But if there's large gains to be taxable, you might want to just reinvest using a 1031 exchange and pull some non taxable cash out.

I was under the impression that money I put into the property is eventually directly removed from my taxable gross earned income. 

We have the lowest active inventory right now since 1999.Average DOM is 105 vs 121 in 2011 (13% decrease)Sales volume is up 14% in Feb 12 vs Feb 11Sales units are also up 14% Feb 12 vs Feb 11.Good time to be a rehabber.

If not why would a gain on RE be taxable if all proceeds go back to IRA??

I am noticing a major decrease in my market in REO listings.

So many got wiped out as values decreased, that the only people who currently do seconds are the truly private people who either don't understand the risks, or who know and trust the borrower.

The March Unemployment rate in Montgomery county OH is 8.5% and is going down a decrease from Feb rate of 8.9% The trend is going in the right direction but so is the rest of the country. how would this compare to Auston which is hot now has a much lower unemployment rate but. what would a similar property in Auston cost and what would the income look like compared to the Dayton property?

The numbers are with the current rent which is about $100 per unit below the market in that area.Leverage:90%Marginal Tax Bracket:35%Appreciation:2%Capital Gains Rate:15%Interest Rate:6.00%Value of the Land:20%# of Units2Total Square Footage1568ARV after Rehab:$100,000COMPARATIVE ANALYSISPrice Per Square Foot$57.37Price Per Unit $44,975Gross Rent Multiplier6.52Cap Rat/ROA7.97%PURCHASE ANALYSISPurchase Price$89,950Closing Costs2.00%$1,799Total Cost $91,749First Mortgage90.00%$80,955Second Mortgage0$0Down Payment$10,794ANALYSIS OF FINANCINGInterest Rate 6.00%0.50%Term in Months (n)360Amount Borrowed (PV) $80,955 Balloon Payment (FV) $- Monthly Payment (D)($485.37)FIRST YEAR OPERATING PROJECTIONIncome/ExpenseNet Rents $1,050.00 $12,600.00 Vacancies5% $52.50 $630.00 Advertising $- $- Cleaning & Maintenance $50.00 $600.00 Contingency $50.00 $600.00 Captial Improvements $- $- Insurance $50.00 $600.00 Property Management 10.0% (self managed) $105.00 $1,260.00 Property Taxes $180.00 $2,160.00 Water, Sewer, Garbage $50.00 $600.00 TOTAL OPERATING EXPENSE $537.50 $6,450.00 NET OPERATING INCOME $512.50 $6,150.00 Mortgage Payment $(5,824.39)Pre-tax Cash Flow $325.61 Tax AdjustmentsInterest Payment on Mortgage $4,830.26 Depreciation (affects TI not CI)$71,96080% of value/27.5 $2,616.73 Year 1 Taxable Income $(1,296.98)Pre-tax Cash Flow $325.61 Tax Expense $453.94 NET CASH FLOW $779.55 CASH ON CASH RETURN YEAR 17.22%My first thought is to Raise the rent to 575.That would bring cashflow up too 120 per month at 13.3%.

The city assessment in 2011 is at 193K and in 2012 at 179K (pretty sharp decrease) while comparables are 175K - 190K.

Also-if you can make the deal work with less than 30 months amortization, you will increase the value and decrease the discount!