All Forum Posts by: Prithvi Sri

I bought a home in bay area fifteen years ago for 750K. Lived there for many years and left to LA about 18 months ago and rented to someone as soon as I moved. I sold the property a couple of weeks ago for 1.65M and I am in the middle of escrow. The house is fully paid and there is no mortgage. I assumed that I am eligible for 500k capital gains exclusion which leaves me with approx 350K in capital gains. But I read an article somewhere that a primary residence converted to a rental property can benefit from both 500k capital gains exclusion as well as 1031 exchange. I don't need the money right away so if I can do a 1031 exchange to save the taxes on the 350K, I would like to consider doing it. Can someone who has done 1031 exchanges tell me if it is possible and if it is worth going through the pain. Thank you for your help.

I am looking into financing an assisted living facility property with 30% down and my personal guarantee - the loan value is less than my networth. Based on the info, a couple of brokers offered rates of around 4.2%. I was comparing this with the loan rate of 2.5% one of the builders got on a mixed use real estate development - almost ten times bigger size than my deal. In my eyes, loan to me seems a lot more secure compared to the loan to the mixed use developer but why is he getting such an amazing rate while I am paying almost twice as much. Am I not looking hard enough?

I am looking at commercial real estate in LA area and there are a few retail properties with pretty decent cap rate - 8%+ net but they have land leases (running 20+ years into future). Should I consider them or not? Why? I am used to SFR real estate so far and commercial is new. And "not owning the land" part of the investment makes me scared. What if the landlord doesn't renew the lease after 25 years? Or ask for an exorbitant raise? Will my investment go down the drain? Can I buy out the land part too? What should be the pricing on the land in such a case (say I am paying 10k in monthly rent to the landlord. How much should I offer or what would the landlord expect to sell the land rights)? If these questions are already answered, please link it since I wasn't able to find them myself. Many thanks in advance.

Thank you @Joel Owens, @Tom Wong, @Jon Mauro, 

@Michele B., @John Warren, @Account Closed 

for your valuable feedback. Unfortunately the seller received an offer by the time I put forth my offer and accepted it so I am kind of shut out. I asked to write a back up offer. Given that the deal is gone in three days after listing shows that I picked the right property - but didn't act in the right pace. Anyway, learnt a lot during the due diligence phase and while qualifying for financing. Thanks a lot to all of you for weighing in and sharing your perspective. Your active participation like this is what makes this community so effective. Gracias.

@Jon Mauro, It is a commercial shopping complex with 17 different tenants. 

@Account Closed,

Good advice about hiring a property manager. Thank you. Now, I have been managing my properties myself (7 tenants) as this was saving me money not just in management but also in taking care of repairs, etc in an effective way. Since the stakes are higher with this, what is the downside of managing this myself? How strongly would lenders feel about letting me manage it vs letting a management company? Also, what is a fair rate to pay the property management company if there are 17 tenants in the complex and the total rents are approx 30k?

@John Warren, That is solid advice. I tried with my credit union that I banked for the last twenty years. Unfortunately, they don't deal in CA for commercial loans. Bummer. Spoke to three brokers (one I found on this forum, thank you guys) and getting the initial conversation in movement.