All Forum Posts by: Luis Escobar

@frankwong according to lender I talked he thinks I would still qualify despite the equity line. And the equity line when used would get covered by the cash flow in Benicia. If indeed I can still qualify for loan despite the equity line wouldn't it be the same as if I had an extra 60k in a conventional loan? With the exception being that by pulling the equity line I now get to keep Benicia as as asset that is paying for itself and as a long term hold continue to appreciate? Thanks for your perspective

Hi BP community, I own a rental (recently was a primary) in the Bay Area and couple of duplexes in the California Central Valley, and properties in Indiana. However, I am currently renting the place we live in and now have decided we want to set roots and purchase a primary home to do so. In order to do that we need 200k for a 900k to 1mil purchase price. The following are scenarios I am considering: 1) sell our property in Benicia (about 45 min from sf). Currently owe 380k projected to walk away with 200k profit after expenses. I have and additional 120k totaling to 320k down payment. This would help keep mortgage payments lower and possible a nicer home as well. Or 2) pull an equity line for about 60k on Benicia property and add that to 120k savings and it would get me to 180k total downpayment. That would result in a higher mortgage payment and a bit stretched thin financially. Obviously the positive to this is that I get to keep Benicia property and almost break even on the equity line with the cash flow from rent. The plan would then be pay back equity line once primary home appreciates and I can pull some money out. Approx payment on 60k equity line would be like $350 and interest only. Depending on appreciation of new property I might be paying this (through cash flow hopefully) for many years. Any thoughts on these scenarios? Am I missing any thing I should be thinking about? Thank you an advance for any insight.

@eric geers I live in the bay area and invest in Fort Wayne from afar. This year I made the leap of investing out of state and so far have 10 doors in Fort Wayne and for the most part things are going well. I am really curious to hear your perspective on why you are selecting a different market as opposed to Fort Wayne (I am assuming you know fort wayne very well and maybe have networks there?) I looked at Indianapolis and though the appreciation might be higher the cash flow is significantly less. And actually from what I have seen Fort Wayne too has gained appreciation. Would love to hear your thoughts.

I recently came across a company called explorebelize that is selling units in a development as well. I am still in early stages of doing research. If you don't mind sharing, what intrigued you about potentially investing in Belize? Is your vision to rent it as a STR? What have you found to be the rent projections to be in comparison to the purchase price? Thanks

Yes, definitely. I bought my properties in Fort Wayne and so far they are doing fine and I feel good about the team I built on the ground there. Funny thing is I have been considering Birmingham, Alabama recently so I would be interested in hearing about your experience there so far.

Hi Gordon, I would love to connect. I am in the Bay Area and this year I have bought 3 properties in Indiana. Looking for other markets as well in the near future. Let me know if meet up gets organized and I'll definitely attend if I'm able to.

I live in the Bay Area and have couple of properties in the state and out of state. Looking to expand soon and I'm always interested in new ideas.

Hi BP community. I am in need of help. I was in the process of purchasing portfolio of properties and in the due diligence period I got access to financial reports and after further analyzing performance of properties I am having doubts. Properties are located primarily in C class neighborhoods and an average of 30k. I have read a lot cautioning investors to do this as it often results in higher cost of repairs and vacancies. In reviewing financial statements I see that same trend. I am still in the process of getting more information but I am now concerned that if this fall through that I will not be able to complete a 1031 exchange that defers all of the taxes. Here is my scenario and questions about 1031 exchange:

Original purchase price = 240k (owed about 209k when sold)

Sold property for = 438K

After subtracting fees my understanding was I needed to find replacement property valued at 415k

Funds I have in 1031 exchange account is 208k

My understanding is that to fully avoid capital gains tax I need to reinvest all 208K plus find properties valued at a total of 415k. Is that rightt? If so, then my questions are the following:

• What if I do not buy anything? Does that mean we pay taxes on the 208k profit? Or on the 415k total sales price minus selling fees?
• If I purchase property for 130k to do a partial exchange would I be taxed on 208k-130k? Or would the tax apply to 415k – 130k?

Insight on this would be much appreciated. Thanks!

Mike D'Arrigo but if you go above 4 homes it would need to be a commercial loan right? Am I understanding that correctly? Thanks in advance

@dave foster , thanks for additional info. I am working with QI, but they referred me to CPA for actual tax implications. In my case it seems like I will have to switch up my strategy. I was looking at 350k worth of properties which would leave 65k to be taxed if im understanding it correctly. Although the portfolio I had found was intriguing with a solid roi I don't think it's worth paying taxes on the remaining 65k. Thanks for the info.