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All Forum Posts by: John Clark

John Clark has started 5 posts and replied 1288 times.

Quote from @Ying Tang:

Hello everyone! I’ve received a lot of helpful responses on my recent posts—thank you all for your time and support! I have another question today. My husband currently has a 30-year fixed $315K mortgage that was secured around November/December 2023 at a rate of 7.99%. With mortgage rates trending downward lately, should we refinance now to secure a lower rate, or would it be better to wait until autumn for a potential further drop? I found several online opinions suggesting that high refinancing costs might negate any monthly savings for a couple of years. Given that a rate cut is anticipated later this year, do you think refinancing is the right move? For reference, his credit score is over 810.

My bank will not refinance my into a lower rate unless the savings will pay for the refinance costs within 3 years. It tends to be paternalistic, but that’s a good rule of thumb.

You skip over the most crucial part: just how did this neighborhood go from C to F overnight?

Quote from @Derek Robinson:
Quote from @Eric Gerakos:

Personally, I wouldn't work with anyone who can't spell Steve. But that's just me.


Maybe his parents were creative?
Or a product of the Chicago Public Schools.

Post: Chicago Water Bill Massive Increase

John ClarkPosted
  • Posts 1,317
  • Votes 1,041

If you get no love from the water department call your alderman and be a pain. Water bills don’t triple for non-obvious reasons. If there’s no running toilet, then the water department has a problem.

Quote from @Taylor Kendrick:

@Chris Seveney got it - this would be ny first purchase, but I don't intend to reside at the property. so I'd likely be DQ'd from the vast majority of these assistance programs?

These programs are not for investors. They are for primary residence buyers. That said, you can use it to buy a duplex, but keep in mind that many of these houses are going to be in appalling condition.

What has your bank said? I assume your property can be refinanced at a rate less than your plastic. Borrow and pay off the plastic. 

Start by reading all of your agreements. Then take the agreements to a lawyer to discuss.

Quote from @Bol Oke:

I have a multi-family rental property in Milwaukee (Hampton Heights), and it has a deteriorating wooden deck with a door leading to it. Instead of rebuilding the deck, I’m considering tearing it down and sealing the door. However, my property manager says this might violate code due to egress requirements.

Has anyone dealt with a similar situation? Are there cheaper alternatives to rebuilding the deck? If I remove the deck, would a standard window satisfy egress requirements, or would that still be a code violation?

Looking for advice on how to handle this cost-effectively while staying compliant. Thanks!

You need to tell us basic facts like what floor the door is on (a window out the second floor won’t cut it) and what else is being serviced by this deck.

also tell us how sealing the door affects ingress/egress.

i agree that sealed off doors are unsightly, and a usable deck is a selling/renting point.
Quote from @David Andrzejek:
Quote from @John Clark:
Quote from @Brian J Allen:

There has been growing discussion about how capital gains tax laws are reducing the inventory of homes available for sale in high-appreciation areas. Specifically, homeowners who have lived in their properties for many years may find themselves financially disincentivized from selling due to the tax implications of their appreciated home values.

Consider the following example: A homeowner purchased a house 20 years ago for $250,000. Over time, the home has appreciated to $1.5 million. The homeowner, now older and living alone after the passing of a spouse, would like to downsize to a smaller home or condo that better suits their needs. However, upon selling, they would face a $1.25 million capital gain. Current tax law allows an individual to exclude $250,000 of that gain if they have lived in the home for at least two of the past five years, leaving them with a $1 million taxable gain. With a retirement and Social Security income of $65,000, they could owe approximately $260,000 in long-term capital gains taxes.

By contrast, if that same homeowner had moved every five years, upgrading to a larger home along the way, they would now own a property worth $1 million instead. Their capital gain would be reduced to $500,000, and after the same $250,000 exemption, they would only owe taxes on a $250,000 gain—resulting in a significantly lower tax bill of roughly $55,000.

This discrepancy effectively punishes long-term homeowners who have remained in their properties, disproportionately affecting those who may now find their homes unsuitable due to aging, changing lifestyle needs, or financial strain.

The capital gains tax exemption of $250,000 per person ($500,000 for married couples) has remained unchanged since 1997. If adjusted for inflation, that $500,000 exemption would be approximately $985,000 today. Increasing this threshold would likely encourage more longtime homeowners to sell, freeing up inventory in a housing market that is already struggling with supply shortages.

Revising this outdated exemption would not only provide financial relief to those who need to transition to more suitable housing but also help ease housing shortages by making more homes available to younger buyers. A simple policy update could have a profound effect on housing mobility and affordability, benefiting homeowners and prospective buyers alike.

1. Factor in the transaction costs of 4 sales and 4 buys during that time. Whether you don’t get to keep money because of taxes or because of transaction costs is exactly the same: the money is gone.

2. You get the same long term capital gains in the stock market. Fewer taxes in real estate, though. Why? Because real estate lets you keep $500k tax free.

Taxes are the price we pay for a civilized society. Real estate is taxed lower than most investments 
Our neighbors decided to sell/move whenever they hit 500k gain, and have moved at least 3 times now. They obviously had transaction costs each time, and raised their annual property tax each time as they bought more expensive houses. (yeah, I supposed they could have downsized each time but they didn't... and even if they just purchased an equivalent house it would be more expensive with the same/higher mortgage and higher property tax).

We decided NOT to move, and have had a low property tax all this time but now are faced with over a couple million in gains if we moved today. I don't know which decision is better... I could model it out but it would be an academic exercise because we can't undo the choices we've made. 

I also don't know how long we'll stay here and how to exit. The thought of all that dead equity seems unwise, and a massive cap gains bill is unappealing. We'll probably have to rent it out for a couple years and 1031 it to get out. 
Total up all of the saved property taxes plus the saved transaction costs plus personal disruption avoided value plus $500k and compare that number to what your friends paid -- and that assumes they paid long-term capital gains tax as you will. 

1031 exchanges just postpone the pain. It is the dying in place that avoids it.

Post: Trying to back out of deal with earnest money

John ClarkPosted
  • Posts 1,317
  • Votes 1,041
Quote from @Charlotte Wilson:

We put in an offer a few weeks ago for a property in Kenosha, Wisconsin that has turned out to need a lot of work and the sellers aren’t in agreement to fix majority of it. Long story short, the electrical is a big issue. we sent an addendum and they responded with fixing some of electrical but not in a way that made sense, so we denied it. The NEXT day, they had an electrician work on the house performing those tasks that we didn’t agree to. Would this be a way to back out of our contract to get our earnest money back? My real estate agent is saying no but when I look online, it states otherwise and I have no further knowledge to back it up. Any advice is appreciated.

If the contract had an inspection period and you complied and seller didn’t make proper repairs (note that ol’ devil “proper” — not “what I want,” just “proper”), then you can probably terminate the contract. Contact your lawyer immediately.