All Forum Posts by: Daniel Hanson

found a decent answer to my question here:

http://www.1031exchange.com/reverse/

The Reverse Exchange greatly expands the ability of the investor to take advantage of changes in the marketplace and to improve his or her investment position."

@Eddie T. - I'm curious about the reverse 1031 exchange- I hadn't heard of that before vs. a regular 1031.  Can you explain a bit on that?

Thanks!

11 more units

@Joshua Martin

I'm thinking you need to evaluate this as more than 2 options, each looked at independently in a spreadsheet.

1. rehab, rent, refinance
2. rehab, sell
3. owner-occupant short term while rehabbing to rent
4. owner-occupant 1 year while rehabbing to sell
5. owner-occupant 2 years while rehabbing to sell with Cap gains exclusion

I was struggling to see the value of any of the owner-occupant options, but I assume that helps you get the purchase loan on the place.    Still, it seems like it delays any investment income for at least a year if you go that route.

yes, definitely 2 year hold on the capital gains exclusion. 

$375/ mo is definitely a better number, but keep that option open for future hiring out a property manager, even if you are paying yourself that money for now.  Don't want to be backed into a corner with negative cashflow if you do hire a PM in the future.

@Joshua Martin

Hey Josh,

Just a couple questions. What is the utility cost of $75/ mo composed of? On a SFR I would expect the tenant to pay water and electric, so if that's the case you could add $75/ mo onto cashflow.

As a strictly rental, the bottom-line $74/mo CF looks risky to me, especially since you aren't including the monthly payment cost of the borrowed rehab, which should be covered by the rental income.

If your girlfriend will be the owner occupant, flipping after that might make more sense rather than refinancing, as she would get the capital gains tax exclusion at sale.  Plus it gives you a full year to perform the repairs and get it flip-ready.

Nice summary of Waukesha county @Marcus Auerbach

@Meg Roman I live in the city of Waukesha and own one SFR there as a rental. I keep my eye out on the MLS and the county auctions for potential Waukesha rental properties, but I've come to the conclusion that unless I dig a lot deeper, the rehab and sell or BRRR strategies are going to work better as an initial entry into the city than a straight rental.

thanks @Paul Ewing  !  I like the idea of the auditable paper trail.

Hi @Paul Ewing - I'm curious on the unsecured personal loans that are not mortgages.  When you do your income taxes are you able to deduct the interest cost against the property similar to how you would deduct interest with a normal mortgage?

@Jerad Miller

I previously did a lot of looking and evaluating on storage units but ultimately decided to go in the residential rentals direction.  A couple key things to know when you are evaluating the purchase of storage units:

• What is the size mix of units (10x10, 10x20, 5x10) etc. 
• What are the nominal rental rates by size of unit, 
• in which size are there vacancies,
• are some of the units flexible so you could convert them into different size units based on your market research
• what is the market rental rate by size of unit.
• Are there any future zoning regulations that would make the property have to be re-done for visual appeal, costing you a lot of money?
• what's the average length that a storage unit is rented in this facility
• how fast can you turn a vacant unit
• what are the local laws regarding evicting a non-paying tenant and disposing of the unit's contents
• is there spare land on the lot that would allow additional expansion by adding storage units
• is advertising primarily by visibility to drive-by traffic and if so do you get enough cars per day?  if not is there another effective method of advertising?