All Forum Posts by: Rocco Swinney

I bought a place three years ago and I’m thinking about selling it for a capital gain around 20 K my gross annual income adjusted is $50-$60,000. I am trying to figure out capital gains tax and what I don’t know is if the capital gains is added on to the rest of my income.

After expenses I will also show a profit from my other rental properties of around $15,000.

And I am considering selling another property that will give me a net capital gains of around $60,000 and want to know if I should push the sale of this property off on the 2021 so that it does not affect the capital gains rate on my other property?

Summary file married jointly

W-2 income of around 50–60 K 

Rental income around 15 K

Capital gains on property a 20 K

Capital gains on property be 60 K

I have the availability to put a lot into my 401(k) if I need to lower my income or into IRAs in order to lower my income up to the limits if necessary to avoid paying undue taxes.

What would you do?

Why not have the appraiser contact the tenant directly and set up a time to walk through?

This shouldn't take more that 30 minutes and the appraiser can follow the COVID protocol, mask/gloves etc.

We did one recently and had no issue. Although it was in our local area, but I met the appraiser and gave him access to the property while the tenant was working. With the tenants knowledge of course.

 Has your tenant already stated that they have an problem with this? perhaps they will just agree to let the appraiser have access and move on.

Good luck 

Hey @Darnelle Turner if you need anyone local to bounce ideas off of feel free to reach out. Not sure how far along you are in the process of learning but make sure you educate yourself prior to diving in. Read tons of books and listen to tons of podcasts. There's a bunch of blogs and webinars on here that are super helpful as well. Start analyzing deals to get famililar with the rents and prices in all of the different neighborhoods here. You'll put yourself in a much better position getting started once you are ready to dive in. There are some good meetup groups in the local area too where you can meet other experienced local investors and pick their brains. But most importantly don't be afraid to take action once you educate up! First one is the hardest then it's a cake walk from there once you get that momentum going. 

@Rocco Swinney I definitely know what you're getting at, like what does this seller know that I don't. I always wonder this, and do ask every seller, but sometimes you're given the generic answers (which could be true), and sometimes something seemingly more real that you can grasp on to. Doing proper due diligence will definitely help find some issues that may have been unforeseen, but I don't think there is a way to uncover every little thing and do a full transfer of knowledge from the seller to the buyer (especially if it's been with the seller for a while). There are always things, small or large, that do get by a due diligence that you only uncover after taking possession where some you have recourse and others it's just not worth your time. Personally, I prefer long time holders of the asset, not just someone who has held it for a year or two. 

I purchased all my MF's from retiring sellers, ages 75-85, with ownership of the buildings from 20 years all the way to over 60 years. I knew there was a genuine reason for why they were selling, and they had taken care of their long time properties for decades. There was definitely no way I could manage it in the same manner and know every little crevice of the building, city, tenants, etc. like they did. 

When I sold mine, I had already moved across the country and was looking to divest from the asset class. I tried to share every single red flag, concerns I had, pending issues, etc. with the buyer from the building, tenants, city, neighborhood, vendors, etc. but it is tough to get that support from all sellers. 

@Nathan G. Nathan G is spot on. I recent bought an 11 unit from an out of state buyer that just wanted out. I have since been shown an off market 8 unit MF plus some sf’s from an older couple that live in another city in same state but are ready to get out of the rental business. All their properties are in great shape and they were well managed. So they just want to move on to another stage in life or retire or something else. I’m not really sure exactly why they want to sell, but it doesn’t sound like it’s anything bad related to their properties or tenants. From what I hear talking to brokers and others, this is very common. And the best thing about some older owners that have had their properties for a while is they often have below market rents since they maybe cash flowing so haven’t felt the need to raise rents to keep up with the market.

@Rocco Swinney  what matters is why are you buying the property, and are you underwriting it properly. Why the owner is selling makes no difference.

Your offer to purchase should include a requirement that they provide all documentation and agree to sign an estoppel certificate (also called estoppel form or agreement). The estoppel certificate is a form filled out by the tenant and then confirmed by the Landlord. It's supposed to ensure there are no surprises after closing. For example, you buy the place and the tenant could claim the Seller allowed them to paint the walls black or that their security deposit was twice what the Seller claimed. How will you know? An estoppel certificate fixes this problem.

Some things it may include:
1. Tenant name, contact information, and address
2. Occupancy date
3. Is there a written lease? If so, review it to ensure it matches the estoppel certificate
4. Are there any modifications to the written lease?
5. Are there any verbal agreements or arrangements between the current Landlord and Tenant?
6. Current lease term (expiration date, month-to-month)
7. Current rent rate
8. Rent due date
9. Security deposit amount
You can find plenty of examples by searching for "tenant estoppel certificate doc" or exchange "doc" with "pdf" for more options.

Here is an example and explanation: https://eforms.com/rental/esto...

Some have a lot of legal jargon but this document does not need to be so detailed. This is an important tool for anyone buying a tenant-occupied property.

I'm thinking back over the last ten years and every multi-family I've seen on the market has been sold because the owner is tired or just ready to move on to other things.