All Forum Posts by: Cary P.

Cash flow will always be an issue, but if it's well rented and maintained, you should be close to breaking even on paper. Capital improvements like replacing a hot water heater is considered income that is depreciable on your taxes. You depreciate the asset, minus land costs, (land costs typically based on tax assessments), every year and that helps offset the cash earned. You actually kind of want to be a little negative as far as the IRS is concerned - mortgage principal and cash flow are still income, capital improvements are income, mortgage interest and HOA fees are deductible as well as repairs and maintenance.

Colorado state taxes are currently 4.63%, but deductible off of your state taxes in Ohio as well as your feed taxes. Colorado does not have a transfer tax like Washington, Pennsylvania and some other states do. We also pay our taxes in arrears as opposed to current year.

Related, but it is always good to know about, make sure you read up on disposing of the asset in the future. As far as taxes go, look into 1031 Exchanges if you sell and buy a new property and depreciation recapture if you don't buy a new property.

Disclosure: my group is getting out of Colorado because of the speculators and high prices and moving to Ohio and other states. We rode the way up from 2007 to now, but are noticing a downtrend in Denver metro proper. I'm not sure what Breck and Frisco are like. Arapaho Basin is separating from Vail resorts after this ski season. They have not announced of they will hook up with another group like that.

@Nick Mertens.. I didn't even have to say anything :D

@Greg B., I'm a big fan of Atlas, as I'm sure you've read.  Good luck in your search, regardless of who you choose. You need to make the right decision for you..

Cary

Hey Jeremy,

I grew up in Durham, live in Colorado and own a SFR in Natrona Heights. You probably know most of this already, but just a reminder:

Things are different in PA:

- insane Allegheny County property taxes. I pay 3 different taxes that total about 4%, a year, in the house cost. Taxes are paid in the same year, not in arrears, so you'll need more money at closing to cover what the sellers have already paid.

- 1% transfer fee when buying property paid for by the buyer.

- Inheritance tax.  PA is one of the few states that still charges taxes when you die. Don't die while living there.

If you are willing to buy in like Leechburg, Kittaning, etc, you can save on property taxes.

You'll still pay taxes in NC, as well as PA, for any earned income on your NC properties, but being a RE lawyer, I'm sure you know all about these issues.

Obviously, living in Colorado, I don't follow any Pittsburgh REIA groups out there. I'm just a bit butt hurt on a relatively small sum with the fees and taxes. It was a good learning experience for larger future transactions.

Good luck! 

Cary

Hi folks,   

We need to re-plan an existing parking lot after partitioning a piece of land.  I want to see how much land we can sell to the city and still have 46+2HC parking spaces on the remaining parcel.  Any recommendations? I tried searching for recommendations for a Denver Civil Engineer, but the first 5 pages of results were not helpful.

Thanks!
Cary

I love love love Atlas Real Estate Group. (http://www.realatlas.com). I burned through several PM companies before I finally l found these guys. I've been with them for almost 3 years now. Because I was locked into a contract with the previous PM company, I spent about 5 months vetting Atlas. "This just happened. How would you handle it?" And their responses were always what I would do. Look for my other posts and you'll see that I'm always recommending them. A great group of people. I can PM you the ones I've had not so pleasant experiences with, but I won't go into details as to why. I don't post that information publicly because it's not nice, but yelp would tell you the same thing ;)

I will PM you..

OMG, I LOVE Atlas Real Estate Group.   http://www.realatlas.com. We burned through a couple other management groups before I found these guys. They saved my sanity and our properties. They took over almost 60 doors from my group and actually got things done when they said they would. We don't have that many doors any more, but they still manage the doors we do have. I'll PM specifics if you have questions. Nick, Jason Jones, and Donna have been great to work with. They've mostly been working apartments for us, but they also manage single family and multiplexes. Different folks manage different things.

We are exploring out of state, as well, as Colorado is just too hot. I don't want multi-family and I already understand NNN, so I'm just exploring other "outside the box" options that are low impact and very passive. Dave's already chimed in, he was first. He gave good input, in other words, the land is all good, regardless of how it is used, but the RV and personal are a no-go. Which is what I figured, but it spares me from that research, which is good.

OK, cool!! I figured the RV and personal home were non-starters.. Thanks for clarification on the rest!!  It narrows my focus.  We're looking into logging rights and ranch land as possible exchanges, but we want to have our research squared away before we get locked into 45 days.

Hi Guys,

We are considering selling a property and have some 1031 exchange questions with regards to IRS expectations.  We would be moving from multi-family property to much different areas and states.  However, there are too many paths for me to explore them all and figure out where we want to go.  So, I want to start with - what is possible?  Here are options we are looking at, but not sure where I should spend my time researching if the IRS won't allow it..

- If we buy a piece of land that has logging rights (or other mineral rights), what are the rules around how long the land must be physically logged for the exchange to be valid? If it's a 50 acre plot that only takes a few weeks versus thousands of acres that might take a year or two? Does the size of the plot of land matter? Once the trees are gone, then what? If we don't sell it, can it ever go to personal use or would that still need to be 2 years later? Is this consistent across all mineral types?

- If we buy a couple thousand acres of ranch land, but it is only used for grazing in the summer, is that sufficient? We might be able to use it for hunting and winter sports depending on the area we buy in.

- If we buy a couple thousand acres of ranch land, but want to turn it into a wind or solar farm, how quickly does the land need to become active with the actual farming of natural resources? I've heard in some states it can take years to get approval for such renewal resource farms, so what are the hard limits I'm looking at to make it profitable?

- Can we buy an RV that we move to whatever campsite the guest has reserved (lots of glamping tourists) would that be considered an exchange - airbnb of an RV? Would we ever be able to have personal use on non-rented weekends or stop after a couple of years to turn the RV into personal property? It's a depreciating asset, unlike physical structures, so I'm not sure this is something we can do. However, some RVs are considered primary residences, so that's where my confusion comes in.

- Our current primary residence was a rental for us from April 2012 until June 2016. We moved into it June 2016. Are we able to sell this house to the 1031 exchange business at fair market value, paying any capital gains from the sale (because it was a rental first and purchased after 2009), and rent it back to ourselves from the business at market rent for about 6 months before moving into our new house? This is the one I think might be a no, but the IRS would get capital gains on about $150K in profit (2/3 of about $250K in profit), so maybe it's legit.  We'd legally rent it back from January 2019 through May 2019 and be moving out of state turning it back into a rental.

I'm not looking for "that's a bad idea" - I'll come up with those conclusions on my own .  I'm trying to rule out the ones the IRS will frown upon and not allow as an exchange or the rules around what the IRS expects.

Thanks!

Cary