All Forum Posts by: Graham Atwater

Boy this is a hell of a shot in the dark…

I was listening to a podcast several weeks ago…and the host/guest mentioned a book about building and scaling businesses. 

I recall a specific framework of business start up along the lines of starting with yourself, then adding an Admin, then an Ops, and then other support functions after that. 

That’s all I can remember. 

Does anyone have any idea of what book this may be???

For posterity:

A local attorney (who is also a CPA and focuses on RE/Estates) did inform me that it would absolutely be possible and binding to create a lease option that would then just transfer to beneficiaries upon passing of the owner.

I figure this would probably be the answer but wanted to make sure. And while it is not my sole concern that the new "owner" avoid depreciation recapture, I wold like to structure any agreement that does benefit the current owner and his family as best as possible. 

Also, FWIW, I’m already consulting with an attorney and a CPA who’re RE focused. This is simply an informal discussion on the potential tax/legal dynamics of this situation!

That’s what I was thinking too…and the capital gains would be deferred (and proportioned with each installment payment from what I understand based on the profit ratio). 

But what about depreciation recapture? From what I see 25% of the depreciation would be due in the tax year of the sale. 

Does this seem accurate?

Hi all! 

I’ve found a potential deal with an open minded owner. I’m trying to structure a deal that genuinely benefits the seller and I. The seller is also very elderly and may pass soon (he’s rather accepting of this fact). He currently has the property set up in a transfer on death deed. 

Sellers Info

-Main interest: minimizing capital gains/taxes, preserving estate for his kids

-SFH free and clear, no mortgage, purchased 30 years ago for ~$150k

-Currently acting as landlord, very likely doesn’t want to continue in this capacity 

My info:

-I want to cash flow the property now 

-I want to purchase the home now or in the future 

Property info

-No tenant, rent comps $2600-2800

-Current comps of $290k-320k

I don’t know the sellers full financial picture. I do know minimizing capital gains or any other taxes is a priority for him. 
 
I know his cost basis in the property is likely very very low, so selling would trigger significant capital gains and depreciation recapture. 

Here’s what I’m thinking….

-Master lease option now, with option upon TODD actuation or some period afterwards. This allows cost basis to be raised before selling, maximizing tax benefits to the seller/his estate. It also allows me to take over property management, landlords duties, and reap the cash flow now. 

What are your thoughts? Anything I’m missing? How could this be done?

I love BP!!!

@John Warren Hi John! I hadn’t even thought about short term rentals for that area but that’s a really good point with the graduations. I know when I went to boot camp in San Diego there were graduations every week. Do you think they have a similar schedule at Great Lakes?

And thank you for the tip! Is Bill a forum member? I am absolutely looking for a meetup to get plugged in to!

@Martin Vehlow Hi Martin! I appreciate the welcome! And that does sound like good advice for starting out. I actually am closing on a home currently though it is a primary residence in Wheeling, IL. Not a terrific deal though it’ll free up some cash flow from my current renting situation which is always welcome. 

What part of Lake County are you from? I just moved to Buffalo Grove last summer and work in Lake County too. 

@Jonathan Klemm Thank you for responding! I’m a big One Thing fan but can’t say I’ve read Mindset! I’ll have to check that out!

I’m focusing on Lake County and perhaps Northern Cook county as well. I’m trying to develop my overall strategy as I head into looking for a first deal. I think I’ve got an idea of how id like to approach things but I am certainly open to suggestions, ideas, and advice!

@Paul De Luca

Hey Paul! Thank you for reaching out!

And I'm concentrating on Lake County as I'm familiar with the area some and have ties to the Navy base which may provide a competitive edge. Though I'm certainly open to other areas as well!

Is there a certain region you focus on?

Hi everyone! My name is Graham and I’m brand new to the Midwest! 

I have family members who started in REI (to varying degrees of success) and have always wanted to enter in myself.

I’m finally approaching a place in life where I can begin to start investing and am looking for my first deal in Illinois!

I would love to connect with anyone who would like to offer advice or is at a similar experience level in the area!

Interesting book recommendation: Whack-A-Mole: The Price We Pay for Expecting Perfection by David Marx. This book caused a big paradigm shift in how I view human error and mistakes by humans entirely! I highly recommend it!