All Forum Posts by: Mark H. Porter

This is why, after 26 years in the game, I’ve had four attorneys (only because of multiple states), three RE brokers, two bankers, and two 1031 QI’s (first one retired years ago). When you get the good ones that prove loyal to you, and to each other, you stay with them and give them some of your power to make your decisions so you can golf more.

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Does the current lease state anything about what happens when it expires (term goes month-to-month, auto-renewal, etc). If not, it’s over with and you can write a new one.

Depending on where you live, you can simply write a new lease with new terms and conditions.

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This is one for you @Dave Foster

1 Vote

I have done this many times. If the downleg and upleg LLC's are disregarded, in other words, they just get reported on your schedule E and don't file separate tax returns in the LLC names, then it all rolls back to your SSN anyways.

I've had three properties, with two separate disregarded LLC's, roll to two properties using a completely different, disregarded, LLC.

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Long Island, New York

I'd be conservative on the $700k ARV, these higher interest rates have changed things a lot.

Is that $500k in cash that you have in it or is any of it debt?

I would be be careful with the first scenario of the 75% LTV. Banks are changing their minds daily.

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Salem, Oregon

I’m sorry but what do you mean by what type? It’s almost easier to say what can it be included in a 1031.

I’ve done many MF to many SF, many MF to single tenant retail, single tenant retail to many multi-tenant retail, and SF to multi-tenant retail.

1 Vote

Fort Lauderdale, Florida

I've done very well in VT, SC, NC, SC, and VA. But let me give you a couple of tips.

If you’re buying a property that will be appraised based on income approach, rather than comps (e.g MF of any size), always go for the cash flow.

Always buy to sell. I know you’re planning on long-term, but with things appreciating the way they are you don’t want to be sitting in a lot of equity that could be used elsewhere n a 1031.

Mark

2 Votes

Quote from @Dan H.:

1) Maintenance/cap ex as a percentage of rent screams inexperience

2) every percentage I have seen shows me that they have never filled out a maintenance/cap ex spreadsheet meaning they are far too low on small unit count properties. Maybe those absurdly low percentages may work on a beach front property that has incredibly high rent compared to the size of the structure and yard but in general those percentages are way too low (they are likely too low even on just the interior).

Large unit count properties such as apartment complexes with maintenance staff have much lower cap ex than lower count units. Do not apply NAR apartment numbers to small unit count properties.

Fill out a spreadsheet with all item costs and life span. Have the spreadsheet calculate its expected monthly cost and yearly cost. Example kitchen $15k, 25 year life equals $750/year or $62.50/month. An old kitchen that only has 5 years of life left is $15k/5 or $3k/year or $250/month.

Put in your own numbers. Maybe you believe my 25 years is too short or long or my cost is too low or high for your kitchen. I suggest doing one of these for your first few RE acquisitions. I did, now I know approximately the cap ex cost and I had not done one in years until a month ago when I did one for a condo. I did it for a couple of reasons 1) never did a condo 2) different market so I needed an underwriting appropriate for that market and not want to use underwriting from my traditional market. We ran my numbers past the RE agent we were using and listened to his input to derive a number for our underwriting.

by the way I have a property with a tree trimming cost of $70/month (not the regular gardening costs but the cost to come trim the trees (some annually, some every 5 years). Granted it is not a typical rental unit, but it shows an example of a maintenance/cap ex cost that is easily missed.

Good luck

Reread the OP, he’s a small investor starting out.

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Indianapolis, Indiana

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Indianapolis, Indiana

All Forum Posts by: Mark H. Porter

Mark H. Porter has started 7 posts and replied 1072 times.

Post: e1031 Exchange - can anyone refer them?

Post: Where do YOU Live on the Real Estate Spectrum?

Post: Editing lease for renwal term

Post: 1031 when buying an LLC

Post: What happens to your LLCs after using a 1013 Exchange for a trade-up??

Post: Start of Project 3.5% interest... End of Project 8%?!?!?!

Post: 1031 Exchange Property Qualification Criteria

Post: Where would you buy Multifamily prop for long-term

Post: Questions from a new investor..... :-/

Post: Questions from a new investor..... :-/