All Forum Posts by: Tony T.

Here you go:

https://www.nar.realtor/resear...

If you're out of a metro area not covered by the link above, you can just call a commercial RE agency and ask them. But they'll want to take your name and inundate you with proposals.

HELOCs will follow the Prime Rate, so your interest rate would fluctuate and you have to be OK with that. Technically ALL HELOCs are interest only. If one forces you to make principle payments, you can simply write yourself a check immediately for that principle. But like it has been mentioned, after the draw period ends, you'll have P&I.

Yes, thank you. I do know that and I'm raising the rents $100 right now, so I'd have to convince a buyer that they're low and maybe get a higher valuation. I've been raising the rents $90/year and can never catch up with inflation! I just can't go higher than $90 for the tenant's sake, so hopefully I'll catch up by next year. The (4) 1 bedrooms are probably $100 lower, not $200. 

OK, thanks for the replies so far everyone! Evidently I left out some key info about me and where I am in my life/thinking.

* I am 55 and have downsized from holding and improving and flipping many properties in the past. I am finished with all the work and with all the leveraging to purchase more; I am making things as simple as possible after 25 years of RE investing.

* I own a 12-unit building which gives me about 120k NOI and rents are about $150/200 below market.

* A 5.5 cap rate would give me 2 million for the building and I have no debt.

* I live in a very affordable city which came in 2nd place in the best places to retire this year - Harrisburg, PA. As I said, I'm kind of in retirement mode now.

* ALL of my net worth is in RE, I have nothing in stocks/bonds/etc.

* I manage my 12-unit building myself and after improving every unit (kitchens, baths, etc) myself, I have very little to do to make that 5.5% ROI, but it'll be more later, I'm sure.

* I am considering selling because: (1) I am a little tired of managing, (2) The cap rates would give me an incredible price in this moment, (3) MOST OF ALL, I see government control creeping in which will cause the RE sector to downturn badly.

Example of unjust government control: (1) Calls/Bills introduced to "cancel rent," (2) Federal rent controls just introduced, (3) Eviction moratoriums, (4) Forbidding the use of credit scores to not accept a prospective tenant, (5) Banning criminal background checks, (6) Requirement to accept dogs for simply emotional reasons, (6) Banning use of eviction records to accept a prospective tenant, etc.

Hi there, I have recently discovered that the cap rates in my area have gone from 8.5% down to about 5.5% in the past few years! That makes my (debt-free) property worth a lot more.

BUT if cap rates are at 5.5%, that means I'm getting only a 5.5% return on my money/investment! That's low in my opinion! But I realize it's not including yearly appreciation (inflation). So, if inflation got around 5%, then investing in a 10% return stocks would be the same return as rentals except without the time required to manage those rentals.

Since the stock market does around 10% in the long term, I'm considering selling.

Does anyone have any input on such a major shift in investing? It would be an incredibly big step since I have been in multifamily for 25 years. Thanks for any input.

@Daniel Lioz:

I dragged my feet on the whole concept and someone else purchased it. For only $50,000!!!!! OMG.

But I'm feeling better about that I didn't get it. I went around the back to look around and was met by a few thugs that wouldn't let me walk on "their" sidewalk and I was threatened several times, so I had to get out of there. Now I know why it sold for only $50,000. I'm so glad I didn't get it even for that. What a nightmare it would have been.

@Sebastian Hernandez - I already had the list of allowable uses from zoning. Thank you.

@Account Closed - Your viewpoint has no good foundation. The shape, look, or former use of a building should have no consequences of a sound, wise decision. Unless you're superstitious, and I am not.

Wow. It is 2-1/2 years later and my inflation fear/prediction was dead on. It was fun reading all the posts to this thread all over again.

I did end up doing what I knew best, that is to purchase a cheap townhouse ($125k) to rent out. Boy am I glad I did! Its value is up 30% in only 2 years! Plus I'm making $800/month profit on the rent after all expenses. That's about 22% ROI which includes the increased value. Even if I left it empty, I'd be coming out on top of inflation easily.

I was going to sell all my properties since I'm old enough and have enough to retire completely, but now it would be a very bad time because of inflation.

Thanks again for the replies, I think I'm understanding most of it. @Dave Foster, thank you for all that info!! To see if I understand, I'll make this example:

Lets say my 1031 property is selling at 1.5m and I find 3 houses for 500k as replacements. that makes each house 33% of the tax burden.

If I rent the 1st one for 2 years and live in it for 3 (5 year requirement), I'd get 60% of the 33% it represents, so that's about 20% (.60* .33) tax savings from the 1st.

Then I move into the 2nd home for 2 years which is 2/7ths (years lived in) = 29% of the 33% tax burden which is about 10% (.29*.33);

Then I move into the 3rd home for 2 years which is 2/9ths (years lived in) = 22% of the 33% tax burden which is about 7% (.22*.33).

Add 33% + 10% + 7% together and it's about 50% tax of the original tax burden ...is this looking correct?

So a better way would be to purchase a 1.5m home, rent it for 2 years and live in it for 8, would I be looking at 80% tax reduction?

Of course with inflation, I'm just going to get taxed way more, maybe even double in the next 5 years. Plus I just got divorced, so I can only do $250,000 gain exemption which I didn't think of until yesterday. I'm not liking the idea of moving so many times either, so I may to rethink all this. Maybe once or twice, I'd move?

Bill,

Thanks for that info!! I had no idea they changed the law. That changes A LOT. I guess I could buy a house in FL for 1.4m and then live in it, but I don't know if I'm willing to move away.

Another thought: How many months is required to rent out a 1031 replacement property before I can move into it and start my 2 years or residency?

More info with my situation:

(1) Apartment building is worth about $1,400,000, purchased at $700,000.

(2) Houses that I'm willing to live in run about $400,000 in my area (2 story with 2-car). I could buy all 4 if I needed to, but with the new info on the law change, I may need to scrap the idea. It's a lot of moving for less than half of the tax I thought I would save.

Complaint: My property value was only inflated over the years; its value didn't make me any profit in real (inflation adjusted) dollars. So I'm being taxed on inflation. How is that just? I shouldn't start a new topic ...sorry.