All Forum Posts by: Jesse T.

 I think both it was a good idea to try it and a good idea to abandon it when it did not meet the needs of the community.  IMO one thing that chat needs to be successful is content.  If it is tried again - maybe scheduling some of the podcast hosts available for chat at a certain time.  Another issue may have been that it was just one thing too many - there already are blogs, PMs, messages, podcasts, calculators, etc.

It sounds like their isn't likely to be significant price appreciation - so the term of residence likely won't be a big deal.  

The first question to answer is does the area work for you to own it as a long-term rental?

The second question is how the numbers look for using it as a rental.  If it looks good, then you need to look for property management to manage the place when you are out of the area.

If it is a good rental area without a lot of appreciation, that potentially means you could start building up a portfolio of rental properties - if you can build up the down payments to get investor loans.

What is the loan balance?  Are there unpaid property taxes?

How you would be able to close before the 27th if you can agree with him on the price?

Welcome to BP.  

Are you looking for a strictly investment duplex or will you be living in it?

I think getting your taxes prepared by a CPA with Real Estate tax experience would be a good idea for at least the first year.  If you plan to build a real estate investment portfolio, the CPA will be an important part of your team.  You also will likely need a Real Estate lawyer at some point, so getting some recommendations early would be a good idea.

I meant focus on listing properties for rent.  I would think in at least some of the markets your area that is a fairly common way of finding tenants.  A fair number of your clients may be people who just one rental, but there will likely be some that own multiple properties.

In situations where the purchase price is lower you will use that for the basis calculations.  There isn't a taxable event in the conversion.  As long as your acquired property is more expensive in a 1031 you defer taxes(both capital gains and recapture) - although you will have a lower basis.  

Lets say you buy a property for 150K.  It is worth 200K when you convert to a rental.  You use 150K for your basis.  Then after 10 years you have depreciated it by 40K.  At that point your basis will be 110K and you have a 40K recapture.  If you sell for 300K you will owe capital gains on 150K of the proceeds and recapture tax(close to income levels) on 40K.

If you go the 1031 route and acquire a property worth 400K - you will have a basis of 210K(original 110K + 100K in additional funds) and 40K that would be recaptured in a taxed sale.

 What you did in that scenario was acquired the property for personal use and then converted it to a rental property.  As a rental property it is eligible for a 1031.  The relevant "acquisition" is the conversion to a rental property.  One note on the basis is if your property was at a lower value at the time of conversion you have to use that vs. the purchase price(also for depreciation calculations).

A good starting point for new Real Estate agents is rentals.  They don't pay as much as sales, but they often have a shorter time frame.  Also established agents tend to pursue listings more, so that leaves more opportunities for newer agents.

If you have limited time to spend as an agent you want to limit the amount of time you spend showing houses as a buyers agent.  One exception would be for serious investors(can produce proof of funds or at least pre-approved for an investment loan) - even if it doesn't result in a commission - the networking can be valuable.  But even there at some point you may have to cut back on how much you do for them.  If they are looking at dozens of properties and only making low-ball offers that are rejected, it probably isn't the best use of your time.

Also long as you can get normal financing and find good deals I would leverage as much as reasonably possible.  When you get to your limits of normal lending - you may want to become a little more conservative.

Flips are taxed as normal income.

If you buy a property, improve it and rent out for a reasonable period - you roll the proceeds of the sale into a 1031exchange.  The 1031 is a tax deferral of capital gains and depreciation recapture.