All Forum Posts by: Patrick Thomas Dickinson

@Andrew Lax I just used google and looked up California ( sf Bay Area ) and it’s said and every 40 year appreciation of 6 percent, I have no crystal ball but if history repeats itself then I may not be to far from real numbers , who knows ? 

@Nathan Gesner

Thank You for the well thought out response. I’m assuming you’re all for me turning it into a long term rental . I think you may have missed the fact that my current primary would rent for 3800 and the mortgage is currently 6125$ this means I if I turned it into a rental I’d be operating at a loss for a lot of years because that’s a huge gap so you can automatically say that I wouldn’t get any cash flow for probably the first 10 years minimum. Meaning me and my partner  would have to eat that loss and come out of pocket to augment the rent to pay the full mortgage for at least a decade or so . I do have other rental properties that I have a gain on so I could use the losses on this property to offset the other gains that I have from my other properties so that is an option.

with the following in mind above does that change your opinion and if so, why or why not?

I forecasted out appreciation for about 28 years and it said it would be worth about 4.3 million at a rate of 5% increase per year and appreciation. I do like the idea of having access to the cash out refi and helocs 

Hello Everyone 

Im writing this post to see if theres any thing im missing in my thought process. Im always interested in hearing someone elses viewpoint. I have heard time and time again that a primary residence is not considered a good investment if you really look at the numbers. So I ran my numbers and I will discuss below. 

My current primary ( scenario 1) Keep the primary for the life of the loan ( current rate is 4.5 so i dont see my self refinancing anytime soon)

current home value 1,150,000

Loan amount 935,000

appreciation estimate 5% per year 

after a 28 year hold and the house is paid off I would have a house worth 4,312,000$

my current mortgage is 6125$ ( piti) included 

My second option( scenario 2) 

Sell the house, walk away with $150 ,000 ish in hand and put that into a low cost index fund 

Rent a house elsewhere for about 3000$ ish and take the extra 3000$ im saving everymonths from not having to pay my mortgage and puting that money in the index fund as well 

I ran the numbers on both of these scenarios and doing what I mentioned above would break even at about 28 years meaning my stock account would be worth 4.3 million just like my house would , but the only is that holding a house for 28 year would mean 28 years of property taxes, loan interest ,home insurance and repairs etc whick I calculated to be about 1,200,000$ at minimum which raised my eyebrows to say the least 

Also i understand that each of these options ( stock market vs real estate ) will have there tax consequences ( long term capital gains) so any thoughts on that would be appreciated as well. 
 

What would you do? It seems like selling and renting is the biggest wealth builder in the end 

Rent in a lower cost area with a lower monthly payment and use the difference gained  to invest in the stock market ( which would yield around 8 percent) 

Keep the primary and hold it long term ( average appreciation in california from what I could see is about 5 to 6 percent if you look back in time 

Keep it as long term rental ,it would rent for $3800 current mortgage is 6150 $ - doesnt seem smart to me 

Let me know if you need any more details in order for you to give me a better answer or insights 

Quick question, I’m in California and will have a sizable, capital gains tax bill owed to the IRS and the state of California in the near future. my question is how quickly does the capital gains tax liability need to be paid? Someone told me that it had to be paid within the same quarter that you sold the house does this sound accurate. Or do you have till next annual tax filing period (April 2025) to pay the capital gains. I don’t wanna incur any penalties or fees, so I’m just looking for some guidance on this. 
thanks 

@Bruce Woodruff

it is her primary residence and she’s been there more than 2 years and probably 20k in improvements since owning the home 

Hello

Any tax savvy people / cpas out there want to help me out. 

My moms selling her house in the Bay Area and will have a large amount of capital gains once it is sold, I have a few questions. 

1. You pay capital gains to the feds and your state of residence ( California for us) correct ? 

2. If my moms can creatively come up with a way to keep her taxable income below 47000$ ( for single filers) she would have to pay 0 in capital gains on the sale of her property, am i understanding this correctly. 

If so I’m thinking she could make some sizable donations which would lower her taxable income to below 47000$. It seems like a no brainer to me if I’m correct. Any insight on this ? 

@Carlos Ptriawan can you dm

Me

With the lender information thank

You

@Bill B.

@Arlen Chou

@Jason Wray

She seems to think she she might be able to do what’s called a reverse contingency and sell her house to someone on the contingency that she has to find herself a replace home. With the lack of supply here in the Bay Area that could take months to do in my opinion especially if you’re looking for a quality home here in the Bay Area in a decent area. Any  good neigborhoods are getting multiple offers over asking, so offers need to be really aggressive right from the start.  To boot she only has a few cities she’s interest in.  Then my next thought is who is going to want to buy her house and wait for what could be multiple months for her to find her future home ,probably very few people in my opinion. ? 

Thanks for the creative financing choices 

Any more to add on this situation 

It almost seems like in any situation in order for her offer to be strong she has to have the cash in hand. 

Are agents still getting clients home in the background or is most stuff going to market to see who can pay highest and best? 

Hey everybody 

Heres the scenario.

Just looking for advice not another agent solicitation 

My mom has a house in Pleasanton California worth 1.5 mil and 1.7 and a sizable chunk of equity in this property . She is looking to downsize and pay cash for a home somewhere within the purchase price of 1 million dollars. 

The problem. She’s not willing to sell her house and do rent buy back for a few months and she’s not willing to sell and find a place to live for a few months while she shopping for another house. 

So basically her buying this other downsized house is contingent upon the sale of here current primary residence which I believe makes her offer a lot weaker especially in our hot Bay Area market. 

How would you tackle this problem, what are some options ?

@Matt K.

Ok matt, 

so two things 

1) are suggesting I trade my brentwood sfh that cash flows maybe a little bit less for multi in antioch probably in a borderline d class neighborhood that is full of headaches ( highly likely) . In addition what's long term appreciation worth you said it yourself brentwood will probably appreciate more long term antioch is full of problems I have friends that are cops there. 

2. My house  has only been a rental for 2 years ( so not much depreciation recapture) I contacted my cpa to get a better idea of what my tax liability will be with and without the 121 exclusion. Its my understanding that capital gains is taxed at 15 % and dep recapture is taxed at 25% ( that could be a lot) 

My cost basis when I bought the home is 370,000 and I could probably get 650ish if I sold = so thats about 280,000 k gain x 15% =42,000$ plus whatever dep recapture tax id have to repay. So ya that could be a problem and id have to 1031 if I miss the boat on this one and continue to rent the property. I get that 

My problem is that rates have almost doubled this year making almost nothing cash flow greatly, Im looking for low stress, not antioch/stockton multifamily or out of state air bnbs that are subject to high management fees 20 to 30 percent of rents, not to mention cities changing rules all the time about short term rental. Ive spoken with a few people that do STR unless you manage yourself the margins can be minimal for the hassle you deal with ( not really looking for another job, I have two right now)

as far as the midwest is concerned, Im looking to build significant wealth and this is a long term game for me. Collecting 400$ checks every months Isnt going to suffice. I am looking for sound long term investments that will probably appreciate, you cant argue California has probably made more long term millionares than most every other state. I ve owned property and currently owned property in multiple states and on paper california does better for me than all my others. Probably because rents go up like crazy here and we have a huge supply issue.