All Forum Posts by: Joaquin K.

Hi Rudy - I don’t see why they would require you to do this, but why don’t you just call and ask?

1.  Old “knob and tube” electrical wiring - Needs immediate replacement. 
2.  Old electrical panels like Zinsco or Stablok - Needs immediate replacement as they are a hazard (Google it).

3.  Asbestos - apparently is not an issue if you don’t disturb it, but most people don’t want it there and it’s expensive to coordinate professional removal. 
4.  Leaks in roofs or windows that have resulted in mold (often enclosed in a wall and not visible). 

Looking up current or prior tax history for the property is not useful - as you say the current owner's basis is generally not related to yours.  For this reason looking at the Assessor's website is also not helpful.

For LA and OC I generally use 1.1% of the purchase price per year for modeling. I agree with Shaun's estimates (1-1.6%), but 1.1% has been a great estimate to date.  When you close a deal the Assessor's office will reassess taxes, and I believe their default treatment is to adjust the basis to the purchase price.  

If I'm really deep into analysis of a deal I ask Escrow and they look it up, though I'm not exactly sure how.  I think your friend who bought a condo is way off - before you close Escrow will definitely provide a estimate of your tax bill.  Keep in mind that many people (esp for SFRs) impound taxes and insurance into their payment, so Escrow would need to have a solid estimate of taxes in order to help set this up.  It is also a critical input into the lender's underwriting (ie. they will make sure you can afford the mortgage, insurance AND future property taxes!).

I am familiar with the basics of cost segregation.  I know that recently the market for reports has become much more competitive, and prices for these engineering reports have fallen.  I'm in Southern California.

As an alternative to a full engineering consultation, does anyone have specific experience with DIY cost segregation software/calculators?  I understand that these are relatively new products that are likely most suitable for smaller residential buildings with depreciable basis of less than $1M.  I have only found one example of these self-serve tools, but believe many exist.  The one linked below promises a report for $399, and free support in the event of IRS questions/audit.  This price seems very reasonable if the report is actually going to allow accelerated depreciation.

Who's got real experience and can provide details?  I would also be interested in learning about other companies that offer this type of product.  Thanks 

https://www.kbkg.com/residenti...

(I have no affiliation with this company)

I believe the city consists of Laguna Woods (the gated retirement community which used to be Leisure World) and some commercial areas.  I do not think there are any residential units outside of the gated community.  If anyone knows otherwise please let me know (with some reliable references).  Thanks 

Hi David - Did you buy in Laguna Niguel or in Laguna Woods?  Laguna Woods is a 55+ community that's pretty luxurious (plenty of amenities and a relatively high HOA). I don't believe activity there is representative of the market in Orange County. Activity in Laguna Niguel is likely much more representative of the general market conditions.

What are you looking for?  Cash flow?  Do you need money every month?  What's your holding period?  

I assume you are in neither Florida nor OC so you'll be using some sort of property management correct?  Or do you have friends, partners, or family in either area that would be helping? 

PS.  The only way you should buy a 1600 sq ft townhouse in Newport Coast IS if you hit the lottery!

A 1600 sqft townhouse in Newport Coast seems to have potential for much higher valuation than a 2200 sqft SFR in Laguna Niguel. I would take Newport Coast and rent it!

It sounds like you are in a great situation.  It's nice to have a few good options.  The primary residence tax exclusion cannot be beat, and even trumps the 1031 deferment.  I don't know your tax bracket, but putting $144K in your pocket is probably equivalent to earning $200K through taxable income.  Taking this money off the table would be smart, and allow you to reassess your strategy without a tight (1031) timeline.  You could spend a few months considering whether you want to purchase a larger property in Poway, or make another investment.  

If you choose to invest, there are many ways you can cash flow more then $225/month with ~$140K down.  Oceanside appreciation has been fantastic, but I do not believe SoCal coastal appreciation can continue at the current rate for the next 5 years.  That said, I have coastal investments myself and continue to be bullish for the long-term.