All Forum Posts by: Jared Smith

@Steve Yount we work with lots of investors in your situation. We actually point you in the right direction to get your assets rolled over into a SDIRA vehicle and then we work with a lender that does non-recourse loans or you can purchase our turnkey options with cash from your SDIRA. 

Non-recourse loan rates are in the mid-7% range  currently with various amortization periods up to 30- year amortization periods.

@Karin Cain welcome! You mentioned you are looking for your first property, are you able to provide some further clarification on that? Are you looking for property near you, out of state, STR, MTR, LTR (short-Mid-Long term rentals) or something else?

It's always an exciting time to get started as long as you think about your goals and make sure that your purchase lines up with your strategy/goals. Would be happy to provide some additional info if desired!

@Dave Foster Great point about the depreciation of the repairs made. That is some higher level math there!

@Gp G. was this a rental property? I am assuming yes, but if not, you don't have to Worry about a 1031.

If it was a rental property you also need to consider how much depreciation you have taken on the property. Based on the purchase price of $140k I would make an assumption that you take between $4-$5k of depreciation per year, regardless of whether you did not not, the IRS makes that assumption for you. So that would be between $20k-$30k reduction to your tax basis, below your purchase so say you are starting at $110k-$120k. Now you add $30k of repairs x 6 years, you are stating you have put in $180k into repairs so add that on to your basis, now $290k-$300k. Your mortgage and CC debt are irrelevant to the discussion other than you won't be able to pay those off if you do a 1031 because you can touch that cash, it has to be handled by a qualified Intermediary (QI) and then put into a new property with equal or greater value. You can also add/subtract closing costs and fees from your transaction to reduce the taxable income.

If these assumptions are correct and you sell for $350k, you would be exposed to taxes on about $50k of the income at about 15-20% depending on the specific tax rate. That would be $7500-$10k of taxes you would owe. A decent rate for a 1031 is around $1250 +/- $250 for the full transaction for a single Property exchange.

If you want that money back free and clear and pay off all of your debt I would recommend foregoing the 1031. If you can't really justify $30k per year of expenses/improvements you would want to reconsider potentially.

1031 folks, does all that sound correct? @Dave Foster

@Bhavin Patel I have the benefit of being familiar with the model you are looking at and the model that @Jordan Ray is referring to. You two have completely different goals and passivity requirements. How do I know, I recently set Jordan up with a home that he is renovating to create a long term rental, but he and his team are doing all of the work and will have to find the residents and they happen to live right here in Memphis where they are doing the work where he lives and works in real estate full time. 

The moral of this story is that you have to be careful when comparing deals and % returns because most everyone has different metrics and evaluation criteria. If you were an active investor and shooting for 4% CoC return that would be nuts. But this is also dependent on how much month you put down and various other things. Are you considering the equity pay down that your resident will be providing for you which goes directly toward to your net worth, not your bank account.

The question is one aspect, who and how they answer is what you need to be weary of.

Hi @Janelle Benzick, you can get your LLC set up, if that is the path you want to go, in a very short time. You probably will want to buy in your personal name and then transfer to an LLC later so that you can use conventional lending that is not available if you purchase under your LLC.

Best of luck getting started!

@Miguel Hernandez. That's awesome. There are several Qualified Intermediaries (QIs) that are on these forums if you don't have someone. Do you already have plans on for what you are putting the funds from that deal into?

Can you share some numbers associated with your current property? That would be helpful in being able to provide some advice.

@Carter Ford would love to connect. I am both a Memphis based investor myself and am now with a prominent turnkey Memphis based company and study the market here day in and day out. 

There are definitely markets in Memphis that will support your price range, but just like any other market, you are going to get what you pay for. There is definitely a trade off for day 1 cashflow vs long term wealth building homes that will protect your investment. 

@Jayson Ruiz Perez you pretty much described me in your description of yourself! Except I already transitioned out of the Navy after a 21 year career in 2023.

I live and work in Memphis, TN now with a turnkey company which is a great way to get started.  Click on my signature line if you want to set up a call. I am also active with the Active Duty Passive Income (ADPI) community and was recently on a podcast with them.