All Forum Posts by: Lem Diaz

I'm finally getting around to learning about REITs.  I've come to learn that the primary (only?) revenue stream for REITs is generated by rents paid out to their tenants.  

What about the other half of the equation, the property's equity value?  Assuming a property increases in value how does the equity get folded into the revenue which then would be paid out to the shareholders in the form of dividends?  Are there other ways REITs produce value that gets translated to dividends?

I can imagine a scenario where a REIT investment manager buys up some property...say a mall...and the value of that land and structure increases over time. Since the REIT is required to pay out 90% of the taxable income as dividends...are they not required to share the equity value to shareholders. Does this only trigger when they sell?
 

Am I even thinking about this in the right way?

Thank you

Lem

I'll take a look at your market comps. Please send them along.

@Joshua Dorkin

@Brandon Turner

Love what you folks have built here and I'm also an avid listener of the podcast. Cutting to the point...the podcasts have become rather redundant as of late.  We hear a story or two about how they got involved in real estate, first deal, how the moved into their next thing, a couple of digs between Josh and Brandon and then the famous four. 

I get that you're trying to address a broad audience, but the podcasts that I tend to really get the most out of are the ones that get into more depth around deal structures.  I like these because they tend to focus a lot more on actual concepts, trade-offs, challenges, risks, and ultimately leads the listener to some outcome. When you actually get into things like adding individual utility meters to a complex, how you structured an owner financed deal and more importantly...walking the listener through the process and negotiation elements...THAT is where the real value is in these podcasts in my opinion. 

I'd love to see more of that and less of the surface level stuff. Just my humble personal opinion.

Thanks for creating BP. Loved seeing you at Google a while back.

Lem

@Wayne Brooks thanks for the thoughts.  I haven't read anywhere that there is a requirement for the spouse to be on title. I'll have to research that more. Thanks for calling that out...it's a fair point.

Hopefully Steven will be able to shed some light.

Cheers,

Lem

I'm getting married Jan 28th 2017. My Fiancee has been living with me for just over two years, but still did her taxes and had official mail delivered to her old residence (her mom's place). We will plan on filing jointly for 2017 taxes. I am the sole owner on title and the mortgage. 

My question is whether or not we'd qualify for the 500k cap gains exclusion for married couples after Jan 28th? 

I think yes, but I'm worried about the part where I have to prove that she lived there for the last two years since her taxes were done with a different street address on them.  What constitutes proof in the eyes of the IRS?

60% of rents until the loan is paid off??!  That seems like a lot of upside for the lender and a lot of downside for the borrower.  Is this common in owner financing?

As I understand that exemption is for your primary residence only.  So if you live in one of the 4 units you can exempt the relative amount (1/4) if you live in two units (2 years in one then 2 years in another) over a 5 year span then you can benefit from 1/2 of the  capital gains exemption as a function of. The whole capital gains amount.

So in scenario 2 above let's say you achieve a 100k profit from a sale.  50k of that will be tax free.

Where it gets tricky is when the units aren't all the same size/quality.

@Tyler Lyons If I understand you correctly, you're assuming he and his wife are filing jointly for their taxes.  As I understand that is the only way (plus the 2 out of 5 year requirement) someone can get the full 500k tax exemption...otherwise it's 250k if you file individually.  Please do correct me if I'm wrong.

@Chris Mason

Roger that. Appreciate the insight.  It's not too far off from what I thought, but great to get confirmation.

@Chris Mason thank you for the explanation. Up until what number of units does this apply? As I understand pretty much the same rules apply for up to 4 units, but beyond that there are different rules. 

It's next to impossible to get a SFH in the bay area and have a positive number from the [ Rent * 75% ] - PITI equation. I haven't looked into any multi-units, but I assume it's roughly the same up until some inflection point...perhaps 4 units.

So if I buy a 5 unit complex and that equation yields a positive number there are investor friendly lenders out there that will give me the loan?  How much would I typically have to put down in a scenario like this?

(Sorry for the bold type, it won't deselect bold for some reason)