All Forum Posts by: Richard Chang

Hi all BP Pros, 

I would like to discuss investing in  a Las Vegas Commercial Property for the long term. I would like to buy and hold for passive income for my retirement.

Since Las Vegas population continues to grow then that should bode well for the future.

As a starting point, I need guidance in how to evaluate properties , locations and economics in each target property. 

I need a general strategy on what asset type makes the most sense long term for someone that is NOT business savvy. 

Retail strip centers, Office / Medical buildings,  Restaurant buildings, Gas stations,  industrial office.

Of course, the Cap Rate  ( income % ) is an important factor for me.

So, some thoughts on Las Vegas investments in the $1.5M-$3M range ?

What resources should I be looking into ?

How much can you depend on the Buying Broker to guide you into the right deal ?

Best, Rich

 @Leslie Pappas,

Ok, this means that there is a existing marketplace of "Loans" ( like Trust Deeds ) where an Investor would loan money to the buyer in a 1031 Exchange ?

Not sure what "no qualification required" means ?   

Typically, what kind of loan periods and interest rates are being used ?

Interest only, amortized loans 3 5 7 10 years etc.

Will this be a better way to finance than "bank" financing ?

Thanks for your patience and help, Rich

 Hi Wayne,

I believe I understand the 2 points above. 

So, the replacement property purchase must  involve 3rd party ( bank ) financing ( >= $250K ) to match the relinquished property loan ( $250K) so that no BOOT is incurred ?

The point being that there must be $250K loan to match.

Thanks for you patience and help, Rich

 Hi Leslie,

So, if the replacement property has a loan of 200K and my relinquished property has a loan of $250K, a 50K difference, then how does it work out to create an additional 50K loan ?

I don't understand, how this works. It seems that the ( existing bank ) loans are NOT being paid off in both properties ? 

Thanks for your help, Rich

Hi all, 

Some research below shows that the existing mortgage paid off by the buyer would be considered as  BOOT  income to the seller ( me ) and subject to tax.

So, that means that I would be paying capital gain taxes on $250K  ( 5.7%)  right in the 1031 Exchange ?

Or, if I pay off the $250K mortgage first with my own cash then I can avoid this.

Hmmmm, confusing ... 

http://www.realtyexchangers.com/1031_Exchange_FAQ/...

I want to 1031 Exchange into a property that has a mortgage. How does that work?

In a 1031 exchange, the assumption of a liability by the other party (or transfer of your property subject to a liability) is treated as boot received by you. It's called mortgage relief. To figure out your net mortgage relief, you may offset against it your assumption of a liability (or transfer of property subject to a liability).
The assumption of a liability or the transfer of a property subject to a liability is treated as boot.

Hi all,

So, I was wondering when you would use a LLC in a 1031 Exchange and how is it beneficial ( liability ? )

In my situation, there are  no partners and I am thinking that it is not applicable.

Thanks to all the BP experts, Rich :)

Hi all,

I am considering doing a 1031 Exchange of my Duplex Rental Property which has been straight line depreciated for 25 years. with an existing loan of about $250K.

1. If I understand correctly, the depreciation capture ( estimated $250K)  is not triggered by a properly executed 1031 exchange and is deferred. Thus avoiding/deferring  capital gain taxes and depr. recapture.

2.  How is the $250K Loan proceeds handled in the target replacement property.

For simplicity, assume the Duplex sells for $1Million and I buy a replacement property for

$1.1Million. Does this mean I need put on financing on  the replacement property of $250K + 100K = $350K or I could add 100K cash and then finance $250K ?

Please explain how the financing would work in the replacement property ( hopefully I don't have to make up the loan difference with cash ).

Apologies if this has already been answered.

Thanks to all the BP Experts, Rich :)

@Paul Ortiz

Thanks for the tip, I went to the NB site and they show all the Building Permits on a map

but I was NOT able to find any Duplex property building permits. Probably since there are only a few in the area.

Thanks, Rich

Hi,

Thanks for all the replies. 

I don't believe this makes any sense for me.

At $250 sf  for 2 2000 sqft townhomes  ( 4000 sqft )  = $1 Million dollar building cost

plus a min 1 year building time and carrying loan costs etc.

The possible market value for each might be $1 Million each which only grosses $2M

which might net  800K ( 2M - 1M - 200K misc ) .

At $200 sqft it might net 1M ( 2M - 800K - 200K misc ).

But this does not favorably compare  to outright sale  which should net $1M after some renovation work.

Building profit would be better if each townhome sold for 1.25M.

Your comments are welcome.

Thanks ! Rich

Hi all,

I have a duplex rental property in Newport Beach CA and want to consider if tearing down old 25-40 year structures and building 2 new townhomes for sale makes any sense as opposed to an outright sales / exchange.

How would you get a idea of the costs , timeframe etc.

Approach some local builders and ask for estimates ( since they know the local building laws and standards ) ?

Thanks !