All Forum Posts by: David Weskamp

Quote from @Rebekah Hitt:

@David Weskamp do you have a good tax attorney you are willing to share contact info on? trying to add that to my contact list!

 Hi Rebecca, 

Sorry for the long delay. Not really, I have a local attorney that i use for promissory notes and legal documents and a new attorney in Arkansas that is helping me get set up with LLCs. But, i dont think either of them specialize in Taxes.  

Thank you both for your comments.

Yes, I think I did answer my own question. The CPA's explanation was news to me, and I was thinking (or hoping) that all of these would be deductions. Still learning as I am going

In my CPA's defense, I had not provided her a detailed expense report that categorized repair/improvements. 

 To accelerate the depreciation, do I have to to complete a cost segregation on the property? (is that the correct term?) 

Hello,

I met with my CPA yesterday and we discussed my rental portfolio and remodels completed on recently purchased properties.

She asked whether these were repairs or improvements.  Apparently you can deduct repairs, but not improvements ( this depreciates over the 27.5 years).

Well, of course I want repairs, so I can deduct. 

Has anyone had any experience with not being able to deduct remodel costs. Did you have to show the difference on what was a repair and what was an improvement?

For example: I bought a home for $70k put 25K in rehab. I would assume i could deduct $25k on taxes to off set a couple sold properties and rental income.   

Thanks for any help,

Dave Weskamp

Hello Investing Anglers,

This might be a strange post about fishing and investing, but I am hoping to connect with other investors that love to fly fish. I am an avid fly fishermen and live in Idaho, but enjoy saltwater fishing equally. 

My goal is to connect with other anglers to discuss investing opportunities. The opportunities don't necessarily have to be centered around fly fishing destinations, but would be fun to think about fishing in places I invest. I would also be interested in connecting with folks that might invest near Salt water flats and mangroves (redfish, tarpon, bones, permit and so many other). This could either be US or out of country. 

I think there could be opportunities with short term rentals around fishing destinations. That's how and where I travel (Baja and Yucatan Peninsula) . 

 Most of my fly fishing friends don't want to hear about me discussing investing while we are drifting a river, so hoping to connect with other like minded folks. If you love to fly fish and want to connect, please reach out to me. 

I currently invest in Idaho and Arkansas. I have not been to Arkansas yet, but hope to fish the White River while checking on properties.

Tight Lines and successful investing,

Dave Weskamp

Thanks Will, Mark and Daniel for your responses. I reached out to my Arkansas (Central Bank) lender and asked if the due on sale clause would be an issue (no response yet). Mark-I do not have these in an S-Corp, so not an issue. Daniel-That's interesting about the co-mingling. I will run these by my real estate attorney before completing. Thanks for your replies. Good stuff. Dave Weskamp

All,

I am in the process of creating LLCs for my properties in Idaho an Arkansas (I live in Idaho).

The properties I own are in my personal name. I own a few free and clear and a few with mortgages.

My question is, What is the best way to transfer ownership into my new LLC's? Is this process different for properties with mortgage vs free and clear?

Thanks,

Dave Weskamp

Thanks All for you comments. I should have done more homework before I purchased a lesser value project.

At Bill Brandt-I actually think i am growing by purchasing a lesser value home (I would own this free and clear) compared to a mortgage-but sounds like the IRS doesn't think so.

I may look into purchasing a couple more homes to bring that value up to $208ish. I like the idea of $70k for purchase and $28-$35K for two down payments. 

Unfortunately, the two homes I purchased two months ago were not held by an escrow agency and do not qualify for reverse 1031.

Lessons learned. I am now going to meet with a CPA and exchange expert and try and think strategically for the next ones.

Thanks for all the quick responses.

Dave Weskamp 

Hello BP Team,

I am struggling to work through a potential 1031 that I thought was a no brainier.  I have been hearing this 1031 term for 20 years and thought it was such a great tool. I'm not sure that a 1031 exchange is a tool that will fit most properties and is really that useful

I have been investing in Idaho and out of state (Arkansas). I recently put a single family residence under contract in Arkansas that was contingent on selling my duplex in Idaho. This is where the 1031 comes in> 

Here is my scenario: 

Idaho

I purchased a duplex in Idaho (2019) for $135,000 at 20% down ($27,000). I currently have this property under contract for $208,000 My goal was to to 1031 exchange the capital gains into a property in Arkansas

Arkansas

I have a single family (plus detached apt) under contract for $70,000. I have sent both my PSA for Idaho and Arkansas to the 1031 escrow title company and have informed my CPA of my plans. The closing dates for both properties is August 6th.

My CPA has informed that this exchange will not really defer the taxes. I was informed that I must trade up with Like Properties. My goal was to exchange and use the capital gains to purchase the AR property free and clear. So, It appears that I must purchase/exchange a property that is equal or higher than the one i am selling. So, forced to purchase a property that might require a loan instead of being able to purchase free and clear? How do i complete this exchange and defer the taxes?

I also tried to do a reverse 1031 with two other AR properties that I purchased less than 180 days ago, but since the properties were not held with a title company after closing and until the exchange was complete, I did not qualify. (which i understand). 

Hoping that some investors may have some advice on how to complete this exchange with deferring all of the capital gains (or at least most of the gains) Is this true, that you must trade up and your exchange property must be higher value. 

Thanks,

Dave Weskamp in Picabo, Idaho

Hi Monika,

 I have not purchased anything in Blackfoot, but have purchased two rentals in Pocatello. I feel that Blackfoot will have a slower growth compared to Pokey, Idaho Falls, and Rexburg. I feel much better investing in a college town.

Blackfoot seems to be an area that might be just out of range from these other cities for growth. Just my opinion. I would take a closer look at Pocatello and Rexburg.  Rexburg seems to be booming and i think will continue to grow. Brigham Young University went from a two year to a 4 year several years ago, which has had an impact on growth. 

I  found a great realtor in Pocatello. She is also an investor and property manager. This is one of the reasons i am investing in Pokey.

With that said, if the duplex is cash flowing and purchase price was good and repairs were minimal, I personally would consider it. I am a new investor and lots to learn, so take my comments with caution. 

If you would like more info on Pocatello and my realtor, send me private message. 

Dave Weskamp

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $75,000
Cash invested: $75,000

Single Family home. The house was under contract and fell though due to foundation issues. Many interested parties, but could not be purchased with loan due to foundation issues. Foundation was shored up and plan is to repair in spring. House is solid but will require permanent repair before selling with traditional loan. The house is also zoned residential and commercial, so a shop could be built and business run out of the house. The house also has water rights which adds value

What made you interested in investing in this type of deal?

This property was under contract at much higher price and fell through due to minor foundation issues. Required cash deal. This will rent well and plan to repair foundation in spring. Depending on if I find a solid long term rental, I might flip.

How did you find this deal and how did you negotiate it?

When the house price dropped due to foundation issues and bank would not loan on it. Did some research and spoke with the contractor on cost estimates for foundation work, it still penciled out very well.

How did you finance this deal?

Cash

How did you add value to the deal?

Foundation work will be completed in the spring.

What was the outcome?

Keep you posted

Lessons learned? Challenges?

Keep you posted

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes on real estate agent and contractor for foundation estimate