All Forum Posts by: Geo Tan

@Jeff B.

I'm just under the impression that commercial loans are much harder to obtain. No idea where I heard it from and if it holds any credibility but I'll definitely keep a broader mind in terms of it!

I'll definitely look into ARM loans (Do you know if this is harder to obtain than a 30 year fixed? And what are it's cons? Since you listed the pros already) and get back to you as soon as I understand it a bit better!

Exactly @Yinan Q.

I'm trying to better understand the risks associated with it and how people with similar runs in the LA area have turned out.

Hey @Jeff B.!

I feel like I'm getting some awesome information but I'm having a little trouble understanding it completely. I'm very green to the REI world so I don't know too much on the types of loans and a lot of the acronyms you just mentioned (Which I will read up on so I can understand a bit better).

Do you think you can tell me a little bit more about how you used your inheritance and turned it into a cash-cow? And any more in-depth you can get into the ARM loan (Is it harder to get approved for this? I'm planning on keeping my next property less than 4 units to stay behind that commercial line).

Thanks for the quick response as well!

Hello Bigger Pockets Community,

I was just wondering since LA is such an expensive market, what would be the pros and cons of paying a higher down in a well appreciating area to stay afloat with positive cash flow in places like Los Angeles.

For example, my biggest struggle right now is finding a property in the greater Los Angeles area that will provide cash flow but at the same time not fall behind on appreciation in comparison to major urban areas like Koreatown or Downtown LA. 

I know that it is important to use OPM to gain max returns on the investments but there is no way I can pay close to a thousand out of my own pocket per month to make the money back and then some with appreciation. So what if I paid 40% or 50% down on a property to allow positive cash flow while reaping in the benefits of appreciation as well. Besides greater risk by using more of your own money than loans, what downsides are there to doing this as my initial investment to start my portfolio?

Once again I apologize if this is a horrible idea or if I'm ignoring some basics in real estate investing.

Thanks in advance!

@Aaron Montague

Awesome! Thanks for the quick response. Any opinions on going 1031 or tax free?

Hello BiggerPockets community!

This may be a very simple question but I was wondering if anyone here knew what sort of documents do I need to prove that I lived in the property for the 2 out of 5 years owned in order to get the $250,000 tax free. If there is any other documentation or proof that I would need for this process I'd love to hear more about it as well.

My current situation is that I have a property that I purchased for $150k that I'll be selling for $240k this month. I am debating if I should go forward with a 1031 which has the obvious time deadlines, or just to get the up to $250k tax free. I have owned the property a little over 5 years and I have lived in it for at least 2 so no problems there.

Thanks in advance as always!

Hello everyone!

Been MIA from work and looking at properties.

I just wanted to run a quick calculation I ran to see if I'm covering as many bases as I can in a short period of time while searching for potential investment properties.

So for this example the property is listed as $719,900

If I include $20,000 for rehab to my OPM and take out my $210,000 downpay (Which I set aside $10,000 for any other closing fees, etc), my mortgage would be $529,900

With a fixed 30 year mortgage at 4.5% interest it comes out to a monthly payment of $2,685. I calculated property tax as 1.25% which divided into 12 months comes out to $771 a month. The potential rent which I looked around for similar properties with rent is roughly $5,000. So $5,000 minus monthly payment of $2,685 minus tax of $771 minus $1,000 for repairs, insurance, etc. comes out to a cash flow of $544.

That is the usual calculations I go with for skimming through properties and I wanted to see if this was a horrible way to calculate or if I'm on the right track.

Thanks as always to everyone for the help thus far.

@Dave Foster

Sorry for separating the post but I felt like these next few questions I had were unrelated to the question above!

So simply, the 1031 requires me to send a list of potential replacement properties that I am able to obtain within 45 days. This list is set in stone for my 1031 after the 45 days and as long as I close before I purchase within the 6 month extension I should be golden?

I was a little confused about this part:

I thought the value had to be the same as the value I closed for the 1031?

And lastly, since I'm selling my Vegas property for cash then did a 1031 to obtain a new property, does it effect at all how fast the new prospect property will close when I purchase?

As always thank you for explaining everything out for me and any lurkers on this thread!

@Dave Foster

So if I'm understanding your explanation to @Ethan Vegas correctly:

As long as I have met the requirements of owning property for 5 years and house hacking for 2 years, I just need to figure out what is more of a benefit, using the 1031 for avoiding tax costs or paying the tax but gaining the 250k which I can pick by basically deciding how to use my property the last year? 

So for example let's say I've owned a duplex for 4 years which I house hacked for 2 years already. I just need to crunch numbers to see if I make more profit through the 250k or through taxes with a 1031 which will depend on the property and decide if I'll house hack or rent out the 5th year? Or is it usually the case that 1031 saves more money majority of the time or vice versa.

I really feel like I'm missing a major point here so feel free to let me know if I'm not making any sense!

@Account Closed

Always a pleasure hearing from you Bob!

You're definitely not a bummer man... I agree 100% with you that people who know what they're talking about say it like it is. I think I got a little spoiled from all the nice people in BP that go out of their way to break it down for me which I am very grateful for.

I totally understand the long term is great in CA. The biggest issue with my current situation is that I have a full time job that does not reach enough to have me piggy back the property until I can reap in the gains after several years. I can most definitely not make the loan payments on such a property unfortunately. That's my biggest fear and the main reason I took a step out of LA and am researching other cities as well. Let me know if that is a horrible mentality or if I'm mistaken.

I have to honestly say you completely lost me in your last paragraph though:

I'm assuming it's because of my lack of knowledge on my taxes and props so I'll look into everything you just mentioned and see if I could figure out what you mean on my end.

Thanks again,