All Forum Posts by: Amit M.

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 ;)

One key factor is understanding future appreciation, and your appetite for that risk. But basically, if you can hold for 5-10 years, and don’t have to sell, you significantly mitigate short term risk to appreciation. 

I do think 2% appreciation expectation is way too low. But I think 8% is aggressive. You can see the chart below (one of my faves ;) to get an overall idea, based on a long history. bottom line is that many millions of dollars were made in the Bay Area strictly due to appreciation. My personal orientation is to strongly avoid selling any decent Bay Area asset, and only sell as a last resort  

Another benefit of keeping is that you always have the option to mortgage the home if you need or want to borrow money for future investments, etc. Of course not only do you get the best interest rates, but you also get to write the interest off.

^ that’s exactly right, unfortunately. I’d offer the low cost options first- a security camera and a faux “security provided by...”sign. If he insists on a security system, see if he is willing to pay/partially pay for it (but it’s more of a hassle to install and later remove.)

Let us know how you resolved it!

@Roz Enfield what neighborhood is the property in, and what type of property is it (SFH, small, or large bldg)? That info will help me give you further advice.

You’re in a bit of a quandary, as the rental market in SF really sucks right now. So my inclination would be to work with a reasonable tenant. Otherwise you may have a vacancy for a few months, especially as November is right around the corner...and we all know how sucky it is to turn a unit over between Thanksgiving and Christmas!

^ yup....holding my breath for Prop 21 to fail and get flushed down the CA toilet! And given the latest polls, it’s likely to fail :)  But to all you CA peeps out there, vote damnit, vote!

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I’d make sure those expected $4900 rents are not 2019 pre covid #’s :)