All Forum Posts by: Amit M.

I second what both folks above wrote. Plus I’ll add my own personal observation on how much cap ex you actually end up spending: luck

Bottom line: hope for the best, prepare for the worst

Question: "How are the sale values of ADU's?"

Short answer: They suck...especially for SFH's

But keep in mind that adding an ADU to a 2-4+ unit building is a different animal. Namely, the appraisal should account for the added unit's direct value. You may need to have your county adjust their official record to include the ADU in their unit count, so a duplex is categorized as a 3 unit bldg, etc. Then the appraiser should be able to appraise it accordingly.

That's a big difference from the appraisal challenge with SFH+ADU everyone mentioned above.

Keep in mind folks that adding an ADU to a 2-4+ unit building is a different animal. Namely, the appraisal should account for the added unit's direct value. You may need to have your county adjust their official record to include the ADU in their unit count, so a duplex is categorized as a 3 unit bldg, etc. Then the appraiser should be able to appraise it accordingly.

That's a big difference from the appraisal challenge with SFH+ADU everyone mentioned above.

@Joe Bertolino yeah your friend probably passed away with a net worth of well over $30 million, especially since he started early, and the mission has been on an absolute year in the last 20 years.

As for Fortunato, I heard him speak at BAWB a few years ago. You’re right, he is a total deal maker and an animated speaker. But honestly, I think your low profile mission friend probably made 5-10x what fortunato ever did. Simply because he invested in SF Bay Area early and consistently. Walk softly, carry a big stick sort of thing ;)

@Joe Bertolino you hit the nail on the head. How long ago did that client of yours own properties in the Mission (I assume San Francisco)?   because those went up 3-4x fold in value over the last 15-20 years!

quality

not

quantity

—————

3words

🍿 guess what? You guys are both right 😂

How hard is it to identify some properties within the 45 day period, but choose something else to close on within the 180 day period? That can buy you 6 months if feasible...

@Dan Engberson question #1: how important is it for him to avoid capital tax gains?? Basically he can sell it, pay taxes, and put the money into CD’s, etc. as a safe and simple way to retire. BUT, he will pay hefty capital gains. FYI he may not care, but whoever inherits his assets in the future may care ;)

So if he wants to avoid capital gains, he needs to do a 1031 exchange, which has strict timeframes to adhere to and is a semi PITA to deal with. BUT you avoid paying the tax (for now at least.) Exchanging into another physical property, even if it's NNN, has risk and some management responsibilities, which I think he won't want. Next option is to 1031 into DST funds. These are basically real estate funds, and are usually professionally managed, and it's easy to buy into a few diff ones for diversification. That sounds up his ally IMO. You basically need to research the heck out of the DST market to make sure you're getting good ones, and not overpaying in fees. The 2 big negatives of DST are 1- they're not liquid, so you need to commit for several years before an exit and 2- they have a lot of fees, so the return is usually less than buying your own NNN property. But they are passive and professionally managed.

@Jessica M. you’re receiving lots of varied long term advice to mull over. But I’ll offer one tangible tip: yes you can absolutely write off all the rental expenses for the home your mom rents from you. Of course you need to declare the rental income, but you should be able to realize a paper loss big time, as you have significant mortgage interest not to mention the significant depreciation you can take. That will materially reduce your tax burden. you do this by filing a schedule E form with your 1040. 

Also, kudos for taking care of your mom ;)

@John Erlanger yes, the appreciation rate is very specific, not only to the city itself, but also to the neighborhood. Even in SF proper, some neighborhoods appreciated at a higher rate than others, mainly due to gentrification, civic/transportation improvements, etc. And that rate will change from decade to decade between different areas. But the chart gives a good general idea of overall appreciation in prime Bay Area markets. 

It basically boils down to that old realtor adage- Location! Location! Location! 
yeah I know it sounds corny as hell, but for this market it’s held true ;)