All Forum Posts by: Paul Lee

Thanks Wendy. Per quite a few professional opinions here and in my contacts 366 days is guidance and intent is the major determinant in 1031 decisions. That said I may still lease for a short term as it would be an entire new can of worms if I sold now and didn't find a replacement, then it could be a short term gain tax on the income which is the worst outcome.

Thank you so much BP community! Proceeding w option 1. 
it was too good to refuse. 

HELP all advance 1031 professionals and CPAs. I have two CPA's with 2 opinions and now I want the communities opinion. 

So I listed an AZ property I bought as a 1031 replacement and closed on 6-30-22 for rent @ $6000 for approximately 2 months with only 1 application (that failed financially) and all similar feedback from all prospects (too dated). 

I then remodeled the property and posted back FOR RENT (not sale) at $11,400 just 2 weeks ago (01-30-23). Even at this price it is about a 5cap.

I received a lease offer from a prospective tenant who also submitted a purchase contract at an attractive price to be closed in July 2023 or sooner (they said they would rather purchase than rent). Which peaked my interest and it is a number I would accept.

I have a pretty large gain as this is a 3rd 1031 turn and I would want to 1031 again (or at least try to (subject to replacement property availability).

First CPA opinion. Go ahead and sell it now, because your intent was always to rent the property and just document everything well (not listed for sale, not your intent)  OR do the lease with option but I'm at risk. CPA feels under an audit any option to purchase accompanied with a lease shows you are probably circumventing 366 of ownership and it would be just to postpone for future 1031 and would come under question. (I agree with this that it would be under question, but also thought this would be okay as it is 366 days and that it doesn't matter when a purchase was written).

2nd CPA Opinion. There is no rule/ruling that says you can't enter a long sale contract as long as it closes after 366 days ownership and IRS would not question this. CPA suggests do a lease and an option agreement, but do them separately with no consideration for rent credits. (I've read about this (right here on BP) to avoid it being a land contract in the legal sense and separating them makes sense).

Questions

1. Should I sell now under 366 days ownership and roll the 1031 gains to a new property with under 366 days ownership of this property?

2. Should I lease now with an accompanying option (in the form of a long closing purchase contract) to be beyond 366 days or more ownership) and roll 1031 at that time?

3. Just lease the property to someone else with and not enjoy a really good offer from a prospective tenant who is head over heels with the property?

I should add I do not believe this tenant will lease the property without an option/long close contract as they have many times verbally stated they feel they are throwing money away renting. That said I have two other tenants that may lease the property I believe but it is a poor cash flow scenario (5cap) so I'd rather go buy a MF building or something else with the sale proceeds.

Thanks BP community!

@Paul Sandhu don’t think Kansas is in the cards  Do like to fish and have considered Montana, Idaho, Utah, but I think for the family we ultimately would like beach and California has a ton of it. 

@John Underwood kinda pin pointed my problem. The internet has 1000s of ads. I have little to no familiarity in most of these areas for a couple months of living so looking for more or less a STR travel agent or broker.

@Kevin Boyd sending you a PM. Prefer walkable, bikeable to beach with a beach town area to boot. 

@Michael Baum I've searched CHBO. I found a couple on there that may work and actually rented a place i owned on CHBO before as well. I'll probably keep looking there and AirBnB, and VRBO and local agencies. 

Thanks so much BP community. 

Looking for a broker or STR manager/owner who can help us find a 2 month place to stay this 2020 summer. Budget is $15k/mo. We have 3 kids and a well behaved lab mix that goes everywhere with us and runs/walks with us off leash (when allowed/legal). Walkable to restaurants or beach, bike-able and family friendly would be cool.

Are there any brokers out there that do this or STR owners/managers that have something?

Any other suggestions?

Any recommendations?

Will do!

Just cashed out on a 2nd/primary home in PV. Wondering if anyone knows any local/private banks or credit union that will do a jumbo 1st position HELOC or LOC. Would like to have $1-2mm available. The local relationship can be of great value. I'm more ease of use conscience than rate conscience.

Would also go for a national, internet or remote bank too to get the higher balance HELOC.

Post or PM me your favorite AZ private banks for real estate activity (flipping/building/rental warehouse lines) OR anybody who has a jumbo HELOC they like.

Just cashed out on a primary/2nd home in AZ. Looking for jumbo HELOC. Preferably that will go to $2mm. I do most my business in WA and my commercial bank won't go to AZ. A national bank or a lender that has a brick and mortar representatives in WA would be great, but an internet lender or remote credit union is fine. I'd also go for a $1mm HELOC which will be about 33% LTV if the process is painless and quick.

Who is your favorite JUMBO HELOC lenders?

I remember the days of drive-by appraisals at 50% LTV with my local credit union in WA that would close in 10-15 days for $100 recording fee. Something like that would be very favorable in my situation, but I understand highly unlikely for this size of loan.

Any referrals are appreciated.

Happy Easter!