All Forum Posts by: John Woodrich

Blast from 2 years ago....  Talk to @Tim Swierczek, he is an expert on this and has helped hundreds of investors.

To weed out non-buyers many commercial deals start with a Letter of Intent with general terms.  After that is agreed upon you will have a due diligence period where they will typically provide more information, you can review leases, etc.

I think you two aren't completely on the same page as everyone on here would agree that you can depreciate the new property....  Bonus may be another matter....

This is uncharted waters to some extent - tax reform changed the 1031 exchange rules and only allows them for real property being exchanged.  1031 exchanges do not allow personal property to be exchanged which is eligible for bonus so that is likely why he has created his position.  So if you exchanged a property in 2019, seemingly it was real property exchanged for real property, which is not eligible for bonus depreciation.  

I understand that many CPAs and cost seg experts may take different positions on this. I am not signing your return and I don't have all the information so all I can point out is some general understanding.

@Kevin Mosier nobody I know. 

@Jeremiah Dexter go to @Brad Schaeppi's website and pay for a consultation.  These are somewhat like tax sales, you have to know what you are buying and what your rights are.  The buyer does have a redemption period after the sale and if they can sell it for more than the amount due it is in their best interest to do so.  I am not an attorney but I am not sure how you received a deed when the actual owner is still the person living in the house....  I am guessing you purchased the loan instead a deed to the property and you are in the position of the bank here which can be bought out...

My post wasn't very long but if you missed my comparison I am copying it again for you: you have to pay close attention to CapX as these markets have relatively no appreciation and you are purchasing old properties.

My perspective is a bit different as I get to see the back end of how deals worked out.  I have clients who purchased properties in Duluth that I was personally interested in.  And if you can clear $250k profit on a flip, you are smarter than most of us.  I would be curious how many $250k Tuesdays" you have been able to cash out on.  You can message me direct if you want, I want to learn as much as I can about Duluth.

@Pavel U. points out an important and often overlooked piece - notify your insurance company!!  I bet many people forget this step.

@Soda P. you are correct, it has been a lot tougher to find feasible flip properties lately.  Matt (above) and myself also flip properties, the margins have to be a bit bigger to deal with the licensing side of things and as the market has been rising cities have tightened their belts a little bit on contractors and investors.

When I got started in 2007 I did everything wrong, the cities knew it but they were just happy that we were fixing some of the dumps and never mentioned it to me.  I got a license because I started getting some grief over it.

@Temu Chechu when you go from a duplex to a triplex you get into commercial building code.  In the past zoning would have been the biggest issue but the 2040 plan cleared way of most of that problem.  If you call the city they can let you know what is needed and if you can do it now.  I also agree that unless he is planning on getting dirty or using unlicensed workers $30k is likely too small of a budget.

@Andrew Boyer-Kern it depends how the property is owned and if it is owned in a business entity. If it is owned in an LLC taxed as a partnership the general answer is no but it could be taxable. If the property is owned in a corporation it could be a taxable event. Ask your CPA and they will have the information to help you.

Another thing to note, if you do a cash out refi and spend the money on another property you will have to follow the interest tracing rules as to where you can deduct the new interest, if at all.