All Forum Posts by: Francis Van Steen

@Account Closed I appreciate the advice on the 1031 but I did discuss this with my father in law and he is not interested as he owns multiple properties free and clear already and does not want to acquire any more properties, tax liability or not. I will keep you in mind for the future if I need to trade up thanks again

@Christopher Phillips we have renting it from my father in law for 11 months

@Scott Davidson I appreciate the feed back and I do not know much about depreciation, how would I calculate it as i am versed in some real estate processes but am still very green

@Christopher Phillips My father in law did live in the house before we moved in for well over 5 years, he is single so we are betting on him receiving the exemption. I appreciate the advice to run it by a CPA as we want everyone to win in this situation

@Brent Coombs we would be paying more for the mortgage but receiving this house at a discount even at 7.7% I will be able to be a homeowner and add value to the less than complete house. We do not plan on living here for 30 years and I know not to bet on appreciation so I will do some value add to the house over time and expand it to a 4 bed 2.5 bath with less than a 40k investment, the layout will support it. Comps for 4 bed 2.5 baths in my area are in the 850k range today. So my thought at 70K total investment (30k deferred and 40k reno) will net me over 100k in todays money not including appreciation when I decide to sell around the 10 year mark also the equity stake in the property at that time. 

@Mark Creason I did not account for depreciation and thank you for the capital gains info I am not a pro so most of my math is back of the envelope. I will have harder numbers in the next week or so and can really give a better snapshot.

I am currently renting a 3 bedroom 1.5 bathroom house in the Silicon valley from my father in law for about 60% of the market rent for similar properties in the area. My father in law does not want to be in the landlord business and has always said he wants to sell the house to us. 

Houses in our area are comping for around 700K- 750K for a similar layout but the problem is they are in move in condition. My father in law has always done things about 70 percent and the house is currently in that semi unfinished state (I spent 5k just to have it cleaned and functional before I moved in). That being said I estimate there is about 30-50k worth of work to bring it up to the level of the comps in the area.

My wife and I are not rich but we have no debt, we have 250K in our retirement, I have a pension I am vested in and we have about money tied up in investments that we can if need be make liquid.

I have been working with a mortgage broker friend and he says we are golden to purchase anytime but I don't want to go the traditional route with 20% cash and here is the strategy question.  

My father in law owes about 300k on the house and with repairs closing costs and such give him about 350-370K in debt to sell it on the open market. If he does so under advice of my broker friend he can expect to sell it for 725k max (due to recent sales data). That leaves him with about 355-375k in profit. He will not roll this money into another property (no 1031) so he will have a tax bill on this of about 75K (20% is my understanding) leaving him with about 300k profit.

My father in law want to help us and his grandson stay in the area and is willing to be creative. So my plan is to have him gift us the 20% of the appraised value as our down (Appraisal will be done this week and looks like it will be around 650k) 130K and he is fine with that and we would get a traditional mortgage after that. It is my understanding if he gifts us equity there is a transfer tax on that, is that true? Also I understand the upper limit of tax free profit on your primary residence is 250k is that true. My father in law likes the number 250k and he is willing to sacrifice the 50K more he would make on the open market vs giving us some equity and helping us buy the house. Is there any other thoughts or strategies on this situation as I want everyone to win in this situation.

Rachael and Jay thank you for the honest feed back. I will continue my due diligence process and you both have helped me gain more confidence with my decision to start working with Praxis.

I have been a long time lurker but I am now starting to take action with my real estate investing. I am doing some due diligence vetting Praxis Capitol (Brian Burke's company) and want to get feed back from anyone who has or is working with them. I had a very pleasant phone conversation with Bob (SVP of Praxis) a few days ago and his knowledge and approach was aligned with how I operate. I am looking to buy into one of their offerings in the near future using a SDIRA. Any feed back would be greatly appreciated.