All Forum Posts by: JP Christopher

Thanks to everyones comments.  I really appreciate.  

I understand not getting emotionally involved and hope that part of my message expressed that I understand my legal responsibilities here too.  

If Melanie and Julie come to their own conclusion that Julie needs to be removed off the current lease (2.5 years left) what would you need to make that happen?  A letter signed by Julie stating she wants to surrender herself off the lease?  Would it be best for us both to sign it? 

And as someone pointed out in this thread, I have already mentioned to Melanie that we would rescreen her, even though I know personally her recent promotions, etc.  So thanks for pointing that out as it's in the plans.  

Jp

Hi there. 

We have two females renting a home from us.  They entered into the lease as couple and from what we knew, we're doing fine.  

We received a message from one of the residents (Ill call her Melanie) yesterday asking to talk in person.  When we met you could see just how frightened she appeared and was shaking most of the time.  

She shared that her relationship with Julie (resident #2) was not good and she has been in fear for a long time.  She mentioned Julie left about a week ago and traveled 5 hours to where her mom/grandparents live.  Melanie was stating she feared Julie coming back and wanted her removed from the lease.  She also mentioned that Julie is unemployed and in no way has ever contributed to the rent/utilities.  

she also mentioned that she has called the police before when outbursts and abuse has occurred, but it takes 8 hours for them to come, and they have openly told her there is nothing they can do based on their same sex relationship.  Not that this is right, but she wanted to tell us the truth.  

She did also share that Julie has kicked in one of the doors to the bedroom that she showed a picture to us.  

I have no experience of a resident being abused (and I guess in this case also having a resident being the abuser).  Julie has been difficult in the past to work with and none of this now seemed to far out of reach.  Melanie does have her sister and brother in law staying with her in case Julie shows back up.  What we were told is that Julie got into a physical altercation with her Mom this week and was asked to leave their home.  They encouraged her to go to a hospital and try to get somw help.  She checked into a hospital as of Friday night and am told that she maybe will be out Monday or Tuesday.  Melanie feels that she will make the 5 hours drive back to our town and expect to move in.  

I don't know personally what all in on record but it was shared that there is a counselor at work and colleagues at work that know the entire story and incidents.  

I am certainly not going to let Melanie live in fear but also know we need to walk a fine line here.  Not that its of utmost priority, but Melanie reassured us that she loves the home she is at and is currently in a financial position to handle the rent and utlities on her own...as she has been doing, already.  She has gotten 3 promotions since she moved in 2.5 years ago and her income has now doubled.  

Melanie's ideal goal is to remove Julie from the lease and sign a new lease directly with us.  Obviously if Melanie was to forefeit her part of the lease in writing to us, and asked to be removed....i would guess that would be cleaniest if we were okay with it.  Then we could rescreen Melanie and assuming all checked out, sign a new lease there.  

But now the question is more around if Julie doesn't want to do that.  Or isn't in a position.  My partner and I found one piece of research yesterday for our state of Missouri, that if a police officer, counselor, clergy, or someone else has physically been involved and has witnessed this physical or verbal abuse and put that in a letter with certain language needed for the state MO, that we could accept that if we felt comfortable with where it was coming from.  

Unless it has to come to it, Melanie stated she proffered not to do a protective order or restraining order.  But she has also stated that she understands that she is so scared what could happen next.  Again its one side, but there are consistent threats of Julie committing suicide to have Melanie live with it...and also threats to kill Melanie.  However I dont know when or the context.  

I am still a person first and if you would have seen how vulnerable and scared Melanie was...you too would be moved by what we witnessed.  I was very honest with her and mentioned I have no experience here with leases and properties, and didn't know exactly what we can and can't do.  And she understood.  

If any of you (and I understand we are not attorneys) but had opinions, ideas or activities you would do if you were in our place, it would all be greatly appreciated.   

jp

Thanks to you both.  I totally get it and just was looking at differently.  I understand that if I want to proceed down this path, then I need to be prepared to exchange 100% of the total amount that is sold.  And if for some reason I can't tie up that total amount, then I will need to treat the sale without an exchange and pay the tax accordingly.  Thanks again.  JP

Sorry Eddie.  I may have been confusing. 

All I am trying to do is not create a taxable event and defer the sales proceeds (that would be taxable) by carrying out a 1031 exchange. 

As I don't need the money and would rather re-invest.  (that is what I meant by being a buyer again)

So whatever I sell this house above what my basis is....I wanted to 1031 that specific amount.  

In my example, if purchase and rehab was 250k....and it sold for 450k....I wanted to 1031 the 200k sale proceeds.  And take back the 250k purchase and rehab monies to use in other capacities.  

I understood the term "partial exchange" and also "boot" but I took it as....if I had 200k in sales proceeds in the example above, but only 1031 exchanged 150k amount...I would then be doing a partial exchange.  The remaining 50k of the sales proceeds would be taxable and would be considered the "boot".  

If that is not correct and we are saying that the entire 450k has to be entered into a 1031 exchange.....then that was not my understanding.  But I will take a look at the article.  I have read a ton but not many get into the real weeds on things.  Thanks again.  Jp  

Can someone read this example and tell me one way or another what's possible.  Just sat with another friend/CPA and what he mentioned I was not aware and I am not sure if it's accurate.  Nothing against him, as only a small few ever come across 1031's.  

1.  If I have a rehab that is bought for 100k, 150k is put in, for an overall cost basis of 250k.  

2.  If I decide to list and it goes under contract for 450k, in theory, I have 200k in taxable sale proceeds.  '

3.  If I don't want or need the sales proceeds, can I not 1031 the 200k, start my period for a like kind exchange, and then convert back into a future buyer.  

4.  I would also then regain the 100k purchase price and the 150k rehab cost and (total 250k) which was my original cost basis back into my bank account without any limitations or taxable event

Correct?

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I know I could partial 1031 the 200k in gains listed above by 1031'ing say 150k....into a like kind exchnage, and then keep 50k of the sales proceeds....and pay taxes on that 50k.  

My firend/CPA said that the only option he knew of was that you would have to 1031 the entire 450k....so you wouldn't keep back the 250k that was non-taxable.  So he discouraged me to do a 1031.  He lives in Malibu and I don't necessarily know anything about his tax background, his clients, or where his focus has been over the years.  

If he is correct and I am misinformed, then this drastically changes my gameplan over the 4 projects I have this summer.  All with the same goal of not wanting to take any of the sales proceeds and roll each sale in a 1031 for the entire amount over my cost basis (per property).  

Happy Easter to those families that celebrate.  Thanks for all your help.  JP

Hi Everyone.  First question on BP so hoping some of you can shed some light and advise us in the right direction.  Here's hoping everyone's families are safe and doing as well as we all can, all things considered.  

When my domestic partner and I recently got into real estate, we set up a couple LLC's but ultimately 1 LLC bought the properties we currently own. She is the sole member of that LLC. Though we understand that some investors have one LLC for many, others have one LLC for each property. And then others do a hybrid of maybe 1 LLC for a couple rentals and maybe another for some rehabs they are working on.

There were reasons we felt this was the best way to get us started, but looking back, we probably should have structured our business differently. I am now looking to quickly and effectively transfer most of these vacant properties from her sole member LLC into newly created LLC's in the name of each property. I would be the sole member of these LLC's.

The new LLC's are being created as I type and our thoughts would be to quickclaim each property out of the current LLC into their new respective LLC. We will then have all new LLC's just owning one property each. Which makes the most sense right now based on current situations. We have never processed a quickclaim though we know it's extremely common, and we know exactly where the recorders office is in city hall.

Given what you have read above, and considering you were in this situation trying to achieve the same results, is there anything we are missing or that you would love to share. As for the field on a quickclaim stating the "sale amount" obviously we aren't looking at this like investor A is selling to investor B....but rather a more suitable setup and restructure....so how would you treat the "sale field amount" if you were transferring to new LLC's between you and your spouse/partner?

If it helps in any way, we are located in Missouri.  We are trying to move on all this this week, so we can't thank you enough for reading this and sharing any personal experiences/ideas.  

Be safe everyone.  JP

Though I have never processed a quickclaim,