All Forum Posts by: William Hochstedler

Quote from @Tim Ryan:

Long story short, they ended up buying two duplexes. Once they got pregnant with twins they decided to move on from the managing and they bought their primary home.

This is an excellent point.  A local broker made all of his kids buy fourplexes as their first home.  Needless to say, that's treated them very well over the years.

Quote from @Tim Ryan:

What did Kiyosaki say? Your home is a liability and an investment is an asset.

Interesting.  This is a mindset argument, not a financial one.  It falls apart completely if you think of yourself as as tenant and pay yourself rent (that you would otherwise be paying someone else).

https://www.richdad.com/your-house-is-not-an-asset

I prefer the quote from The Richest Man in Babylon, "Make of thy dwelling a profitable investment."  In other words, take advantage of all of the benefits granted to home owners including lending, zoning, and taxes.  But treat it like an investment.  House hacking is just planning to repeat this process.

Also, learning home ownership on your own house is much more forgiving.  Houses are complex systems where lots of stuff can go wrong and there are lots of opportunities for improvement.  Experiencing these first hand in your own home provides greater flexibility while you figure this whole racket out.

Thirty years ago, I was fascinated by real estate opportunities in an emerging market (Brooklyn) and spent lots of time looking at cool warehouse space in places that are now 30-50 X the price.  But I never acted because I didn't have the money, knowledge or confidence to pull the trigger.  It was only after I got to Utah and purchased my primary residence (and got a real estate license) that it all started to click.  I had to have the visceral experience of committing to a 30 year obligation was 5 times my annual salary and then watch it work out relatively risk free (because I have to live somewhere) to feel comfortable making multiple six-figure commitments.  So I advocate home ownership as the first step.

The most important thing is action.  The best time to buy real estate (and plant trees) is 20 years ago.  The second best time is today.

If you're serious about this, you should definitely consult an attorney.

I am not one, but here are some things I've learned from playing around with these types of things:

--Trusts are excellent vehicles for anonymity

--You can hire a professional fiduciary (like an attorney) to act as trustee so the public contact is not easily affiliated with you. 

--Understand the issues that might arise from LLC's formed in states other than where the property is located.

--There are other public records where your identity may be discoverable including mortgages (trust deeds), utility bill guarantees, and property tax payment records.  So you really need a robust strategy.

Most states only publish the registered agent for LLC's and have a paywall to find out actual ownership. So if you are just trying to avoid showing up in broad searches, it's not too hard. Just create an LLC and have a corporate registered agent.

True anonymity is possible.  But it's expensive and takes meticulousness to make sure all of your records that could be made public are consistent.  

I'll let @Jeffrey S. Breglio speak for himself, but he has all sorts of resources for real estate entity set-up Utah that can help guide you through what you are trying to accomplish.

Find yourself a good investor-friendly real estate agent.

Your questions span several competencies:

--Sourcing properties

--Helping find a contractor

--Structuring due diligence contingencies

--Assessing value

This is what real estate agents do.  And you need local knowledge to find the professionals and get a sense of market rents and values.

Any Florida agents out there that can help @Bob Asad?

Good luck!

Just ask a lender if you can do the project as tenants in common with 3/4 and 1/4 ownership with you being a non-occupant co-borrower as @Joseph Chiofalo suggests.  If you can only be 50% you'll have to secure your additional 1/4 some other way (and there are lots of ways).

The only problem I see with your plan is the condo conversion.  Condo conversions are bureaucratically intensive and usually not worth it for 4-Plexes.  On top of it, reaching 20% down through principal reduction and appreciation could be a decade out.

So you should probably look at the project as a long-term partnership with you co-owning this with your sister for the foreseeable future.

But these are great opportunities.  Parents do it with their kids all the time.  Just start by talking to a lender about the various ways you could approach it.

You need to focus on the source of water.  No amount of sealing your foundation will keep that kind of water out of your basement.  It's not a boat.  There is nothing you can do to your foundation (including fixing the crack) that will solve this level of water as a long-term solution.  

In Utah, we rarely install water drainage around foundations.  That means that the only thing holding it back is a tar coating where the foundation wall sits on the footing.  This can fail and is as much of a weak point for water penetration.  Concrete is also porous and will have constant moisture issues until the source of the water is determined.

Here are some things to consider before you start throwing the kitchen sink at the problem:

Does this happen only after a storm event?  The answer to this will eliminate plumbing issues like leaking water mains or sprinkler lines.  

Were the sprinkler systems recently turned on?  Broken zone valves in a sprinkler system could do this.

How are the gutters?  If the water is coming from the sky, the downspouts could be routed differently.

How is the soil compaction and grading?  It's possible that the back-fill wasn't properly graded and excess water is running along the path of least resistance underground toward your house.  

It's unlikely that this is some kind of spring.  Because they would have had lot's of problems during construction if they had an active water source when digging foundations.

But your first step is to really determine the source.  Trying to stop the water as it comes into your foundation is too late.

You can't know how a deal structure will impact the seller's tax liability without knowing their whole financial situation.  That being said, I offer to pay for a consultation with a CPA.  Once the seller understands how much tax they'd owe in various scenarios, you can tailor the deal to maximize benefits.

I'm not an accountant.  But that's the general idea.  

Definitely consult with your accountant before you sell as there are situations where a 1031 isn't worth it.  And if you do go with an exchange, everything needs to be really buttoned up or you could lose the deferral and be liable for the whole gain.

Quote from @Stephen Jones:

My question is, am I able to pull a portion of that money out and just get hit with the gains? 

Yes.  To clarify @Jason Wray's response, monies pulled out of an exchange are called "boot" and you pay taxes on them.  Not prohibited.