All Forum Posts by: Michael John

Sell or cashout refi? 
This property cashflows about $1800/month after all expenses including P&I. But $21,600 is a 4.32% return on all that equity ($500K+). Plus half of my net worth is in that one property. I’m eligible for the 121 exclusion shielding me from about $50K  in capital gains tax. I could 1031 exchange the other half of the sale into another 2 family, though I’m looking at around $1200/mo cashflow at best. Or I could cashout refi $200K which would increase payments about $500/mo plus closing costs.

My goal is to buy a primary residence.

Thanks in advance!

Sorry for the misunderstanding. I moved 2.5 years ago. So my 2/5 year deadline is approaching.

Two-family home in HCOL area worth $1M

$500K owed on mortgage

$3500/mo PITI

$6000/mo rental income

Have opportunity to sell now; unit 1 would be exempt from capital gains tax via sec 121 exemption (lived in 2 of last 5 years)

Would 1031 exchange profits from unit 2 into new investment property (anticipating $500K range with ~$3K in rental income)

Would also consider buying a new primary residence and renting out current property, which could get about $3K monthly rent

If I sell now, I could save upwards of $50K in taxes. House is about 10 years old and expenses & maintenance costs will likely start to ramp up in the coming years.

Market is hot now but who knows what covid could do. Property is in a metropolitan commuter area.

Cashout refi is not an option as rates are close to 4% plus 1.5 points since it's an investment, and max LTV is only 70%

Your wisdom is welcome!

Hi - I am having trouble finding a tax professional who can help me sort through the new tax law with respect to my investment properties. I’m in Hudson County, NJ and would love to be able to talk with someone local if possible. Can anyone refer someone? Thanks! 

Thanks everyone!

Hi, just wondering if time spent in a real estate course and studying for the state exam counts towards the 750 hours needed to qualify as a re professional for tax purposes. Thanks.

This is a great post. I do have a question that probably requires a post itself - when does it make more sense to hold this property and let the renters pay off your mortgage while you continue to rake in cashflow and your property continues to appreciate, versus selling for a few $100K profit? I’m in this situation - could sell my duplex for about a $300K profit or continue to collect $2500/month cashflow. Thoughts? Thanks!

Interested newbie here.