleigh, NC
  • Posts 38
  • Votes 30

I have been in this situation a number of times and haven’t hesitated to tell them that I am hoping to put the funds toward a new property.

I cannot speak from the bankers perspective, but if you are borrowing against a primary residence my guess is they are just filling in a required field on the application.  They are going to look at the collateral more than anything else.

Post: Just Got Our First Single Family

Adam WardPosted
  • Investor
  • Raleigh, NC
  • Posts 38
  • Votes 30

Congrats and good luck!  Look forward to hearing the updates!