All Forum Posts by: Randall D Cheney

We're going to sell some building lots that we have divided off of our farm, and do a 1031 exchange with the proceeds. We'd like to pull at least some of the development expenses out of the sales money before we reinvest, but have been told by our title company that that's not possible. Are there any 1031 loopholes that would allow us to do that? We know that we have to spend equal to or greater than the sales price in the new investment, and that the proceeds of multiple lots can be combined to make one purchase. We also know that the sale of each lot can be used for a separate, individual 1031 purchase. Would it be possible to 1031 the proceeds of all lots but one, and keep the proceeds of the last lot to help cover the development expenses, and then to avoid capital gains taxes on the money from the last lot, deduct all or some of the development costs from it? Any other ideas on how to cover our expenses and avoid taxes? We thought of paying cash for a property in the exchange and then doing a cash-out refi on the property to pay the development expenses, but we'd have to pay closing costs and interest etc. We could do that, but maybe there's a better way or a 1031 loophole that we don't know about. Thank you for your ideas!!

We're going to sell some building lots that we have divided off of our farm, and do a 1031 exchange with the proceeds. We'd like to pull at least some of the development expenses out of the sales money before we reinvest, but have been told by our title company that that's not possible. Are there any 1031 loopholes that would allow us to do that? We know that we have to spend equal to or greater than the sales price in the new investment, and that the proceeds of multiple lots can be combined to make one purchase. We also know that the sale of each lot can be used for a separate, individual 1031 purchase. Would it be possible to 1031 the proceeds of all lots but one, and keep the proceeds of the last lot to help cover the development expenses, and then to avoid capital gains taxes on the money from the last lot, deduct all or some of the development costs from it? Any other ideas on how to cover our expenses and avoid taxes? We thought of paying cash for a property in the exchange and then doing a cash-out refi on the property to pay the development expenses, but we'd have to pay closing costs and interest etc. We could do that, but maybe there's a better way or a 1031 loophole that we don't know about. Thank you for your ideas!!

We're going to sell some building lots that we have divided off of our farm, and do a 1031 exchange with the proceeds.  We'd like to pull at least some of the development expenses out of the sales money before we reinvest, but have been told by our title company that that's not possible.  Are there any 1031 loopholes that would allow us to do that?   We know that we have to spend equal to or greater than the sales price in the new investment, and that the proceeds of multiple lots can be combined to make one purchase.  We also know that the sale of each lot can be used for a separate, individual 1031 purchase.  Would it be possible to 1031 the proceeds of all lots but one, and keep the proceeds of the last lot to help cover the development expenses, and then to avoid capital gains taxes on the money from the last lot, deduct all or some of the development costs from it?  Any other ideas on how to cover our expenses and avoid taxes?  We thought of paying cash for a property in the exchange and then doing a cash-out refi on the property to pay the development expenses, but we'd have to pay closing costs and interest etc. We could do that, but maybe there's a better way or a 1031 loophole that we don't know about.  Thank you for your ideas!!   

We own 30 acres of developable property. Because of the current zoning laws we are limited to dividing off only three lots of any size. Our original plan has been to sell 3 lots and 1031 into buy and hold fixer uppers. We've recently been considering building new homes on the land instead then renting them out long term. Can someone help us think through some pros and cons to this idea?

My income goals are only to wisely invest this capital. I've considered accumulating a portfolio that could eventually replace my job but I won't be ready to retire from it for another 3 years. I do not owe money on this land. The land, as is, does not produce any income. Class C SFH in my area looks be be around 200K. I don't believe I can leverage against this farm land. It is not worth much as farm land. Once I subdivide it into three building lots it will be worth more. I've considered building on them but lack the capital to build 3 homes. Thanks!

I own 5 acres of farm land free and clear that can be divided into 3 building lots.  I expect to be able to sell each of the three lots for 120K.  Should I 1031 this capital into single family rentals? How many? 

Thanks for the response. I am in Utah. The median home price varies greatly from city to city. I'm sure the rent rates do too.  Maybe a better question would be.. what are the best resources that I can use to determine home prices and rent rates and how do I calculate a go-no limit.

I've heard that if I should not buy under $150K because the more the purchase price is above this cutoff the less I can get for rent for the price. Is this true? Is there an term for this? How can I determine the cut off for my area?  Thanks. 

If I have 50K to put down on a 200K investment will I qualify on the remaining 150K loan based on the income from the rental or does the lender also consider my job income?  Does borrowing this 150K deminish my ability to borrow another 150K for the next purchase or will the lender give me multiple loans as long as the rental income is there?

Thanks.  

Thanks. Are there any major issues that would make for a "walk away" situation? Say for example a sinking foundation, termites.