All Forum Posts by: Will Mejia

You should send the IRS their money (or best esitmate) right after you closed. Hopefully it's not in the MM with your cash.

Depending on how everything is set up, what you consider a max for retirement account contributions may only be the 20k limit whereas you can go up to ~$70k in total with other methods. It sounds like you should've talked to a CPA before the sale to help you do a little tax planning, but a bit late for that unfortunately. Also those improvements you did may only be able to be depreciated over time instead of all during this year depending on how much each one was and what they were.

As for the cash portion, keep it in savings for now, I always use 50% as a good conservative estimate when not knowing many factors about someone. That's 50% of the gain by the way, not the sales price. For the other portion, invest how you see fit really.

You can try accelerating some purchases that you would normally do next year to be this year, but there's not a ton outside of the normal stuff. (Don't buy stuff just for the sake of lowering your tax bill, it's not worth it)

@Will Mejia

For taxes: the first step is to pay an accountant specializing in real estate to estimate your tax hit. It may not be as large as you fear. No matter how much detail you share here on the forum, we will not be able to give you a reliable estimate because a lot of factors can change the result. We need to see your past tax return and ask you a bunch of questions.

For reinvesting your money: also cannot answer without having an extensive discussion one-on-one. It's like asking what the best food is. Everyone has their favorites, but it does not mean theirs work for you. For example, what if you have an allergy?

I know I did not provide any help here. I'm just cautioning you against taking any specific advice from any other online response.

This is a tough one because your situation, income, risk tolerance all come into play when recommending other tax strategies. I would say figure out your long-term financial goals and determine the best course of action with this money. I've seen too many people try to force a tax deduction or strategy but end up putting themselves in a worse position by picking a strategy that doesn't align with their goals.

If you're done with real estate altogether there are a few recommendations. If not, can you take advantage of a syndication that plans to purchase a property by the end of the year and do a cost segregation? 

If you're unsure, I would say put a minimum of 30% of the funds you received aside for taxes and use the rest to invest towards that goal you want.

If it helps set you at ease, none of our clients have ever been "killed" by the IRS, we haven't seen that dark side of them, yet. If I remember correctly your burial plot is one thing they cannot take from you, a most recent example being Nicholas Cage's plot in New Orleans. Haha Good luck! 

I understand your concerns about the repairs on your 2-flat brick building in Chicago. Selling has the advantage of faster access to capital and escaping landlord responsibilities, but it might result in potential profit loss and face market fluctuations. On the other hand, repairing and holding could increase the property's value, improve rental income, and contribute to long-term wealth building. However, it comes with upfront investment and ongoing management concerns. Before deciding, conduct market research, consult with a real estate professional, and weigh your priorities, considering your need for immediate capital, risk tolerance, and long-term goals.

Quote from @Will Mejia:

I own a 2 flat brick building in Chicago. Over the years some brick cracks and other outside work has accumulated. Some concrete areas around the building need to  be fixed. I would guesstimate 20-40k in repairs.  I have about 5 more years before building is completely paid off.
In these situations I wonder if its better to just sell the building soon or repair. But my thoughts are will the hassle, time, money, spent on repairing give me any actual "gain" in the end? Or I could just sell it as is and save myself the trouble.

Why sell the property? I honestly find landlording very boring and after many years its not fun.
I also have thought of reparing it and then handing it off to a PM company and holding it for longer but dont know if it will be worth it.

In this situation, it ultimately depends on your long-term financial goals and personal preferences.

If you are not enjoying landlording and find it to be a hassle, selling the property as is may be the right choice for you. By selling the property now, you can avoid the time, money, and effort required to make repairs and potentially deal with ongoing property management responsibilities.

On the other hand, if you are willing to invest in the repairs and potentially hand off the property to a property management company, you may be able to increase the value of the building and generate higher rental income in the long run. This could result in a better return on investment over time, especially if property values in the area are expected to increase.

Ultimately, it's important to weigh the potential costs and benefits of repairing the property versus selling it in its current condition. Consider consulting with a real estate professional or financial advisor to help make an informed decision based on your individual circumstances and goals.

I had a great job at the time. So I was able to get the duplexes. I dont work there anymore so my income is no where near the same. I rent my duplexes. I dont live there .

The cashflow + job allows me to rent in Buena Park and live ok but I would like to maybe get a condo or a 3rd duplex property (to house hack)so what I pay in rent now can go towards mortage. I didnt think about this before until recently when I found out you can use equity of your properties to buy more.

Like the user above said, I think I need to figure out if and what buying power I have first.

Originally posted by @Tony Angelos:

Hi @Will Mejia, as everyone on BP will tell you, house hacking is awesome, but my question is how did you acquire two duplexes if your day job doesn't make you much money? And what is stopping you from going about acquiring a third in the same way? And finally, is the cashflow + your day job enough to either allow you to rent a place more suitable to your wants or buy something in the area you wish to live?