All Forum Posts by: Michael McLoughlin

Hi @Tracy T., my wife and my first investment property is/was also rented by my parents (currently in escrow on their house and going to 1031 exchange it). I think @Dave Foster gave you some great advice in how to treat the rental so you can 1031 exchange down the line. 

One mistake we made from a relationship perspective was not raising the rent for the first several years they lived there so my advice to you would be to treat the business relationship in terms of the rent in a business manner. Plan for annual rental increases that cover cost of living increases. If you don't set the expectation of rental increases your parents may expect there not to be increases in the future. You don't want to set yourself up to feel taken advantage of or be cash flow negative. Hope this helps.

Hi @Justin Garrett, I'm currently in the process of selling two rental properties I own (one is in San Diego) and doing 1031 exchanges into real estate investments that are much more passive and with more cash flow than I'm currently getting. It's syndicated investing into institutional grade properties, luxury or class A apartment buildings. I'm already involved in one apartment complex in Jacksonville Beach FL and since it's working out well for me I'm comfortable putting the proceeds of the two properties I'm selling into more of these investments (they're called DSTs, Delaware Statutory Trusts). I'll be looking to diversify into different apartment communities in different locations. 

Message me if you have any questions, happy to help.

San Diego can be a tough market because the rents don't reflect the value of the properties (not even close to the 1% rule). We're actually selling our rental in Rancho Bernardo and going to 1031 exchange into a DST (Delaware Statutory Trust). The move is going to give us MUCH better cash flow and we won't have to deal with any tenant hassles.

I agree with @Katrina Razavi, look at the working class areas like Chula Vista and Escondido. 

I think if you wanted to exchange or do a partial exchange it would have to be in

the same title as you owned the building you are exchanging. 

If you're an accredited investor, you can 1031 exchange into DSTs which allow you to invest into institutional grade A properties. Investments can be as little as 100k which can give you an opportunity to diversify over multiple properties. This is what my wife and I are planning on doing in a few months. It's attractive for us because you get reliable cash flow, tax shelter and appreciation. 

 If anyone is interested in learning more about DSTs/1031s, this is a great book to read. My wife and I read it a couple weeks ago, it's easy to understand and was a balanced, objective look at the world of DSTs.

Agree completely, the property values in SD can be prohibitive compared to other areas around the country.

@Amit M., I know of a few investors that have been successful investing out of state, especially in the "fly over" states. I invest out of CA because the taxes are lower and the price to rent ratios/cash on cash returns are solid. Just ask Marco Santarelli and Ali Boone.

 Yes being more hands off was one of the reasons DSTs have been so attractive to us. We did our research and found Leslie Pappas who advised us on what DSTs would fit our investment goals and risk tolerance. Leslie is very straightforward and we like her style. We were also able to spend a day visiting sponsors and learned a lot.

Thanks for sharing @Michael Swan, always great to hear others "take control" of their financial freedom. Best of luck on the continuation of your journey.