1031 Exchange
Hello
I own a property in Lake Tahoe, CA. It is land only in a private golf development. I am new to REI. How do I go about either selling this or doing an excahange or leveraging it to buy rental property and start generating income? Where does one list properties like this especially if one wants to exchange it for other properties.
Neil
Thanks Chris. Very helpful. I checked out his site.
The one thing that I notice is that what is considrered qualitifed use. The land that I have owned in Tahoe is owned by the trust but how does one declare that this is an investment vs personal.
One other question is if the trust also own an "equity" golf membership, is this considered property that is qualified use for an 1031 exchange.
I know I would not want to do a 1031 if my land has equal or lost value over the time period. However, my equity membership is profitable and the land is likely to have either stayed the same or lost value.
Can the equity membership be used in a 1031 Exchange?
Neil
The issue here is "like kind exchange". Most likely your interest is in the form of personal property (trust, LLC membership, or the like). You cannot exchange personal property for investment real estate. What you need to do is convert it to real property ownership first- dissolve the trust, distribute the property from the LLC to yourself, etc.
Chris
May be I am missing something. The title is the trust. How does a change in title to the property to my name make it an "investment property" rather than a personal property? I would think it would be the other way around.
Is there something in the title or deed that enables one to declare it as investment property?
It seems to me the golf membership is personal and not real property. Is it separable from the land or a benefit that runs w/ the land?
When you say "the trust" if the whole development held in a trust or is this just your personal trust?
I would be sure to talk to a CPA at a minimum and might even consult a attorney that might be familiar w/ the development.
If you convert the use (personal v. investment) there is a minimum period of time that it has to be investment as I recall.
Newkid pretty well clarified my point, but to repeat:
Personal property is not real property used for personal purposes. Personal property is a painting, a couch- or stocks, LLC memberships, and equity interests in a trust.
Personal property and real property, even if both used for investment purposes, are not "like kind" and thus cannot be 1031 exchanged.
The simplest solution is to transfer the real property out of the trust or LLC and into your own name. As Newkid pointed out, another option is for the trust or LLC to do the exchange of their real property.
find something undervalued or where by doing something cheap, you can make money.
Watched a flip that house over the weekend.
The guy bought a place for 950K, and was able to do a lot split. The vacant lot he created was worth 850K itself.
ITB-
Although this does not work for everyone, as you do need credit and a source of initial funds, clearly you understand my investment strategy.
Works for me! Looks like it works for you, too...
Chris
Ok let me help you understand !! ......
If your credit is shot, You CANNOT get any kind of loan. (Forget Grasiosi he has nothing to do with this) If your monthly and only income = $1800/mo and only have $50 in the Bank, the ONLY WAY to do real estate is to be a wholesaler and without ready buyers for your contracts and properties, then the aim of being a wholesaler is defeated. Without the ability to get a loan (whether hard money, soft money or what ever kind of money I cant do what you did !! Buy with cash .... something I am looking for... If you cant get a loan in the first place then the Idea of refinancing doesnt even exist. Chris made sense and so do you, but ....... I dont have the cash to start, neither do I have the credit !! Which points me in the direction of wholesaling except if wholesaling doesnt exist in your state. ...so How do I find buyers for my contracts?
Does anyone know about wholesaling and where to find bargain hungry cash buyers?
Quote:
On 2008-02-01 17:58, destinriche wrote:
But a heloc, and a loc is different then a secured loan. I did not know there is a difference between a HELOC and an LOC, or is that not what you are implying? If there is, would you please explain?
Also what lender is giving you unsecured HELOCs?
You need to go back to your bank and clarify the secured loan thing as well as the acronyms you are using. HELOCs and LOCs are the same thing when secured by your property. You can get a HELOC on your primary residence as well as your investment property.
Perhaps you are thinking about a home equity loan (HEL) and a home equity line of credit (HELOC).
As I understand it, a HELOC is a revolving credit line secured by your property. Payments are interest only for the life ot the credit line (usually 15 years). The interest is variable and often tied to the prime rate. Even though secured by your property, a HELOC is viewed in the same way as a credit card. Your HELOC credit limit and credit utilization will affect your credit score.
A home quity loan (HEL) is a fixed rate, fully amortizing loan secured by your property. The loan is fully amortizing over the loan term. This loan is reported as either a mortgage loan or as installment debt. Here credit limit and credit utilization are not considered because this loan is treated as a mortgage loan. An on-time payment history and credit seasoning will factor into your credit score.
[ Edited by NewKidInTown3 on Date 04/08/2008 ]