All Forum Posts by: Charles Kao

@Chris W.

I would get the property you are buying under contract first before you sell your other property.  Small multi and residential is flying off the market and finding a commercial property that meets your requirements is probably easier said than done. Last thing you want to do is sell your property and then not have a property to 1031 into.  Especially considering the due diligence involved in commercial real estate you have plenty of time to get your residential property sold in time to execute a 1031.

@Anthony West

Flipping is fun, no doubt but I am surprised you want to get into it knowing all the tax advantages are in holding not flipping. Speaking candidly the only reasons I flip are because its fun and because it makes great social media content. While I do know of people that have high volume successful

flipping businesses very few only flip and I found that it was horrible return on time competing with hundreds of investors and want to be investors especially when you factor in tax treatment and the time spent looking for a flip is taking away from making money at your actual job. If you want to get into I’d consider lending or partnering on a flip.

@Lloyd Silver

As a resident of both San Francisco and Grand Rapids I can tell you the same things that attracted out of state and international investors to Grand Rapids remains unchanged. You have multifamilies and most of the real estate priced well under cost of build so there is still lots of potential to grow and you have population and job growth/diversity in all the key areas. What will be most difficult for you is getting that first deal and the team to execute your plan. The biggest obstacle my out of state investor clients and friends have in Michigan is trust. Without it, its hard to act as fast as you need to.

@Mac Boeve Welcome

@Zachary J Strang I find them multiple times a day. Especially areas like Kentwood there are hundreds of them.

@Kyle Robertson

I fell into the worst case scenario the first time I quit my job I went from everything going well to not being able to work and mounting medical bills. Struggling to pay medical bills I had to sell alot of real estate to pay for bills. I was still in my 20s and like many others I knew that I could continue to hustle as my passive income could take care of my usual expenses. I say this not to discourage you but to let you know that it is my opinion to make sure. My situation could have been alot different if I was on a spouses insurance, diagnosis was sooner and or a number of things but had I not gotten sick I am certain I would have never gone back to a W2 job yet my retirement may not have been so comfortable. My second time around I know I am primed. I have almost 7 years of living expenses, leisure funds and vacation saved up. I could get sick again with an additional 100k of year medical bills and my family could still get by without us losing our home. This retirement I go into knowing I never have to work a day in my life where as the last I went in believing I could get to that point so my advice is how comfortable do you want to be in your retirement. Its a tough balance for sure and I know the feeling of counting your days to retirement but be sure when its time.

@Joshua B. @Matthew Orton

Josh is really good at explaining these with legal background where as I learn by stories so his answer is spot on but here is my spin on things to make sense of why city has to ignore what is on deed or at least is supposed to. When all else fails I defer to lawyer. It is very common on deals where the price on deed is not the purchase price. Assessing departments have access to the property transfer affidavits not the purchase agreements. For example I have seen homes bought where buyer paid seller $1 for the home and then $100,000 as a “relocation” fee to circumvent creditors and then claim right of redemption. I personally try to write in consulting, goodwill or equipment fees to help present assessments from going up and also certain tax benefits. So for example a commercial property I wrote an offer on seller wanted 1 million. Assessment was only 280k so I offered

1 million but broke the purchase price down as 100,000 for vehicle and video equipment, 60k for consulting for 6 months, 45k for goodwill with the remaining 795k for real estate. By doing this it allows me certain tax benefits but also makes it easier for city to justify a lower assessment even though purchase is still 1 million just not 1 million for real estate. Hope that helps.

@Craig Eby Jr Welcome

@Matthew Orton Taxable value can uncap to SEV regardless of price so even if you bought property below SEV that does not man it will go down. I would call the city to find out and look for examples of similarly zoned recent sales from year before to see what city does. Some cities always rise to purchase price.

@Kyle Daneff

What about vacancy?