All Forum Posts by: Felipe Ocampo

Yes, I am currently stuck between a rock and a hard place. I will keep everyone posted on how things unfold. The more I look through my email, the more things I find against this company. A few months ago, the tenants which were month-to-month gave their 30-day notice. The PM didn't let me know until a few days after they were already gone. 

Thanks @Nathan Gesner. I just sent an email with your recommendations. Hopefully, this gets resolved positively. I looked through the contract again and there was no clause to deal with disagreements or mistakes. It seems like the only way to get out of the contract with cause is if the property manager is actually stealing money from you.

@Chris Seveney I understand there is a set-up cost, and I paid the $200 set-up cost fee over 2 years ago. I would assume after all that time all these NRE costs would be fulfilled. Also, the costs for marketing and getting the property rented should have been covered by the 1st month's rent in my opinion. I just think this clause is predatory and they just want to get paid for doing no work. It is their only way to retain customers since they don't do a good job of being property managers so they have to rely on these shady tactics. Again, I checked two other property managers' contracts and they had nothing of this sort. 

The property management company of one of my properties is terrible. They are extremely unresponsive, taking days if not weeks to respond to my emails. At some point, they switched email servers and did not let any of their clients know of the switch. After about 3 months of not getting my emails answered, I found an old personal email of one of the employees and they finally gave me the new email. The straw that broke the camel's back was that they took over 2 months to get the property rented. The property is in great condition and it's in a great area; there was no reason for it to take that long. After all this, I decided to find a different property management company and gave them their 30 days notice, but they then told me that their management agreement has a clause that if I want to go to a different property management company, I must pay them all the property management fees left on the newly signed 12-month lease. This seems extremely predatory. They are already getting the 1st month of rent, which means they got paid for all the work they did to get the property listed and rented. Unfortunately, I did not catch this clause when I first signed this contract a few years back. I checked the property management contract that I have with other companies and none of them have this sort of ridiculous clause. 
Here is the clause: "Owner can terminate Broker "without cause” if the Property “is under a Rental Agreement", provided the following conditions are satisfied: 1) Owner shall first give Broker thirty (30) days written notice; 2) Owner shall pay a sum equal to the commissions due for the remainder of the current tenant's occupancy"

I argued that this was a termination with cause because of the above-mentioned reasons, but none of those reasons are "causes" within the management agreement. You are basically only allowed to do a termination with cause if the company basically steals money which they haven't done. I haven't actually heard back from them regarding what I am arguing which is not really surprising since again they are not very responsive. 

Any recommendations? I don't want to pay them over $1500 to do nothing, but I am also tired of working with them.

@Dave Foster and @Bob Norton thank you very much for your responses. I am glad I was able to get started on this early. 

@Bill Exeter thanks so much for the response. You were right! I was assuming the recapture tax was also 15% like the capital gains tax, so the actual taxes that need to be paid are closer to $12,000, which makes the 1031 exchange even more appealing. Does your company help out with 1031 exchanges? If so, is that the $750 to $1200 fee you are talking about, or are there additional fees?

I am currently selling a rental property(just signed the offer) that I have had for about 6 years and just realized that the capital gains will probably be pretty steep so I may want to do a 1031 exchange. I originally bought the property for about $208,000, will sell it for about $235,000, and the depreciation has been about $7563 each year. I put about $6000 into capital improvements. I know I need to include closing costs, which I am assuming were around $7,000 for each transaction. That is almost $8,000 in capital gains assuming a 15% tax rate. I currently own about $147,000 on the mortgage. 

My questions are: 

1.How complicated is the 1031 exchange process and is it worth it in my case?

2. Do my numbers above look correct or am I missing something?

3. How quickly do I need to identify the replacement property/properties?

4. What are the typical costs to do a 1031 exchange?

5. Any other suggestions or recommendations? 

One of my tenants wants to buy a property that I wanted to sell anyway because it has an HOA. I have never sold or bought property on my own without a real estate agent so I would like to know what the necessary steps are for selling a home by yourself. Unfortunately, my tenant already has a buying agent so I would have to cover that agent's commission but I would at least like to save the selling commission if possible. The property is in Germantown, Maryland. Any additional suggestions would be greatly appreciated.

My wife and I plan to retire in about ten years. We will probably have $500k in taxable accounts and $500k in 401Ks. Initially we will draw about $40k each year from our taxable accounts. Since withdrawals from taxable accounts don't count as income, both the income tax rate and our capital tax rate should be 0%. Therefore, I think we should also plan to do a Roth Conversion Ladder on $19,049 (less than the $19,050 to still be in the 0% income and capital gains tax bracket) to minimize taxes paid on some of the 401K money. Otherwise, when this money is withdrawn from the 401K we would end up being in the 12% tax rate. 

The converted money would end up in a Roth IRA where it would grow tax free or could be withdrawn tax and penalty free. This is what it would look like:

$40,000 (Taxable account) $19,049 (Convert Roth IRA to Traditional IRA: this money can't be used in 5 years)

I would essentially repeat this over and over again and save tens of thousands of dollars in taxes. 

Is there a flaw in my logic here? I would really appreciate any comments or insights.

that’s unfortunate. Thanks for the response