All Forum Posts by: Robert Hetsler

I can recommend a good property management company and a Good eviction attorney in Jacksonville as well.  In law school, I worked for a law firm and we handled hundreds of evictions so I am very familiar with the process in Jacksonville.  I have also had to evict at least 6-8 of my personal tenants and I will tell you if you have  A tenant that ignores everything and simply defaults, you were still looking and six-eight weeks, under the best case scenario.  Alternatively, if you have a tenant that has been down this road before and knows the proper defenses and discovery to stall the process, then you could be looking at a six-month process. The key is to ensure that the tenant is paying his or her rent into the clerk of court depository during the pendency of the action because if they failed to do that, that is grounds for immediate removal so you definitely want to ensure that is being done.

With respect to additional cash flowing properties, I actually have six condos/townhouses in the Jacksonville market that I am looking to unload. Currently, they are not listed on the market but they are all rented and I would be happy to discuss options.    Three of the condos are in a complex right next to the St. Johns town center in a complex called Sail Cove and it is the closest residential community next  to the town center, excluding the ones inside the town center.  These are located at 10,000 Gate Parkway Blvd.. Another one is in Orange Park off of Wells Road, one is off of Beach Boulevard near parental home Road and the last one is off of Arlington Expressway.  Although I am an agent, I was going to try and sell them off market and I would even consider possibly financing a portion of the sales price.  In my opinion, they have a combined value of approximately $491,500 as most of them I purchased less than 24 months ago and have replaced AC, hot water heaters, and all but one of them, I installed new ceramic tile in all of the units bathrooms and kitchens as well as installed granite countertops in all the units in all the kitchens and bathrooms. If you or anyone else is interested, now would be the Time to email me independently to discuss before I do get an agent involved.     I hope this email helps respond to some of your questions and it added some value to you today. Thank you I hope to hear from you soon 

Although I am extremely familiar  with 1031 Exchanges; however,  I am not nearly as familiar with the crowdfunding deals.  As such, I believe @Drew Reynolds, @Ian Ippolitoand @Jeff Wallenius both identify the "hotspot" issues in terms of ensuring you comply with the entity structure rule.  If you keep in mind that core concept that the tax payer is the one that receives the benefit of the exchange, you should be fine.  In otherwords, you would need to make sure that the same legal seller is the same legal buyer of the replacement property.  For this reason, partnerships are often something that does not qualify unless all partners are in agreement.

However, the items mentioned above like a Tenants in Common structure would be fine.  As pointed out by the prior comments, if the asset does qualify for 1031 tax treatment, it is likely their will be specialty assets that promote the fact that they are 1031 Compliant as their goal is to secure as much exchange money as possible.  In those cases, they will likely provide you with all the data to support the fact that they are compliant.  Contrarily, if they are not compliant, they likely will be silent on the issue, which is a red flag.  Either way, it is prudent to do your own research.  I know that I would be able to answer that question for you as well as @Dave Foster, a minor celebrity on the site, and @Bill Exeter are also both capable of  responding to the questions after we are provided more facts and the information on the potential replacement property.

As such, you just want to ask the questions to the crowdfunding firm and also ask for support if they indicate that it is 1031 Exchange Compliant Property.  Essentially, like all prior comments stated, just ask the questions and put the burden on them as a first step to ensuring you are not wasting your time on property that does not qualify.  I hope this provides some value.

while I normally never offer up my own services, I realize what you are seeking appears to be very time sensitive and your needs require a unique skill set that is not on every block.

Having said that, I am a Nationally Certified Forensic Accountant, a Licensed CPA, I am a Licensed Florida Real Estate Agent, an avid real estate investor that owns 26 different commercial and residential properties, a Nationally Certified Business Valuator, have valued hotels and storage facilities in litigation cases several times, was a licensed Mediator for the first 11 years of my career (mediated over 3000 cases), Certified in Financial Forensics by the AICPA, a Personal Financial Planner and have a Doctorate Degree in Jurisprudence (law degree).  Most importantly, I have testified, either through deposition or trial, as an expert witness in these types of cases at least 30 plus times and I have been appointed unilaterally by Judges in at least  two different states to be the Forensic Accountant or Business Valuator in contested divorce cases or other civil matters    Please let me know if I can help as I am happy to assist.

 I am responding remotely so I apologize in advance for any grammatical mistakes or any short answers that require further explanation as I'm happy to prepare a follow up response later if need be.

@Kathy Henley brings up an import issue and there is a very specific provision in the tax code that addresses this very specifically and I know that it certainly could change all the answers below. My answers below are based on my experience as a full-time real estate investor and I am hopeful that someone will elaborate on that issue as it is certainly a hot spot with some friends of mine who I have heard complaining about this very issue that 

An important issue to ensure everyone understands is whether your tax treatment is such that you aren't allowed to deduct any expenses or your not allowed to take any losses that result from the property until the property is sold. This is very important to distinguish because if you have income resulting from the property and you have expenses, you can write off expenses to the extent of your income (I believe this is accurate but someone correct me if I am wrong please) but you may be limited in your ability to deduct your losses against other taxable income resulting from your "other career". I mention this only to underscore the importance of identifying the issue and the difference in the expenses and their treatment should you have income on that particular property.

Given that, below are the answers that, in my personal opinion after investing and dealing with real estate for my entire career, that I feel are accurate if you remove the loss limitation issue identified above. Additionally, just so there's no confusion, even though I am a licensed CPA, I do not even prepare my own tax returns ( although I have several real estate friendly CPAs I would be comfortable in referring you too because, in my business of 1031 exchanges, I have met many qualified CPAs) and my responses are primarily based on my real estate investment experience personally and not the fact that I'm a CPA. Here we go!

With respect to question number one, the answer is really going to turn on when you incurred those expenses, or more specifically, when you actually wrote the check or charge them on a credit card. It's a timing issue of when the expenses were incurred and not when you purchased the property.   This could be different if you're an accrual-based tax payer but I am fairly certain that you were not as 95%  of the population, including myself, is a cash based taxpayer.

With respect to question number two, if they are not capital expenses, then they would be expensed in the year incurred and not depreciated. Capital expenses would be something along the lines of re-roofing a house or something that extends the useful life of the asset. Contrarily, recarpeting is something that is probably a necessary and ongoing type of repair that does not necessarily extend the useful life of the asset so I think you're fine to expense items of that nature without issue.    Finally,  there is no exact science ( as evidenced by the fact that you will probably have numerous opinion variations to this question and if you have 500 CPAs in a room and ask them, you will probably have 500 opinion) so the easiest way, if you are unsure and you prepare your own tax returns, I would keep it simple.  At the most basic level, if it is an expensive and large undertaking, it is probably more capital in nature versus a less expensive job that will likely occur several times over the life of the asset,  which indicates it might be an expense that can be deductible in the year paid (and charging to your credit card is paid for deduction purposes).  Most importantly, remember that expensive is relative to the asset and not to you/taxpayer.   This is simply a good rule of thumb and I hope it ads some value for you.

With respect to your question number three, in reading it I don't believe that listing a property for sale has anything to do with it or will have any impact on your federal tax returns. The actual purchase and sale and incurring expenses is what is important but Listing something for sale, in my opinion, does not have any impact on your federal income tax returns.

I hope I helped!  it certainly did not end up being a short of an answer as I anticipated when I started!

there are some very good responses for you and @Brian Eastman has clearly established himself as a subject matter expert and I agree with his analysis 100%.  I would just add a few thoughts that might help you accomplish what you are trying to do which I believe is maximize the amount of money you can utilize to purchase real estate assets in a retirement account and also enjoy earnings now and not have all income proceeds go back into the 401k.  As a financial planner and an avid real estate investor,  the most advantageous route I have seen similar individuals employ is to deposit your account with a brokerage firm that offers non-recourse loans of up to 60-80% (this  percentage is largely determined by the holdings in your account as I know that's how It is done at all the firms I work with that have this product) of your total assets under management and then the non-owner spouse ( The spouse who is not the owner of the retirement plan )  manages the real estate assets for a comparable management fee to which she/he would pay any other management company which would allow the family unit, in large part, to benefit from a significant portion of the income.   This results because the property does have to be managed by an independent 3rd party and it is permissible to self manage the properties. so instead of hiring a third-party management company you simply hire your spouse to manage the property.   

Again, tax avoidance is fine but tax evasion is  obviously something you never want to participate in.  Having said that, I am a very aggressive taxpayer but I stay with in the "letter of the law" and I have seen many  conservative CPAs endorse this method without issue.  I am not advising you that this is a 100% foolproof method either.  I hope this generates more thought as  you navigate these blurry waters. 

One thing I can tell you after having gone to both law school and Accounting school is that if you get five different attorneys or CPAs in a room and present them with the same fact pattern,  you will never get the exact answer from any two of them as they were all be somewhat different and the same isn't applicable to to IRS auditors.  Best of luck!

I might be able to help or know someone, what type of dollar amounts are you in need of?

I might be able to help but the solution I have in mind is someone that will finance 70% of the deal and require 1st position on the collateral. If you have that charges 10-12% and one point. He only does 24 months and lower. If those terms make financial sense, let me know and I can pass along the contact information. Alternatively, as a financial planner, the best financing tool, assuming you have a retirement account or other marketable securities/cash is to utilize those securities to secure a loan, with no closing costs, points or any other closing costs. The rates are typically 2.5-5% and almost all brokerage houses allow for this type of loan but just do not advertise the "collateralized security loan ". So even if you do not have that access to that type of cash or securities now, just keep in mind for the future because if you ever sell a property that results in a decent size of cash, make sure to put that money with a brokerage that has a loan program so that you can have flexibility, no closing costs, and your money working for you both in the market and in real estate. I know that the latter portion of my answer does not address your question but it is a product most brokerage houses have but they do not heavily market so just in case you have security in the form of retirement you might have a solution that could be very cost effective.

Yes call Mary spears and use my name as she is very good and is a good fit for your needs.  

Good luck

I have a lot of contacts in Georgia as half of my personal portfolio is located in Georgia so  I should be able to provide him with some guidance.

 I think the very first question that I would need answered is whether the RV park  consist of land only or is it something that consists of land and the actual  RVs themselves as well. If it is the latter, there has to be an allocation involved and if it is the former, there are no issues as it qualifies since it  is solely the land ( Real property )  dad is being exchanged. Finally, just remember that the taxpayer receives the benefit of the exchange so the taxpayer has to be both the selling entity and a buying entity and cannot be altered.

 I apologize for any grammatical errors as I am dictating this while driving