All Forum Posts by: Craig Lessler

I have a property manager in Gilbert whom I am using to manage 16 properties.  If you like, I can give you the name and number of the company.  They are reasonable.

If you are looking for a large tax shelter, you can invest in oil drilling projects.  You can an immediate tax deduction of approximately 85% of the money you invested in the first year.  However, it is too late to get a deduction for 2015.

Tat, your goal is very achievable.  However,  you need to be selective.  The numbers do not work in a majority of the deals.  One thing I did was I purchased a portfolio of 16 properties for $1.1M cash which will  be generating $90,000 to $100,000 per year cash flow (with hiring a property manager).  There are deals out there where you can purchase a portfolio of properties.  The location and quality of the property are crucial to achieving long term appreciation, retaining long term tenants and attracting quality tenants.  

If I can help you in anyway, please do not hesitate to contact me.

I wish you luck and I know you will succeed.

Th original contact price was $937,500 and the appraisal came in at $904,000.  The appraisal was thorough and based upon the comps and basically said the comps did not support the $937,500 price.

I agree.  An appraisal saved me $33,500 off the contract purchase pric of my primary residence which I bought with no financing contingency, but with an appraisal contingency.

The house was in a nice neighborhood where few homes go on the market.  After the contact wears executed and during the due diligence period, the appraisal came in at $33,500 less than he contract price.  I threatened to walk away from the deal if the price was not lowered to the appraised value.  Eventually, the seller agreed.

Has it not been for the appraisal, I would have overpaid for my dream home.

Very simply, I would look at the CAP rate on your property with your current rent and expenses with the property valued at $310,000. If your CAP rate is low, i.e. Under 7 %, then, I would sell the property and do a 1031 tax deferred exchange into another good quality income property with a higher CAP rate. However, you need to add in the cost of a property manager, vacancy and capital expenditures when you do your calculations. The goal is to have your equity work harder for you.

the property was on the MLS and was an estate sale. The the property is in North Phoenix near the 101.

Thanks.

I recently sold my interest in an out of state property (a syndication and did a 1031 exchange into 16 condominiums in Phoenix. The units were mismanaged, rented substantially below market, had a few vacant units, had significant deferred maintenance and were in need of cosmetic improvements. The units are in a desirable location, have a low and stable HOA fee and have rented easily following renovation.

I have already improved the vacant units and rented them, removed the problem tenants and am quickly bringing the other units up to par and closer to market rents.

Even with factoring in the cost of the property manager and allowing for a vacancy factor and a budget for repairs and future capital expenses, the property has a solid 8% CAP with the increased rents.

I am hoping to do another 1031 exchange in the not so distant future from another out of state property into a bulk purchase in the Phoenix valley.

Reading the BP posts and listening to the podcasts and webinars is giving me more inspiration.  The support that the BP members give each other is also encouraging.

jay,

Please feel free to ask me for advice.

Craig

Jay,

It seems all 3 properties are rentals for some or all of 2015 and will be reported on Schedule E of your 2015 income tax return. 

I had a similar situation in the past where I sold some rental properties without doing a 1031 tax deferred exchange and I had sufficient carry forward passive losses from all of the the rental properties to offset the capital gain from the sale of one of the properties.  The fact that your adjusted gross income exceeds $150K does not prevent you from being able to use your carry forward and 2015 passive losses to offset, in part or in whole, the capital gain from the sale of one of your properties.  

I suggest you contact a CPA to work through the numbers to see if you have enough passive losses to absorb the capital gain from the sale of a property.  If you like, I can give you the contact information of the CPA I use in Scottsdale.

Craig