All Forum Posts by: Michael Penwarden

@Leslie Pappas -- I was just providing the baseline threshold numbers I need to hit on this property in order to remain in compliance. However, I like the 75% LTV for leverage. What does your typical DST look like?

@Leslie Pappas -- thanks -- but can you do that with a 1031?

@David Hutson -- You are making a lot of sense.  It's interesting that you just did something similar to what I'm considering (1031 from investment property in CA into SFRs in Memphis).  Can I ask why you didn't go multi when you went turnkey?

@Pamela Starnes -- Thanks for responding. Yes, you understand correctly. I like the idea of a slower BRRRR, but am not sure how to structure the financing on something like that. It seems like the complexity really ramps up with we start talking about doing a BRRRR on a multi via a 1031 exchange, although I am really motivated to model it out. I will need to convince myself that I can manage the risk/reward properly vs. just vetting a turn key in a good market and letting it ride (if the returns are in the same ballpark, it wouldn't be worth it. If it could result in a strategy where I could really accelerate things it'd be really attractive. I will need some good guidance if I'm going to go that route as it seems there's a lot more to consider. @Account Closed

@Account Closed -- are you asking me to clarify my 1031 limitations?  Essentially, after writing off passive losses, I need to purchase approx $400K worth of property ($100K in cash, $300K in financing) in order to avoid capital gains on the sale of my current investment property.  Not sure if that answers your question.

Hi -- I'm new here and just getting to know my way around, but figured I'd jump in and ask the community for advice/opinions on my situation:

I have a SFR rental property that I've been holding since prior to the downturn. It is not cashflowing, and I have the opportunity to sell it to my tenants. I've spoken to my CPA and -- cutting to the chase and factoring in passive losses, etc -- if I were to 1031 it into different investments, I'd need to spend about $100K of equity against about $300K of debit (for a total of $400K) in order to qualify for a "like" property and avoid capital gains.

What I'm looking for are thoughts on the best strategies moving forward. My goal is to parlay the money into investments that 1) are reasonably stable while 2) providing good cashflow and 3) begin to build a more thoughtful/strategic and lucrative REI portfolio. Another factor is that I am now also able to play a more active role in building my portfolio than I have in the past, time-wise.

What strategies would you focus on?  

I am attracted to the BRRRR model -- it seems like an intelligent way to methodically build a good-sized portfolio by reinvesting my original equity over and over, but I also acknowledge that there's a lot to learn. I would be either focusing in Reno, NV or in the Roseville/Sacramento CA areas, where I could oversee/manage the process and could then be my own property manager.

On the other hand, parlaying my existing equity into a portfolio of 3-5 cashflowing properties in the $100K range (with 20-25% down) in other parts of the country -- places like Memphis, KC, Charlotte, etc -- is attractive because if I get in with the right Turn Key companies I could use my cashflow to continue to acquire additional properties over time and leave the details to the professionals.

Are there other strategies I should consider? SFR vs MFR? Are their pitfalls in either of these strategies that I should be especially wary of? It seems that figuring out how to finance a BRRRR (purchase plus repairs) via a 1031 would be more complex than simply working with an established Turn Key or two in attractive markets, but would it be worth it in the end?

Thanks -- I'm glad to have found BP and look forward to learning from you as I continue to think this through!

Thanks, Dave! I'm at the point where I see the general limitations/timelines of a 1031, but I'm still exploring the best way forward. Fortunately, I am selling my rental to my tenant, so I have a little flexibility on the timing end. That said, I'm still working my way through a boggling number of options -- SFR/Multi, BRRRR or just put the money into a freshly rehabbed property in an area with good CAPS rate, etc. It's both exciting and a bit overwhelming as I try to bring it into focus.

Hi everyone -- just joining up here. I am in the process of selling my first rental (a single family home I've held for a number of years) and am exploring the best ways to leverage the equity from the sale into more actively building a larger investment portfolio. Looking at 1031 exchanges, BRRRR, and cashflowing property opportunities in other parts of the United States. Looking forward to learning from all of you!