All Forum Posts by: Kevin Hoover

Thank you Dave,
Appreciate the input. 
So if it was switched to a TIC with 12 members, if they sold 1 property for 3 million would each of the 12 get a 250K allotment ?

Or is it possible to assign all of a sale to 1 member who then exited the group?

Thanks
Kevin

"The value of the property and how it’s distributed relative to ownership stakes will determine whether it counts as a taxable event"
That is what I was wondering about. 

 Input needed for least tax methods of unwinding a family partnership in the next 13 years.

 
a. General Partner is elderly father

b.  12 Limited partners - all children , spouses not included - cheaper by the dozen

c. Average child owns 8% of partnership

d.  Approx 5 commercial  properties with total combined value book value 12m .. actual maybe 20-25m?

>  Some LP want cash

>  Some want alternative real estate

>  Some want individual properties currently within the partnership.

 How can assets be moved into a LP's name without triggering capitol gains?

 A. Is it possible to convert the family partnership to tenant in common

 B. After its a tenant in common , is it possible for individual members 1031 into outside properties.

 C. How can a individual existing property be moved out of partnership to a individual member without triggering capitol gains?

Quote from @King-yi Chan:

Quote from @Kevin Hoover:

They bought on a really small cap rate, then taxes and interest went up. I think in a bad neighborhood as well.  So they where no longer cash-flowing. Actually very negative cash flow rates.

WWC didn't have the appetite to fund the short flow themselves, as NOI dropped so much. They have done capitol calls on other projects but investors are seemingly pretty slow to give them more.
WWC seems to be trying. However their management  fees are pretty high. Fundamentally their business model was so unprotected and with the skinny margins  it was waiting to happen. 
I will find  the actual report and post it here..

 Hi Kevin, do you have the report that you referenced? Thanks!

As of October 2024 , what I think I learned from the WWC:
a. It's a house-flipping business, not a real estate play.
b. Never been through a downturn, operators ( myself included) often can't see what's right in front of them before the tide is obvious. 
c. If you average a 3-year old and you accidentally get 75% or worse losses of funds for18 months of purchases, it wipes out any prior gains.
d. Unless the business model changes, the risk of repeating the losses will be the same. 
e. My opinion/observation is they are running their company correctly to keep their business around. And trying to salvage investor capitol the best they can. Loosing  75% instead of 100%  your capitol is better than nothing. 
f. I think they are well run except issue. I have a complete loss of confidence in their prior ability to see the interest rate sensitivity.
g. If the business model continues,  with floating rate debt to finance 4% cap rate apartment flips. Its a complete loss of capitol if interest rate jumps. 

The interest rate sensitivity makes the model a gamble, not an investment.
My gamble of properties from September of 2020 to the end of 2021  lost spectacularly. 

What you can learn from my loss of a year's worth of work:
Use your own judgment on the interest rate sensitivity.

Figure out how much NOI drops per 1% interest rate increase.
Add 1 to the cap rate  per 1% interest rate increase.
Then its pretty simple math to see how it goes upside down.

My house is warm. I weigh too much from having too much food.   I don't have much to grumble about. Learn from my mistake and we both will be wiser.

Quote from @King-yi Chan:

Quote from @Kevin Hoover:

They bought on a really small cap rate, then taxes and interest went up. I think in a bad neighborhood as well.  So they where no longer cash-flowing. Actually very negative cash flow rates.

WWC didn't have the appetite to fund the short flow themselves, as NOI dropped so much. They have done capitol calls on other projects but investors are seemingly pretty slow to give them more.
WWC seems to be trying. However their management  fees are pretty high. Fundamentally their business model was so unprotected and with the skinny margins  it was waiting to happen. 
I will find  the actual report and post it here..

 Hi Kevin, do you have the report that you referenced? Thanks!

 WWC  threatened litigation. I had it removed.

I have come to the conclusion that buying properties that are too overpriced to support fixed debt, is hardly an investment.
When you are getting  down money from other people's money, with floating debt, it's a speculation.
Alas I was dumb enough not see initially. I am likely going to be paying approx 300K stupid tax on their account.

The concept of absolving themselves of personal guarantees , most likely is the biggest reason to sell. They seemingly getting pretty quick to sell at LP's expense if needing  cash flow is negative .

The captiol calls they are doing are coming in pretty low. So its sounding like they will sell more simply because the cash isn't coming in.

I guess this is what happens when a outfit overextends themselves and sun doesn't shine for a year or three.

They bought on a really small cap rate, then taxes and interest went up. I think in a bad neighborhood as well.  So they where no longer cash-flowing. Actually very negative cash flow rates.

WWC didn't have the appetite to fund the short flow themselves, as NOI dropped so much. They have done capitol calls on other projects but investors are seemingly pretty slow to give them more.
WWC seems to be trying. However their management  fees are pretty high. Fundamentally their business model was so unprotected and with the skinny margins  it was waiting to happen. 
I will find  the actual report and post it here..

Western Wealth's Heather Ridge just sold. Returns where  -98.3% .
I got a check for  $1751.. The entire results for a  100K investment.
I guess that should teach me on the wisdom of not checking debt structure well before hand.

My experience with them was good until it wasn't.. Invested in  6 deals  -  my  results below.
A. Villas De Azul -Sept 2020
B. Onnix LV -October 2020
C. Presiodio North - Dec 2020
D. Somerset LIX - Feb 2-21
E. The Carling on Frankford Sept 2021
F. Heather Ridge Nover 2021 

As of October 2023:
A,B,C: Each  paid out at least once around 10% total . As of October 23 still seems to be cash flowing.
D: Paid 3% total - As of October 23 still seems to be just so cash flowing.


E: Capitol call of 10% .. They are hoping to sell for a 50% loss of original investor money rather than 80% with no capital call
F: Complete loss .. just sold wiping out 98% of investor money..

Looking back they are simply a proxy for interest rates.. Everything was floating rate loans. As long as interest trended down they looked brilliant.. I followed them several years before investing..
I had  asked about interest rates and they said they bought caps. Stupid me for not realizing it was only for 1-2 years which is essentially floating rate updated annually or every 2 years.
My  Dad farmed thru the 1980's and still mutters how interest rates went high and higher.. never do anything floating. I knew better and alas I am paying for it.

Truly the tide went out and their clothes where missing completely  on the properties from mid 2021 on. Good lesson on what not to do in rising interest rate environment.