All Forum Posts by: Matthew Becker

 Dan seems to kmnow what he is talking about 

1031 arms length could be risky?

OK Sorry for the delay.  I did not do computer time today.  Just enough time to return emails.  

I have more questions.  - Does he want to retain some owner ship?  Is he just looking to have no house payment?  

Total Value $660K. 

Basis - $323K 

Debt $66K 

Liquidation Cost estimate 10% if he sells through broker - $66K.  This can be less I just use this as a conservative estimate because the math is easy.   

Cash Equity. $528K.  So you should make sure he does better than that so it is good for both of you.   

I can't stand Dave Ramsey because he advises people with out asking 100 questions that you should before you give advice like this.  You really have to understand people situation a lot more before giving advice.  I would rather talk to both of you for a hour and advise.    I do deals with friend and family and they are loose because I trust them.  So that has a lot to do with it.  

Credit, jobs, income, age, married, plans for future all this matters. If he makes less 94K a year and married he can take advantage of zero tax rate which would come into play.  You can structure the deal to pay him gains at a zero federal tax rate.  

If he is ok with not owning the properties  The easiest thing to do is buy him a house.  He sells you his house for his basis $323k carries the note.   He buys a house for $500K and you pay it off.  Then you owe hime another $40 to $100K depending on how you figure it out.  You and your husband gift him $19K each.  If he is married you can each give him and his wife $19K x 4 =  $76K  in one year.  Or hand him an envelope with $100K in it.  People love cash.  

He will be allowing you to leverage your money with his this is very good for you.  

I am not a tax adviser and barely graduated high school so I am not sure if I would listne to me.  There are a lot of ways to skin this cat. 

If you don't have a great accountant which most are not.  I have one that is awesome and smart and specializes in Real Estate tax planning mostly because he is an investor as well so he is really good at what he does.  

Anyone can get pro account for free.  most people don't know and this might get me in trouble.  HD actually has another level above pro.  They have outside regional guys and you order through them.  You don't have to go to the store.  I am not sure what you need to spend but north of 2M but man does it save a lot on doors, trim and finish stuff.  Last order I save 40% 

I have to eat I will get back to you in the moring.  I am on vacation so I am a bit behind. 

I can probably help you I have done a lot of private deals and I don't pay taxes.  I have some question.  How much does he owe on each property, what is his basis and how much are they worth?   How much does he want to spend on a house?  How much cash do you have available?  With this info I can probably point you in the right direction.  In general I would come up with a solution and tell my accountant what I am doing.  I just did a deal very similar to this with a couple houses.  

I am new to bigger Pockets,   But I have been buying real estate for a 34 years.  I would not invest in either.  Both have populations that are declining.  You are dealing with people who have to live there not people who want to.  I think you will get little to no  appreciation long term.   Dealing with low income tenants is much more difficult.  It really sucks to kick out single moms who have not paid rent in 6 months when they are crying in court.  I would invest in a fund or find partners in place that are growing.  Economics matter: Market trends and supply and demand.  I think as people are able to choose to work places that have better weather places like Cleavland will continue to decline. Also consider Crime rate.  All these will effect long term appreciation and rents.  

I can relate brother.  But I learned hard work for no money.  The lawns where for another landlord so I made a bit there.  $5HR in 1982 I thought I was rich.  Good luck with the kids they are a wonderful blessing.  My 8 year old turns air bnb with my wife.  She is mean toilet cleaner.  We have a cleaner but during the summer my wife has her do it with her just so she learns.  It is harder than doing it yourself but having capable awesome young ladies in this world hopefully will raise the bar for the lazy dudes. 

Buy one fix it up sleep in a closet and rent out rooms,  live for free,  refi and do it all over again.  1 a year for 10 years . I started at 19.  I had no knowledge and now I have a company that builds 5M to 10M a year.  You have youtube with that you can do anything. Plus thousands of really smart people in this group to bounce things off.  Fail aggressively when you are young there is no risk.  Although anyone who says you will fail might have never tried.  I actually never lost money on a deal.  Once my book keeper embezzle a million dollars from me.  But I don't count that.  Go out and kill it.  

The knock down cabinet that are made of 1/2 plywood shaker style are pretty good deal at home depot.  They are easy to put together.  Set up a contracts account at both Lowes and HD.  You don't have to be a contractor but it will save you a good chunk of money.  Go to pro desk it is easy.   I don't think I could justify custom cabinets for a $1500 rental. I have remodeled several hundred places and the ones made with particle board look good but don't last.  If your cabinets are made out of plywood and nice enough painting is actually a great option.  Saves money and looks great.  I like a navy, darker blue, charcoal or Teal but it really depends a lot on lighting, natural light and how big the kitchen is.   You might have to use some deglosser so the paint sticks.  It is much faster than sanding.  I actually like brush strokes in old houses as well. You don't have to spay them or make them perfect then.  You good contertops and do a tile back splash with some color I think white subway is becoming a bit dated.  My nephew when to Cornell and played football.  I always thought it was a good place to invest it was just to far away from me to do it. 

Good luck