All Forum Posts by: David Shapiro

Let me make sure I'm understanding this correctly. Let's say you have a $250k house you're selling with a $100k loan and $125k Basis. After selling you have a gain of $125k and net proceeds of $150k. You 1031 exchange into a $300k house.

Scenario 1: You put down $75k, get a loan for $225k. You retain $75k of the proceeds in cash. How much of your gain is deferred?

Scenario 2: You put down all of the cash you receive from the sale, $150k, and get a loan for $150k. 100% of capital gains tax is deferred, right?

Then the following week you do a cash-out refi and get a $225k loan. That gives you $75k in cash. This is not a taxable event, correct?

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If my understanding of your above comment is correct these two scenarios have essentially the same outcome but with much different tax consequences.

@Dave Foster in the refi scenario can you do a cash-out and use the funds for something other than real estate without triggering a tax event?

Hi Dominick, not sure what you're doing it for, but I add up any money that left my bank account during the first 60 days or so as my initial investment to keep it simple. At the end of each year you can plug your net cash flows into an IRR chart to figure out what your return has been.

For tax purposes your accountant may look at it differently.

Hope that helps!

@Brian H. I think Cozy.co for screening/rent collection and then QB for bookkeeping works well.

Cozy has expense tracking but I don't see that they have P&L reports or other functions you would want out of a bookkeeping software. If you have Cozy deposit rents to the correct bank account(s) then QB can auto imports those transactions.
Make sure to setup class tracking to differentiate properties.

Let me know if you have any questions on that setup.

I agree with these guys, I've never had luck cash-out refinancing for numerous reasons.

Also, in my opinion some of the most brain damage from deals is the financing, so I prefer to only go through it once :) 

What kind of shape is the complex in? 

Make sure to look into the financials of the HOA so you don't get surprised with a special assessment.

Can you find more than just the one comp? How long was that one the market? Are there other available listings that you'll be competing against? I would check MLS, Craigslist, and other rental sites that are popular in your area. Even if there's a comp at $800 but right now there are three other similar listings and on average only one leases per month then you might have to lower your rent and/or it might take a couple months to lease it.

Does $360/mo include property taxes and insurance?

That should be a good start for you :)

@Kelby K. What return are you looking for on a turn-key property?

@Mike Dymski good points. I'll keep an eye out for a HVAC tech that doesn't do new installs.

@Tom W. and @Francisco Miyares Thank you for giving your knowledgable input. It was reassuring to hear you also think I should replace the system. Install was done yesterday.

Tom- they recommended finding the leak for $275 first. If it were in the indoor coil, which they said is the highest probability it would cost another ~$1200 to replace bringing total repair to around $2k.

Thanks everybody for your input. @Maria McCreless your comment about spending half got me thinking. Even if I were optimistic about the repair at $2k, that's 33% of ownership cost over 10 years ($5380 - less expensive option + misc. labor with parts covered).  $6k ownership = $600/year. That means I would have to be confident the system would go another 4+ years without needing any repairs for this to make sense. I give that a low likelihood and not worth risking so I'm moving forward with system replacement.

@Natalie Schanne I asked the president of my preferred HVAC vendor this morning about R22. He said he paid $770 for 30 lbs. I asked about the 5x markup and he mentioned EPA regulation and overhead. It sounds like $125/lb to the end consumer is the going rate. I'm glad to be moving away from that on this property.