All Forum Posts by: J Scott Hamilton

@Alexander Russell You might also want to check out what the repair bills are like on these properties. As part of your due diligence, ask to see the Schedule E and take a careful look at rental expenses. I'm not saying that Pitt students are more destructive than average, but many of these buildings (even in West Oakland) are old and you may see a lot of your gross rent going to maintenance. This may be a contributing factor to a reputation that off campus student housing in this neighborhood not being well maintained.

Areas that are also getting expensive include Shadyside and areas of East Liberty north of Shadyside and east of Friendship. A buddy of mine who just moved here was getting quoted East Liberty small apartment rentals of $1,000 - $2,000, which is nearly obscenely high for this market. Though if these rental rates are sustainable, it would require either renovating an old building or building a medium rise in order to get the desired cap rates. I doubt a turnkey would pencil out even if you could find one for sale.

@Ash Patel, herein lies what I see as the crux of the matter. Looking at Form 8283, I can see a couple of places where although Section 170 property is not made explicit, it could be indicated so on the form with an attached statement. Even if the intermediary on the sending end of the 8283 is that thorough, the very nature of a Section 170 appraisal could make it open to challenge, since comps subject to the Section 170 methodology are difficult if not impossible to obtain. It's about 450K of charitable contribution which is unnervingly close to the $500K that the IRS doesn't like.

Although many might want to take the deduction and try to ride out the statute of limitations on return filing, I completely understand how you would not want to put yourself at risk of an audit.

The downtown Dallas hotel market is crazy overbuilt. When I left in 2010 the Downtown occupancy was only about 60%, and since then they have built and renovated like crazy.  The aristocracy there thinks that putting more hotel space next to the Convention Center will make the center more popular and draw more events, which will fill up the rooms. So think of it like supply side economics.  But those of us who actually lived in the Central Business District think they are all nuts.

Now the luxury hotel space, that's an entirely different story. They are demolishing older buildings in Uptown in order to erect more residential and hotel space, and it looks like that space rents out well.

Malls

That's a danger area. Online shopping is gutting retail sales. Even those of us working in higher end merchandise are getting spanked. Luxury class might survive, but the rest of us squeezed between Target and Saks are feeling the pinch.

I looked at Welfont literature online, and it was a head scratcher. It looks like the program is aimed at for-profit entities unloading disadvantaged properties to a 501(c)3 charity at better than FMV assuming FMV is based on a distressed sale appraisal and not want the property could fetch in perfect market conditions. The difference between FMV and appraised value is what you get back as a charitable deduction. This works if the seller is not a charity and the buyer is a charity.

Not knowing how the case law would effect trying to wrap a 1031 around a 170, my guess is the IRS wouldn't like it.  The 1031 is based on trading like for like, so it's effectively a barter.  The 170 is structured as a cash sale where you are most definitely taking constructing receipt of the proceeds. 

But I'm not a tax lawyer, just a former licensed preparer.

In the big picture, it would seem to me that if a non-profit likes your property enough to give you an unsolicited offer, it's probably going to be the best offer you're going to get if you wanted to unload the property. But if I was worried about the tax bill, the charitable deduction would unlikely be enough to compensate for the capital gains and depreciation recapture you'll suffer when the property sells.

Ted Turner went large doing solar farms. But he is also one of the largest land holders in the US (among the top 3 I think), and much of it is ranch land, so he was motivated to get his revenue per acre higher.

You can rent a number with Skype for about $7.00 a month, but I have had mixed results with inbound calls not triggering the microphone correctly. When it works it works brilliantly. I believe you have to have a calling plan to make outbound, which together is still only about $10 a month.

You might also be able to get a Vonage plan to do the same thing.

But to be honest, I've been using Google Voice directly tied to my T-mobile cell phone and have had few problems.  The only gotchas are you can't use 4 - 6 digit numbers to text out, and some account setups can tell when you are using a VoIP phone and won't allow that to be your number of record.

Back in the 1980s and 1990s the Federal government was very serious about environmental cleanup and created the Superfund legislation. Gas stations were especially scrutinized and were required to line their tanks to keep them from leaking.  I had seen some cut open and sprayed with a ceramic liner, while others were taken out and replaced. The issue was that many (most?) of the tanks were steel, and petroleum products are corrosive. It's entirely possible that while some of the tanks were lined according to regulations, that the ground could still be contaminated and wouldn't be discovered if the property didn't change hands. So you can inherit a toxic liability when acquiring these properties.

Now having said that, I know of at least two gas station conversions in Dallas. One was a restaurant, and IIRC the other was a residence.

I wrote about the Joplin economy in very general terms from past memories here. The 2011 Joplin tornado caused a lot of new home construction, but at the same time made many outside investors aware of how frequent tornados occur in this back end of Tornado Alley.

There are several BP members here from Joplin who can apprise you of the current market conditions. Of my family members who invested in SW MO real estate, they strongly favor the Springfield metroplex over Jasper and Newton counties.

This WSJ article gives further insights into China's 'new normal' growth rate.  Keep in mind that for China to keep up with the new Chinese citizens entering the work force, they need to maintain somewhere around 3% - 5% growth rate.  So a 7% figure is mostly flat for them.

A larger decelerator to growth has been local borrowing for construction projects.  It was great while the borrowed money lasted, except a lot of that money went into internal development projects that were not sustainable (ghost cities, bridges to nowhere, etc.). So not only was their growth front loaded in building those projects, but at some time those bad investments will have to be marked to market, thereby effectively reducing GDP when that happens.

China is struggling with retooling their economy from export based to internally driven consumer based.  It's not really working.  To be honest, I see their economy stagnant for a very long time until the yuan weakens and their imports become cheaper.