All Forum Posts by: Christina Potosnak

@Dave Foster ok, thanks again. It seems a bit much for just 10k back in our pockets.

@Dave Foster thanks for your insight! The post closing cash out refi is an option. We would have plenty of equity in the replacement property. Since posting this i was able to get clarification from our QI. They said the same thing about a recorded note against the property.

The debt payoff would go to the LLC not to our names. We keep very tight books and certainly don't want to do anything that isn't permissible. If it is permissible, but risky of an audit, you think there may be a possibility of the IRS throwing out the entire exchange instead of just charging us tax on the promissory note amount? The amount is very small in the 10k range.

I hope someone can answer this for me in a way I understand it. We have a single family rental home we are selling in a 1031 exchange. Prior to listing we renovated the home. I asked our 1031 company how we should handle all the renovation costs we incurred...should we add it to the basis and not claim it as an expense? They gave me another option, which I ran past my CPA. They said we could write ourselves a promissory note for the cost of the rehab and get paid back at closing. They said the only thing about doing this is that we would have to add that as extra debt replacement on the new property. The problem I am having is that both the intermediary and the CPA agree this can be done, but no one is explaining how.

My questions with how....How does that debt move to the new property? We are already getting a bigger mortgage on the next rental property. Would that bigger mortgage make up the extra debt?

It seems to me, we would write the note as if we were hiring ourselves as contractors and the contractors agreed to get paid at closing. So the note would be in effect during reno and paid off completely at closing.

Any insight would be greatly appreciated.

@Ryan Swan I should clarify more. We do not split the lease. We have 1 lease per apartment. The apartment has 3 bedrooms. The apartment rents for 1200/month. Locals not in school will not pay that price. Students that inquire about the apartment will do the math and figure $400/room. Places that rent by the room are anywhere from $500-700/room depending on amenities and property class. We are at a premium for locals, but an affordable option for students.

It seemed the OP was wanting the increased rent option of student housing, but others were saying the drama would not be worth it. We like the middle ground. We will lease to anyone that meets the application criteria...it just so happens the majority of our renters are students. We are 1 mile from campus.

@Marshall Gerston, you can rent to college kids by the unit, instead of by the room. We have ours set up this way. We quote the total apt price to students and then break it down "by the room" but explain that they need to pick their roommates. Our lease specifically states that we do not get in the middle of roommate squabbles. This has worked so far. We still get the occasional issue, but we rely on the lease and offer suggestions on how they can settle the issue themselves. We want people to know who they are living with...or at least be the people that found them.

@Alissa Engel, this is gold!!! Love the "sob story" criteria.

@Kimberly M., this is going to be a few extra steps in the vetting process, but here goes....Next application you get you should cross reference past addresses with a website like www.familytreenow.com. It is free and will tell you any previous addresses they have had in any state they have lived in, along with the approximate dates. This data isn't 100% accurate, but it goes off of public records and I have found it extremely useful when screening tenants. If you want to get previous landlord references from places that were not listed on the application, you can Google the addresses and see if you can find a previous rental ad with a property management phone number or landlord phone number. It's not what people tell you...people will say anything to get a roof over their heads. It's what they don't tell you that you will want to find out. I have rented to some wacky people and have gotten more and more sluethy with each applicant. Good luck!

Thank you Jason!!!  This helps a lot!  

@Thomas Gardner, thanks for the reply. We have not heard anything like this yet.

@Miles Wicker, if your plan is to make parks whole again, I would highly recommend looking into the CASH program through 21st mortgage. We had to fill 15 lots and opted for new homes fast, vs old renovated slower option. The price was good after jumping through all the hoops! After we did one park, it makes us want to do others. Now we know the drill and can plan ahead better. The park we recently filled was purchased full, so it was a bad situation that needed a fast solution.