All Forum Posts by: Cary P.

 And this is exactly why I want out :D

 Oh, yeah, we know about this one and it is something we think about.. And in 2020, neither one of us may be working, so the only tax would be this cap gain and no earnings income.. Definitely something we are considering.

Basically, this is what we do.. Even before the first property goes under contract, we start finding our targets and then once we get passed the inspections, etc, we send the 30 day LoI to time going under contract with the closing of the first...

Oh, I'm not OCD over everything, just this one that has a million of my dollars, year of my life, 40 pounds of my body, and enough blood to donate several pints to the Red Cross (Bonfils for you locals). 

Any little thing, because I'm so close to it, is a personal affront when it doesn't go right. I've told the PM company to just deal with certain things below a certain monetary value because hearing about them sends me into heart palpitations. The other properties (another apartment complex, multiple SFH) could burn down and I don't care, as long as no one gets hurt. It's just this one because of how much of myself I've left at this one.

I'm seriously thinking about just taking the tax hit, but not sure if the deal would close in time for us to time the market correctly and honestly how do you invest $2MM in the market in a timely fashion? :D  But, as a last ditch, we could always identify an Inland offering and go that route, if needed.

But I don't relieve myself of the property if the new owner defaults.  We have considered all kinds of ways out, but one thing for sure, I do not want anything to do with this property once we have sold it.  Any sort of boomerang effect due to bad buyers is not something I will consider.

To your second point, we could always say we are going to exchange and if we just cannot identify in 45 days (plus looking while under contract on the first property), we can just bite the bullet and pay taxes or go into something like Inland or AEI.

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1. I'm 44, no where near retirement age.  Cash flow stability is great, but honestly, the gut wrenching terror I feel going near this property is not worth it.  That's why we would consider cashing out if an exchange isn't forthcoming.

2. I don't work for a salary any more.  I'm formerly a software engineer who has become a SAHM sandwiched between elementary school aged kids and mid 80s year old in-laws, as well as managing our property and non-property related business. Hubby works for the non-real estate business and we get loads of tax savings there.  We haven't had to pay taxes since 2012 due to real estate losses and the real estate being active, not passive.

3. 6% commissions?  No, try 3% - At $5MM, you don't pay 6% and if you do, the buyer is making up the difference on their end, not mine (meaning if I want $5MM for it and they want a higher commission, the price is going up to cover, I'm not taking less).  I'm looking at about $150K in commissions. I've already got that locked in on my side.

4. The PM company would not be my sellers agent.  They have nothing to gain on this sale, but they have told me they won't manage for the new owners if we do sell due to the time it takes to manage. Their only dog in this hunt is if we exchange in their area, I would invite them to comment on future properties as to if they would manage them. Their encouragement is the lack of leverage and depreciation, not the burden on their company - at least not yet :D

Originally posted by @Andrew Johnson:

*I* was the manager for over a year when others wanted to rip me off, *I* was the GC for renovations that no one else wanted to manage, I know this property inside and out and I'm GLAD they are spending as much time on it as they are because I just can't do it any more. We have other properties and they don't vex me at all. I'm too involved and it isn't what I want.

It isn't the managers, it's the property.

I'm not saying this lightly regarding the management company... These are the best group of managers that I have found in Denver. I wouldn't move away from them for anything! I've burned through a number of crappy management companies, which is why all of my literal blood, sweat, tears and money are in this place. I'm total OCD control freak and these guys not only get that, but keep my properties in the same way I would.

I'm curious what the hive mind thinks.

My husband and I bought a 36 unit property in November 2014.  It was a total slum - drug dealers, cockroaches, etc.  Through our personal blood, sweat, tears and money, we renovated it to a solid C - replaced furnaces, hot water heaters, kitchen cabinets, flooring, etc.  The purchase price was just over $2MM, the sale price is probably around $5.1MM. We only have about $1.5MM in loans, so we aren't leveraged.  We bought for $2MM, so we aren't depreciating.  From an accounting stand point, it makes sense to sell and turn it into something that produces more tax advantages.  We are cash flowing and turned a profit (even after depreciation) in 2017.

But, we are in the Denver Metro area - no good deals to be found for 100s of miles. If we 1031 exchange, I cannot image the stress we will be under to find a property. If we don't 1031 exchange, then we are looking at about $800K in taxes on about $2.7MM in cap gains.

I cannot stand driving near this property any more and it's not far from where we live.  The PM company we have has been and continues to make noise about how much time it takes to manage the property.  I'm not scared that they will drop us (this year), but they really are encouraging us to sell.  I'm not sure we want to go through the process of exchanging.  We have done a TON of research on ways out - Inland Private Capital, AEI, all sorts of other trusts that may work.  But nothing is really appealing.

What would you do? I really need some sound advice..

My take on it is: liquidity and volatility are polar opposites.  And crypto is incredibly volatile.  The whole ecosystem (and trades) is valued at hundreds of billions, but most participants bought in at well below 1/10000th of current prices.  The current trading volume is mostly one crypto sloshing into another crypto, not billions of fiat flowing in and out per day.

Like @Jerry Shen we too have a crypto position that's a much larger portion of our liquid funds than we feel comfortable with due to recent run-up.  Re-balancing is not an option, it's mandatory.  Trying to cash it out has been challenging -- exchanges go down at inopportune times, and Coinbase's limits mean you can only cash out 780,000 a year -- and that's if you time selling precisely when your limit reaches maximum.

There is a huge exchange risk.  To put it mildly -- to purchase RE with crypto means shifting the exchange risk to the seller.  Like MtGox, an exchange could be robbed and freeze assets at any moment.  Holding coins there for any amount of time is risky.  

Even settling in dollars the title company and bank would have to trust the exchange holding the funds as collateral won't pull a MtGox.  You could ask them to just monitor your wallet to ensure sufficient funds, but then they'd have to trust your security policy and procedures are at least as good as the exchanges.  

The ecosystem has much maturing to do before you'll be able to do what you want easily, IMO.

p.s. I'd appreciate any heads up on safely cashing out if you have pointers.

p.p.s. ours are mined, total investment roughly $0
p.p.p.s. About 20 bitcoins stolen by MtGox.