All Forum Posts by: Rick S.

@Edward B. Thanks for the reply. I should add that In the case of my example, rents are at, or very close to market now.

Does it make sense to buy a turnaround park at a low CAP rate, with the reasoning that it can be "easily" turned around and brought up to the market, or even above market CAP rate?

My thoughts are that a turnaround park should be purchased at a relatively high CAP rate. If I am going to do the work and spend the cash to turn the park around and stabilize it, shouldnt I benefit from raising the CAP to well above market?

Example: I am looking at an older 1940s park (40ish spaces) that has 30% vacancy, half of the lots are TOH old MHs and the other half are RV spaces (mostly empty). Old infrastructure, high density, old MHs, etc. The park is in an area that a similar but stabilized well-run park may trade at a 7-8 CAP. When would buying this park at a 6 CAP be justified?

@Connie Stainbrook

I think the going rate in SoCal is 8-10% + a point or two for flippers, so you may have trouble getting 10-12% from a HML in SoCal. I also am sitting on some $$$ that I would like to put to work at 12%. I think HML rates are higher in other states, but I haven't started digging into it yet. I am following this thread, and hopefully some HMLs will chime in and help us out.

I am considering renting my house for 6 months (summer) each year. Im still working thru the pros and cons of going the Airbnb/VRBO route, or completely emptying it and trying a 6 month lease unfurnished. Im just not sure if anyone rents unfurnished houses for 6 months... or if there is a market for 6 month furnished rentals. I dont want to have to come back to do tenant turnovers.

I like some of the ideas posted here, more food for thought. Great topic for frequent travelers!

@Michael Plaks thank you for the comments. You are correct, we did not file a partnership return. We each reported 50% of income and expenses annually on our personal tax returns. The title comapny isuued each of us a 1099-S reporting 50% of the gross sales price. I am pretty sure we have done evrything correctly up to this point, and the economic parity between us is not an issue. I am trying to read between the lines on your comments, but cannot tell if you implied that we must report the sales expenses 50/50.

@Paul Allen the reason I am asking is becuase it would be more advantageous for her to have the additional $10k expense on her 2017 taxes than me. This is the reason i am asking if the IRS requires that sales expenses be slipt 50/50?

A partner and I own a rental SFR as Joint Tennants with 50% ownership each. In the past we have split all income and expenses evenly and claimed them 50/50 on each years tax returns. We sold the property in 2017 and split the proceeds 50/50. However, my partner paid $20k more in selling expenses than I did. Can she claim more than her 50% share of selling expenses on her 2017 tax return, or must we each claim 50% regardless of who actually paid for it?

I found this excerpt in IRS Pub 527, but it refers to rental expenses, and not sales expenses...

Part interest.

If you own a part interest in rental property, you can deduct expenses you paid according to your percentage of ownership.

Example.

Roger owns a one-half undivided interest in a rental house. Last year he paid $968 for necessary repairs on the property. Roger can deduct $484 (50% × $968) as a rental expense. He is entitled to reimbursement for the remaining half from the co-owner.

It sounds like the IRS forces income and expenses to be divided according to ownership percentages, but since I am not a tax expert, I thought I would ask a CPA here on BP. Thank you for any help.

Repairs go against the NOI, and lower your COC return. Improvements will add to your cost basis, and lower your COC return. So yes, any cash actually spent is included. Non-realized appreciation is not.

I also am considering investing as an LP in MF synications, and have a couple questions...

1. My goal is to earn 12% on my cash. Is this realistic with a syndication at this point in the cycle?

2. If the market takes a downturn, what would happen to my return/investment?

 I have yet to purchase multi-family, however, at the moment I am considering it. If interest rates continue to rise in the future, is there any reason that Cap Rates wouldn't follow and rise as well?

As yields on safe "savings account" type investments rise, it seems that expected yields on higher risk investments would rise, given that the acceptable spread an investor would expect, remains constant.