All Forum Posts by: Michele G.

Great information! I will start researching brokers in my area. Thank you!

@Todd Dexheimer @Omar Khan 

Does that work with smaller properties as well - around 30 units or less? That’s the market I’m currently looking into. 

Talk to your lender. I have spoken to 3 different (local community) lenders who all told me that they had no problem with me quit claiming the deed to an LLC as soon as we closed on the property. They all said it was the smart decision to protect my assets. One even suggest that we do it immediately after closing before we leave the office.

I am looking for a CPA in the Ann Arbor area. I haven’t found many suggestions during a search. I am willing to go out to Canton or Plymouth if needed, but I would prefer to stay in Ann Arbor if possible. 

What are the dates the yard flooding happened? What city is the property in? I’m curious if it coincided with recent big rains or smaller rains. I would not say it has been an excessively wet spring BUT we did have a good storm this past weekend (it poured all night long on Sun) preceded by a few days of steady rain so the ground was saturated by the time the Sun storm arrived. We’re used to that, but it still causes flooding problems. Many municipal systems here can’t handle the heavy rains despite their frequency.

My primary concern would be the house. Is the sump pump new or in good working condition? The tenant or PM should be able to hear the pump working. If it’s running constantly have someone keep an eye on it to make sure it doesn’t burn out. I don’t know anything about grading, but the perfect squares holding water look like a problem. Perhaps talk to a landscaper to find out if there is a simple fix. Perhaps they could create a swale along the backs of your yards or put in a drainage system.

First though - Make sure your pump is working. If it’s old, rusty, or dies, put the money in for a good one. Not all houses need a strong pump, but you probably do. That is a lot of water and it will have to go somewhere in the next couple of days. You want to make sure your pump will do its job. 

Mark - I have been looking for properties, but the ones that have good cash flow have offers within hours. Once I determine my strategy I will need to step up my game and be able to put offers in very quickly! 

Brent - our exit strategy is to pass on our portfolio to our kids. Our 5yr goal is to have $10,000/mo in passive income. We have a well paying business so we don’t “need” the passive income right now - it would be nice though! 

Katie - Good points! I “inherited” the properties before death under prop 13 so my taxes are very low and my basis transferred so that is low as well. There is only 4-6 years left of depreciation on the properties. I put a call into my CPA to figure out how that changes my future tax bill. 

Dylan - I believe if I were to move & live in the property to satisfy the rule I believe I could offset some of the gains. That’s not an option for us since we are settled and have kids in school that don’t want to move. 

@Dan H. Legally I did not inherit the properties. They were transferred to me before death so I can’t take the stepped up basis which really stinks because my basis is roughly $150 in each with low or no mortgages. I refer to them as being inherited because I did not buy them. The equity is spread pretty even among the 3 since they’re all condos in the same area purchased within 10 years of each other during the housing crash in the 90’s. The property I am considering selling is the one with the least CG. All will be fully depreciated in the next 4-6 years. 

After talking to several professionals (real estate, banking, CPA, etc) I am getting conflicting advice about what course of action we should take. I am not sure which move makes the most sense for us. 

We have over 10 years experience in long distance property management, but no experience purchasing investment properties (these were inherited). Our goals are to gain more experience in RE investing, scale up our portfolio, & increase cash flow.

Current Properties (in OC/SoCal):

Prop A - $350k equity

Prob B - $400k equity

Prop C - $530k equity

Cash flow averages $650/mo each after all expenses, vacancy, repairs, & capex reserves. All properties are slightly under market rent and are in the process of being brought up to market in the next 8-12 months. Newest tenant has been there for 6 years.

Advice given:

1. Sell Prop A in a 1031 exchange & invest in a small apartment complex with a max price of $1.0-1.2M.

2. Sell Prop A in a 1031, invest in a new property, & put remainder of cash in a TIC. This would be an option if I was unable to find a good property in time to satisfy the 1031 deadlines.

3. Cash out refi any of the properties at 75% LTV & buy new property.

4. Get LOC on any of the properties to pay cash for a new property then get a conventional mortgage to pay back the LOC.

If we sell, we would sell Prop A. It has the highest market value and lowest cash flow. I would prefer not to sell any of the properties since the CA appreciation has been so great and continues to rise. But I also want to build up our RE portfolio.

Why would you choose one option over another or would you choose a completely different option? I want to understand the reasoning behind a decision so we can figure out which option makes the most sense to us and works best to help us achieve our goals. Thanks! 

Welcome Malinda Bender I am from the east side of the state, but we are considering investing on the west side since our market is so high right now.

I’m glad you found a solution. Here, orangeburg wasn’t installed until the early ‘50’s, but my husband just found orangeburg at a 100 year old house that had apparently replaced the sewer line sometime in the ‘50s or ‘60s. Yes you could force your neighbor to move his line if he ever had to replace the line. That’s not cheap and you may end up creating a hostile relationship next door. Is there a reason you need to separate the lines? That’s typically not cheap especially if you’re going into the road to connect to the city trunk line. Unless the backups are the neighbor’s fault and/or they were being a pain and refusing to pay for a portion of the bills then I probably wouldn’t incur the cost just to separate them. That would be a $15,000-20,000 job around here depending on how far into the road we have to go to tap into the city sewer.