All Forum Posts by: Jim Klapmust

@Kyle J. Thanks, any suggestions on a legal form that would document amount owed, and the plan? I’ve poked around online and seen some but was curious if anyone had one they’ve used in the past. Obviously a lawyer can answer these questions, but figured I’d toss out the question to the bp community.

My tenant was shaky on rent leading up to the coronavirus, and the subsequent shut down made the situation worse.  He's been my tenant for 5 years with good payment history, so I'm willing to work with him, and in earnest he asked about a payment plan to catch me back up that extends beyond the lease end date (June 30th).  He is moving out when the lease ends.

What contract/agreement should I use to setup a payment plan that starts now but extends beyond the lease end date?  I've read much about payment plans, but they all seem to be within the context of a ongoing lease.

TIA for your help!

Thanks guys for your replies.  I'll be throwing it out there and see what shakes out.

HI BP'rs,

I'm looking for some advice.  My brother and I own a rental house in Arlington Va that has been a rental since 2008.  Over the recent years, we have started to be squeezed from the market as nicer places pop up around us for approximately the same rent price.  The rental is pretty old, and less appealing to prospective tenants.  We set a timeline last year to likely sell this summer and now here we are.

We think that the house will probably sell to a developer, who will knock it down and put up something bigger/better. The RE market up there is always hot, so we are expecting offers since many investors contact us thru marketing campaigns as it is. With a high expected sales price, and expectation that we will receive offers from developers who will offer cash purchase, we don't think a conventional way of selling the house would make sense (i.e. sellers agent, list on MLS, etc). I do not think an agent will cover their price by attracting higher offers. I also am not interested in low ball offers, as we aren't desperate to sell.

Do you have any suggestions of how you might soft roll this out to market? Should I just throw it up on Zillow FSBO and wait for any bites? Anywhere else?

TIA for your advice.

@Dave Foster, @Chris Brown I really appreciate your posts.  Dave, I spent some additional time this weekend combing through all of your responses to other people's questions, so a double thanks.  I have a better understanding now, and I agree that the tax exclusion on the current primary makes for a better strategy to utilize the entirety of the tax benefit.  

For kicks, does the following qualified use calculation work as follows:

Purchased - 2004

Lived in until 2007, converted to rental. *Tax law drew a line stating years prior to 2009 are considered qualified use, right?

Hypothetically do a 1031 exchange in 2019

Rent newly acquired property for 2 years (it's now 2021)

Move into newly acquired property for 3 years (it's now 2024)

2004-2008: 5 years qualified use

2009-2019: 11 years rented

2019-2021: 2 years renting (post 1031 exchange)

2022-2024: 3 years used as primary 

Does the prorating calculation go back to 2004 like this:

8 years total qualified use of a total 21 years, 8/21= 38% allowed exclusion on gain (limits apply with 500k married exclusion limit)

Or does the prorating calculation "reset" to the date of the 1031:

3 years qualified use of a total 5 years, 3/5= 60%

Say its $400k gain since 2004, so .38*400,000 = 152,000 sheltered.  Capital gains tax paid on remaining 248k.

or... $400k *.60 = 240k sheltered, Capital gains tax paid on the remaining 160K.

I get it that the longer you stay in the house as a primary, the percentage increases in either case.

Hi all,

Back in 2004, my brother and I acquired a rental property. We split it 50/50 and continue to this day. We aren't structured as a partnership or LLC, just two bros who bought a house together.

Fast forward to today, we are discussing an exit strategy, specifically tax deferment and going our separate ways. I’ve searched the web and forums here without luck so here are my questions:

1. If we sell the property and want to effectively end our co ownership, would we each do our own 1031 exchange? Or do we continue to have responsibility to purchase like kind property together?

2. After a 1031 exchange from and to a SFH rental property, can you hold the new investment for awhile and then convert it to your primary residence? If so, could you sell after two years of using it as your primary residence to get the tax shelter for capital gains on the sale of your primary?

Thanks all, I know I should probably consult a professional but wanted to get some initial feedback. Thanks in advance!

Jim

I have a SFH rented for the past 5 years. I'm ready to hand off landscape maintenance services to a contractor. Lot is shy of 1/4 acre, with decent established landscaping but nothing fancy. I'm curious what you guys pay for basic services like mowing, routine maintenance, mulching when combining in a package deal with local landscape maintenance companies. I see some local ones offer year long contracts. I realize that many factors go into pricing, just curious your experiences with this. Thanks in advance!

Wendy, I'm not sure your link is shareable. You'd probably need to share a pdf of the report for us to see. I'd like to message you offline as I am an investor in Johnson City as well. I just moved away a year ago but retain my sfr. I think it's a great place to invest and I'd like to exchange ideas.

I don't necessarily have all the answers you are seeking but I'd be happy to meet up and share with you my thoughts on getting started, specifically in Charlottesville. I work for UVA and I went to school here. I have investments in other markets, but none in Charlottesville. There is a real estate investment group here that advertises on Meetup that you may be interested in as well. I plan to attend my first meeting in July. PM me if you ever want to chat.

Thanks for the insight Jim. I am curious about the last portion of your post regarding transfers to an LLC. I've read a bit on BP about due on sale clauses that most contracts contain, especially when procuring thru personal financing. What would your recommendations or experience say is the honest way to deal with this issue when trying to shed loans from your personal account and into your LLC? I am considering my own options and unsure how to execute without risking a call on the loan.