All Forum Posts by: Jason Barnett

Total tax liability is going to depend on how much you actually sell it for. Yes you would be paying taxes on the balance if you just sold. However, you can do a 1031 exchange where you sell the residence, put the proceeds into a custodian's account and buy a different residence with those proceeds. The key thing here is that you've got to purchase a like kind of property (i.e. single family residence). The "quality" of the two properties don't matter. However, if you pay less for the new property then you can be liable for the difference.

I have never stepped down in a 1031 exchange so this is purely conjecture... but I would guess that your tax liability would be something like this:

$Sale price of your current home
- $Sale price of home you buy through 1031
---------------------------------------------------
$Boot

$Boot
- $500K
------------------
$Taxable gain

We're thinking about getting a PBX system to route phone calls for our company. You all have encountered something like this... they have some kind of welcome and then "press 1 for rentals, 2 for maintenance, ..." I've read a little bit online about asterisk and Telrex, but I'd like to hear about other folks' experience before I jump in.

We would want a system with these features:
- It needs to record all phone calls that get routed to our sales department
- It needs to have voicemail
- It needs to be able to forward calls to an outside number (i.e. a cell phone)
- We would like caller ID capabilities
- We would also like it if we could get a hosted service solution rather than us trying to set up and manage a server.

The more I think about this the more I'm convinced that I want a PBX system. Obviously part of the reason is because we have different guys handle different responsibilities and we want to route the calls efficiently. However, we are also concerned about legal obligations (fair housing laws, etc.) and it would be awesome to have our prospective tenant calls recorded.

Does anyone do anything like this? What are your experiences?

OK, let's think about this for a second. People go into foreclosure because of a sudden, dramatic change in cash flow. What kinds of problems can do this to a family?

- Medical bills
- Unemployment
- Moving (work related, or other)
- Divorce

There are other reasons as well, but those are some big reasons. Look at this list and the most likely culprit seems to be unemployment. For example, if P&G laid off a bunch of white-collar execs from their headquarters then you would probably find an above average number of opportunities in the Indian Hill area. But don't feel bad for the corporate gypsies, they'll get back on their feet.

You'll probably want to read over this comment that I wrote a few months ago. My experience with Section 8 has been mixed.

As far as inspections go it really is going to depend on who your inspector is. Talk with some of the other landlords in your area because they will tell you who is picky and who isn't (or you can find out the hard way!) They are there to enforce housing code. Most of the things they inspect are fairly obvious (new paint, clean carpet, safe electrical outlets, etc.). Some of the less obvious items that I've been nitpicked on:

- paint underneath the sink and in the utility closet
- any tree branches / weeds touching the building perimeter
- clean window frames (the channel where it slides had to be spotless)
- common area / hallway must also meet code regardless of how many section 8 tenants you have

Excellent! I really need to start developing some of this business logic into PHP scripts... unless someone else out there has already done this? Heck, half of the web runs PHP. Gotta love open source. :mrgreen:

I think I understand what you're saying about the land contract. There seem to be two major differences between your two examples:

1. The 2% down payment. This improves your cash position for the first 25 months and is the major reason why you get to cash-flow positive so quickly. One question though: does the 2% count towards the principal of the loan? Or is this more like charging points to a borrower and you keep that 2% as pure profit?

2. The "spread". "Spread" = rate of return (8.5%) - cost of capital (6.5%). A lower interest rate on the underlying mortgage will improve rates over time (which is why the red line gradually moves closer to the blue line).

The OP also asked a great question that went unanswered... what about credit and buying power? Your debt increases, but so do your assets and your income.

You know, it's funny. I never realized it until recently, but high speed internet is really a big draw for some people. Think about it: hotel chains used to offer high speed internet as a service that you could pay for. Now it is a requirement for a lot of travelers that they must have high speed internet. How much dollars does it exactly translate into? I have no idea... but there is no denying that high speed internet is an incentive that middle class people demand.

Very interesting story. I don't know Chris personally, but I thought about borrowing money from him for one of my own projects. I ended up going a different route, but all the same I'm interested to hear what Chris has to say about the above message.

I recently had a bad experience with using a "contractor" that was a friend of the family. I did not have to front the entire cost of the project with this guy, but at the end of the day he simply didn't finish the project at all (he got close to the deadline I set and he just quit).

To top it all off: soon after he "fixed" the pipe I found it broken and the damage was so bad I had to get my insurance involved. Now the insurance company wants to go after him (for subrogation) and I'm more than happy to let them handle it.

It's ok to go out and get pre-approved so that way you have an idea of how much you can get from conventional lenders. What you want to do is to find a lender that is willing to let you immediately refinance a property after you purchase it. Here's an example:

Appraised value of the property: $125,000
Your actual purchase price: $100,000
First mortgage: $80,000 (interest rate doesn't matter, but points do)
Second mortgage: $20,000 (interest rate doesn't matter, but points do)
Cash out of pocket for down payment: $0
Cash-out refinance of property: $100,000
- Pay off the $80,000 first mortgage
- Pay off the $20,000 second mortgage
- You maintain 80% LTV
- This is the interest rate that matters

If you do the above then you are still going to have to pay for closing costs, but those are small potatoes that a person earning $90K a year can handle. You have few assets? Try cutting expenses for the next month(s) and save up $1000. Always cut back to keep this much cash hanging around and you will be ok in case of minor emergencies. For major emergencies... well, that's why you buy insurance. I have already had one flooded apartment so I'm glad that I have it :violin:

As for the realtors that advertise big gains. They would probably be good people to use for "hand-holding" on your first deal or two, but if they're investors then most of the deals coming your way are simply deals that they don't want for themselves (but they're more than happy to help YOU make a LITTLE profit because they still get a piece of the action). I'm not saying don't use them... I'm just saying you should use them as a buyer's agent to guide you through the process the first time or two.