This doesn’t negate the need to check the lines, however.Pay Attention to Pride of OwnershipAmateur repairs—or a lack of repairs—and deferred maintenance are typically the result of a “low pride of ownership.”

Cutting back vegetation etc.The home probably got more deferred maintenance, water damage evident even in this video.

I added a basement apartment to the house, redid the landscaping, and have taken care of some deferred maintenance on the house.

It needed love and attention because of all the deferred maintenance.

If the property is fully leased and operating well, like your situation, the numbers might not make sense.A few questions to think about....Deferred maintenance or layout issues: If you already need significant updates, the conversion might be a good opportunity to reconfigure the space.

Point is cash flow (positive or negative) can be inconsequential compared to the appreciation assuming you do not need the cash flow to pay the bills - cash flow is taxed, appreciation is tax deferred and can be avoided.I put forth effort to keep my RE investment significantly leveraged.

As for which state to create the LLC in, I will need to defer on that one.

When it comes to my clients, I like to run through different 1031 exchange scenarios to see what we can do to provide the maximum benefit of deferred tax and also be able to achieve what we want to do.

This is a common question among real estate owners.Let's dive in:The reality is that wealthy families often pass on real estate assets from generation to generation.For example, if one generation has an RE entrepreneur who amasses $50 million worth of real estate, that portfolio can generate enough cash flow to support multiple future generations comfortably when passed on.So, what happens if that initial investor built their empire by rapidly depreciating assets and using 1031 exchanges to lower the basis and defer taxes along the way?

If it's a gain, you could defer taxes by reinvesting in a similar property through a Section 1033 exchange.For demolition costs, they can either be deducted or added to the land's basis if you sell.