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All Forum Posts by: James Sun

James Sun has started 8 posts and replied 30 times.

I have rentals in both CA and GA.  The commission structure is very different and I think the CA structure is more fair to the landlord.  What are your thoughts?

CA - 2.5% listing agent, 2.5% tenant agent (if tenant uses one) of lease term, max 1 year fee.  If tenant doesn't use an agent and goes direct, I pay my listing agent 4%.

Typical SFR example. $4500/month x 12 month lease. $1350 to listing agent, $1350 to tenant agent (total $2700). If tenant doesn't use an agent, total to listing agent is $2160.

GA - 100% of first month's rent.  Doesn't matter if tenant uses agent or goes direct.  Listing agent pays 20% to tenant agent if one is involved.

Typical SFR example. $2500/month. $2500 fee to listing agent. Period.

Quote from @Account Closed:

This is a complicated transaction. What do you own? A partnership that owned a partnership who's interest was sold, so the partnership you own still remains?


My partnership interests were transferred to a master holdco (part of a larger recap) and the buyer purchased all partnership interests of this master holdco.  This was done to prevent a property tax reassessment for the buyer.

Quote from @Ashish Acharya:

capital gain from the full disposition of the asset should free up the PALs. But other details will be needed to conclude this. 


There would be no doubt if the gain was reported in box 10 (Net section 1231 gain).  My K1 is different due to reasons above and the gain is reported in 9a. 

One of my investments went full cycle, but the sponsor sold the partnership interest in the properties instead of the property itself.  As a result, the gain is reported on Box 9a (Net long-term capital gain) instead of 10 (Net section 1231 gain). 
The question is whether the capital gain can be offset by passive losses.  The Sponsor company is stating that investors should provide this reference to their accountant -
Passive activities are discussed in Internal Revenue Code Section 469 and its accompanying regulations. Treasury Regulation §1.469-2T specifically addresses the treatment of gain from the disposition of a passive activity.

Anyone have experience with this topic? 

These issues were over 5 turn-overs and my properties are 2000 sq ft - 3300 sq ft SFRs.  The response I get is that no one is perfect and things will occasionally get missed.  Some are suggesting holding on to the deposit longer, but the move-out w/ old tenant walk-through has already been conducted.  How can I tell him to wait until the next tenant moves in to see if there are any additional damages or issues?  This just isn't practical.

I will kindly ask my PM to spend more time during the walk-through and provide more thorough documentation and pictures in hopes that this helps cut down the number of missed items.

I have had this happen many times and I end up paying the cost of the repair/issue since it is caught by the new tenant and the security deposit has already been returned to the old tenant.  Property manager charges 100% of first months rent.  My properties rent for between $2000-$2600.  Would it be fair for me to ask the PM to cover the repair cost since he was the one who missed it?  

Examples are cracked window (blinds were closed at the time of inspection), cracked bathroom tiles, carpet stain behind closet door, missing cabinet shelf, hold in drywall behind door.  Each of these issues would have been items covered by the previous tenant's security deposit, but they were all missed during move-out inspection.  These examples span 5 turn-overs.  How do you normally handle these situations?

DSTs are very high in front load fees (6-10%). If you decide to go the DST route, make sure you go with a RIA who rebates part of the front end commission to offset part of that load. Do not waste your time on DST Brokers who drive you around to visit the offices of Sponsors and say they visit the properties to make sure they look good. These brokers offer 0 value during the due diligence process. They usually just sell from the top 5 DST sponsors. There is no real due diligence being done.

Changing the contract at this point won't do anything.  The buyers agents have already brought in offers based on a 2% commission split.  My out of pocket is still 4%.  I'm just upset knowing that I might have missed out on a potential buyer.  

@Aaron K. Thanks for the hard data point.  I wonder if I should just use a BAC of 2% for all my future listings then.  Or maybe it really depends on if there are real comparables to my properties being listed at the same time.  I would think that a buying agent would still want the 2% vs. 0% if there is a unique property that fits their buyer's criteria.

Maybe now is the time to push down the BAC since inventory is so low.

It just got me curious since I've only seen the selling agent commission go down in the past decade and not so much the buying agent.   

1M property in SoCal.  My listing agent stated that the commission structure would be 1.75% for him and 2.25% for the buying agent.  Property has been listed for a week and we already have a few offers.  Today he mentioned that he "accidentally" structured the commission structure as 2%/2%, but it's not a big deal since I'm still paying 4%.  

What I'm wondering is how significant the .25% reduction is for buying agents.  The norm in this area is 2.5% and I've seen a decent amount of listings pay 2.25% for buying agents.  I've never seen 2% which worries me that agents might be hesitant to show my property.

If it makes no difference, why wouldn't everyone just use 2% as the buying agents commission rate?