All Forum Posts by: Rob Cee

What is a RMLO?

Thanks Anthony. This is exactly why I'm thinking just a straight standard month-to-month lease is my best option. I don't see a big enough gain from a LO or CFD to deal with the complexities and legalities.

Not to get wildly off topic...but there are a lot of other areas to escape CA then Texas. Denver, Boise, Portland, Seattle, Arizona, New Mexico, etc...

I don't really care about things like vehicle tax whether it is $60 or $100...that is peanuts, big deal. The two taxes you NEED to worry about are income taxes and property taxes. Those are the 2 biggies. Even a high sales tax is PEANUTS to what you pay in income taxes (especially if you are high income) or property taxes. It's really interesting when you start researching this. WA State for example is great for high income earners b/c there is NO income tax and property taxes are reasonable, you save a fortune over 10 years in income tax. Someone who makes $250k taxable income in CA pays $25k in income tax, in WA they pay ZERO. ZERO! CO is good too with a very low property tax and a reasonable flat income tax of 4.6%. It amazing you can go to a place like CO and buy a house for HALF the price of CA AND on top of that have a really low property tax. I look at all these things as I am going to retire early and want a lov overhead. You can have such a better life with no financial pressure. My advice for people is to get out of CA. Vote with your feet. Too many people cling to that state thinking they couldn't live anywhere else and live in their little 900sf $800k shacks, eat top ramen, pay huge amount of income tax just so they can fight the crowds and go to the beach every once in a while. CA = overrated, overpriced, over taxed. Standard of living is so much better elsewhere.

I'm in the far NE Heights/Academy Acres area. I think I'm good on rental rates. It seems like Rio Rancho isn't doing well? I read an article in the ABQ business journal that foreclosures rates are spiking there. Glad I didn't buy there.

I have heard people talk about this though, and I'm sure there is someone on this forum that knows about this situation.

Jeffrey C. I agree with what you said about the direction of CA and the tax situation there. I myself escaped to Seattle WA a few years ago after 25 yrs in CA for many of the same reasons you talk about. No state income tax in WA State! I save so much money I can take a vacation every other month if I choose. CA just skins alive high income people with the highest state income tax in the U.S. And home prices are out of control on the coasts. The combination of those two things is a killer in getting ahead. I also was not happy about paying out 10% of my income to CA income tax so CA could transfer that wealth to the highest paid Gov employees in the U.S. and their fat cat 6 figure pensions. The overall quality of the state of CA (especially Southern CA and Central Valley) has also gone way downhill in the past 20-50 years..

I bought a lot of rental property myself in California after the 2008 crash from 2009-2012 and it went way up in value in 2012 & 2013. I sold a few and just paid the capital gains and put the capital gains proceeds I made into hard money trust deeds at 11% return. That is a much better return on equity then I was getting on my rentals (remember return on equity is different then return on investment, once a property appreciates a lot, your return on what you have into it + the appreciation goes way down from your original ROI). I don't see why you are killing the golden goose when you sell? Why not take some profits off the table?

I would rather just pay the capital gains then 1031X into some out of state market like Texas. Texas is strewn with dead bodies of CA investors! I have seen more people lose their shirts trying to avoid taxes with 1031X.

I might do that. I might pay off the high rate second mortgage and refinance the 1st and it would be a positive cash flow rental property. It is in Albuquerque NM. I live in another state. I just hate to throw all that money at a house I don't want. But I would get a nice return by paying off the second and refinancing the 1st. It's a good house in a good area that attracts tenants pretty fast. The market there is just so flat and dead. Prices are back to 2003/2004. So it's a lost decade in terms of appreciation. The state of NM and city of ABQ do not seem to be attracting jobs and growing like it's neighbors are (Denver, Austin, Salt Lake, Phoenix, Boise).

I have a rental house in New Mexico that I was hoping to be able to sell but it looks like it won't sell. I'm leaning on just doing a straight lease to just continue holding since I can't sell it. Just renting it out on a standard month-to-month lease gives me the most flexibility and is the least complicated. If the market changes I can always give my tenant 30 days noticed and list it again for sale. Where I could not do that with a lease-option or contract for deed.

The benefit of the LO or CFD is I could get a little higher monthly rent and a little more deposit. But it doesn't seem like it's worth it with all the complexities with dealing with the paperwork and potential of default on LO or CFD, and losing the flexibility of a month-to-month standard lease agreement.

Thoughts? This is a negative cash flow mistake rental I bought a long time ago and can't get rid of without lowering the price so much I lose my shirt on it. I could find a LO or CFD buyer very quickly though.

Can someone tell me the rules around doing a 1031X into a rental property. And then a few years down the road deciding to move into that rental?