Need Help W/my Real Estate Strategy
Does anyone know of someone that assists with a Real Estate Strategy?? Heres the situation I currently own 7 properties in So Cal, some neg, some pos cashflow w/ a good amount of appreciation. My goal is to replace my current W2 income but Im stuck on what my next step should be, ie 1031 to an apt bldng, 1031 to units out of state, cash out all together and take it to vegas etc. Its strange, I can find any number of people to assist with financial planning via stocks, mutual funds, etc but no one that helps with financial planning via real estate. Any Advice??? thanks
I think there are two kinds of investment properties. One where you make money through appreciation that you can cash through selling or refinaning, and other you make money through high cash returns in terms of rent.
If you are in high appreciation area each year you can refinance and cash out to the point that the rent income will pay the new mortgage, and then use that money either for your expenses or to buy cheap properties with high rental income all cash and enjoy the rent income from the same.
Let me know if it makes sense.
i have a similar situation - 4 properties in florida new construction i bought 1 year ago that will close this year with good appreciation and my present primary i bought 2 years ago here in southern california with great appreciation and 2 more new here(one by the water) in california i just put down deposit and is being built to close this year. The only problem is i am very leveraged so do i sell some or try to rent them all and carry any upside down ? As you know 2006 is a whole different market from even 1 or 2 years ago
Why would you want to rent it , instead of selling , and reinvesting in the other deals ?
if you sold all 7, how much profit would you have?
Quote: I just sold my 1st rental. The rent was 1200, piti was only 625. w/ over 225. of that going to prin. I have taken those funds (over 172K) into a partial (117K)1031 to try to buy my new construction home.
I thought with a 1031 it had to be the entire sell proceeds that are reinveted into an INVESTMENT property. I have never heard of a partial 1031. Also, you can not live in your new construction home. 1031 is only for investments, not residences.
Brenda,
For a 1031 exchange to be completely tax deferred, you have to reinvest the entire proceeds from the relinquished property sale. Any portion that you withdraw from the exchange is taxable capital gains, the portion left in the exchange remains tax deferred.
Same with downsizing. If your replacement property has a lower value than the relinquished property, then the difference is taxable even if all of the sale proceeds are reinvested into the replacement property.
A question for ceinvest. You said you quit w-2 in 2002. All these properties you have were bought before that or after that ? Especially the one that yu just sold, how long did it take to build that much appreciation ? It appears that your cost was around 132k. while your profit 120K
Also with all the positive CF and also income from selling of a property you still have problem with getting mortgage ? why ?
CEinvest,
thanks for responding to my questions.
I may be getting in a similar situation. I talked to several mtg. brokers and many of them told me that the best way is to refinance the property which is paid up, to get cash from it and then buy next property for cash. Based on your experience, Do you agree with it ? and secondly how far can you go without selling or exchanging the properties ?
All landlords say that it is better to have a vacant property than to have a bad tenant. You may have to look less at credit report and more at rental history in a lower income area. When I first started out, I only rented to people with good credit. Then I shifted to people with good credit or good rental history. The trouble with rental history though is verifying it. About 50% of all my applicants put down a friend as their landlord or put down an incorrect current address. So you really have to be a CSI detective to verify rental history. And remember ... someone who is not on the lease is someone with bad rental history. Someone who is staying with mom or a friend had better have good credit.
thank you