Rental Property: Time to Sell? June 2014

[carlsbadworker]

In the state of California, sell and rebuy can also significantly increase your property tax basis so there’s a break-even point somewhere after factoring commission.

[paramount]

[quote=CA renter]

You sure it’s not because you’ve paid too much, or that it’s older and needs more maintenance, or that you’re not getting the right tenants who will care for it better, or that your insurance is too high, or your interest rate is too high, or that you haven’t made the right improvements and marketed it properly to get the best possible rent/tenants? No, it’s because of “Jerry’s kids.” [/quote]

yes, I’m sure – and you’re right it is because of Jerry’s Kids – even Bill Maher knows this:

To the list of liberals who vote for higher taxes — and then proceed to complain about them — add comedian Bill Maher.

Incredibly, the caustic, left-wing Maher recently warned, “ln California, I just want to say: Liberals — you could actually lose me.” As a resident of California, a state with high income taxes, Maher complained that his taxes are “over 50 percent.” What’s more, Maher made a point seldom heard except on Fox News or by a rich Parisian. Maher said, “Rich people … actually do pay the freight in this country … like 70 percent” of the taxes. (Presumably, Maher meant that the top 10 percent of taxpayers pay about 70.5 percent of the federal income taxes.)

[paramount]

[quote=carlsbadworker]

P.S. I am biased for this answer because you’re paramount and I have seen your posts over the year and don’t feel that you’re built for being a landlord.[/quote]

Yes, you are biased, particularly since you don’t even know me…seriously, no need to get personal IMO.

I’m a fair/honest landlord who obeys laws and have been for many years.

I don’t see why so many make a big deal about being a landlord, I generally handle maintenance requests on my own – the biggest problems I’ve had are with property management companies.

For the most part my landlord problems went away once I got rid of those leeches.

I think CAR is right – git while the gettin’s good. I really don’t want to disrupt the tenants life, and yes I know they would do that to me in a heartbeat.

If they told me they were leaving, I’d put the house on the market ASAP.

[CA renter]

[quote=paramount][quote=CA renter]

You sure it’s not because you’ve paid too much, or that it’s older and needs more maintenance, or that you’re not getting the right tenants who will care for it better, or that your insurance is too high, or your interest rate is too high, or that you haven’t made the right improvements and marketed it properly to get the best possible rent/tenants? No, it’s because of “Jerry’s kids.” [/quote]

yes, I’m sure – and you’re right it is because of Jerry’s Kids – even Bill Maher knows this:

To the list of liberals who vote for higher taxes — and then proceed to complain about them — add comedian Bill Maher.

Incredibly, the caustic, left-wing Maher recently warned, “ln California, I just want to say: Liberals — you could actually lose me.” As a resident of California, a state with high income taxes, Maher complained that his taxes are “over 50 percent.” What’s more, Maher made a point seldom heard except on Fox News or by a rich Parisian. Maher said, “Rich people … actually do pay the freight in this country … like 70 percent” of the taxes. (Presumably, Maher meant that the top 10 percent of taxpayers pay about 70.5 percent of the federal income taxes.)

https://www.youtube.com/watch?v=L-nX5YsKHBQ%5B/quote%5D

Once again, you’re deflecting and not answering the question. How is it that “Jerry’s kids” are making this house a losing proposition? DETAILS on your property tax changes over the years, please, and how they were increased above your already-low, *taxpayer-subsidized rate* because of “Jerry’s kids”!

Otherwise, you’re full of nonsense. You always like to post nonsensical, right-wing rhetoric without any understanding of the issues.

[FlyerInHi]

California does have high total property taxes (not rates but $ amount) because of high property prices.

[FlyerInHi]

[quote=AN][quote=flu]You know maybe I’m crazy. But i actually like being a landlord.. If I had 11 or so rental properties locally, I wouldn’t mind doing it versus going to work everyday….

Unfortunately, I’m still ways off from it.[/quote]
I’m totally with you. I also love it too. If I have 10 places around SD, I too would call it quit on my W2 as well.[/quote]

I like it too. But it’s not like you sit back and the money just flows in. It’s like a job and if you can remodel and do work, your profits will be higher.

It’s harder to do in expensive markets, but in most of America even modest families can become landlords. Just eschews expensive purchases such as luxury cars and invest in rentals.

[an]

[quote=FlyerInHi][quote=AN][quote=flu]You know maybe I’m crazy. But i actually like being a landlord.. If I had 11 or so rental properties locally, I wouldn’t mind doing it versus going to work everyday….

Unfortunately, I’m still ways off from it.[/quote]
I’m totally with you. I also love it too. If I have 10 places around SD, I too would call it quit on my W2 as well.[/quote]

I like it too. But it’s not like you sit back and the money just flows in. It’s like a job and if you can remodel and do work, your profits will be higher.

It’s harder to do in expensive markets, but in most of America even modest families can become landlords. Just eschews expensive purchases such as luxury cars and invest in rentals.[/quote]
Yes, it will require work. I never said you just sit around and money just flow in. But I don’t mind doing that work.

[paramount]

[quote=CA renter]
and how they were increased above your already-low, *taxpayer-subsidized rate* because of “Jerry’s kids”!

[/quote]

Talk about nonsense – taxpayers subsidizing me? There’s no way in the world jerry’s kids are subsidizing me – no way.

I’m not even a RE investor per IRS rules. I did not buy the house strictly as an investment.

[ctr70]

I think real estate prices in CA are pretty stable. Maybe we could have a small correction say 5%, but I doubt it. Here are a few reasons:

-a huge % of buyers the last 7 years were all cash (far more then ever in modern history), you can’t default on your mortgage if you paid all cash
-in addition to the huge % of cash buyers, many buyers the last 7 years had very large down payments, they won’t ever default either
-the remaining buyers the last 7 years (fha and va) have really low rate 30 yr fixed fully amortizing mortgages, meaning they are paying down big chunks of loan principle every month creating forced equity
-builders have built virtually nothing the last 7 years, inventory will stay pretty low

What caused the last crash in 2008 was the sudden wave of defaults from all the crazy loans. The lending this time is NOT EVEN IN THE SAME UNIVERSE. 2002-2007 like 60%+ of the mortgages were STATED income, zero down, bad credit. You know the taxi cab drivers and housekeepers buying $600k houses with zero down stated income. We do not have anything remotely like that this time. So I just do not see where all the distressed inventory would come from to cause a large price decline in real estate in the near future.

I know I read all the same perma-bear doom and gloomers that have been saying the last 6-7 years how all hell will break loose any moment, we have so much debt, the whole recovery is fake based on central bank stimulus, income’s aren’t rising, the job numbers are fake, hyper inflation is right around the corner, buy gold, yada, yada, yada. They have been saying the same stuff for 6 years and they will say it every year. That is why they are called PERMA-bears.

[spdrun]

Who says that distressed inventory is needed to create a price decline? What makes today’s (or 2011’s, or 1955’s) pricing “correct”?

Just because you paid $x in cash for an item doesn’t mean it will be worth nearly $x next year. I paid $1000 cash for a laptop. I think it should still be worth $950 next year. Right.

Lastly, what % of the cash crowd actually paid all cash vs using some creative manner of financing that appeared as a cash purchase upon closing?

IMHO, we’ve already seen a 10% or more decline from peak in some areas.

Example:
Condo listed at about 90% of the peak price last year in a specific complex. No accepted offers, so far, and the sellers have indicated a willingness to negotiate by another 5% down. Yet still active on MLS.

[FlyerInHi]

[quote=AN]
Yes, it will require work. I never said you just sit around and money just flow in. But I don’t mind doing that work.[/quote]

yes, I agree with you.

give the choice, I’d much rather run around town taking care of properties than sit in an office.

It’s an easy way to keep active and healthy.

I wouldn’t want to manage properties rented out to low-lives, though. I don’t want to deal with crazies who might shoot.

I’m acquainted with someone who manages a bunch of properties in a college town. The wife does property management full time, and the husband runs the farm outside of town. Healthier than a sedentary lifestyle.

[CA renter]

[quote=paramount][quote=CA renter]
and how they were increased above your already-low, *taxpayer-subsidized rate* because of “Jerry’s kids”!

[/quote]

Talk about nonsense – taxpayers subsidizing me? There’s no way in the world jerry’s kids are subsidizing me – no way.

I’m not even a RE investor per IRS rules. I did not buy the house strictly as an investment.[/quote]

Not only are your property taxes subsidized (assuming prices have risen more than 2% per year since you’ve bought it), but the interest rate on your mortgage is also subsidized if it’s a govt-backed mortgage.

But you’re deflecting again, as always. Answer the question: Which taxes, specifically, are higher than market rate because of “Jerry’s kids”? And by how much, exactly (show your work!). Let’s see actual numbers. And specify exactly why you think it’s “Jerry’s kids” vs. your fellow taxpayers/voters who’ve voted for additional debt or overly-fancy new schools, parks, libraries, or other improvements that are being reflected on your tax bills (and how about those multimillionaire developers and all of the other “private sector” govt contractors…are they “Jerry’s kids,” too?).

[scaredyclassic]

Setting aside taxes sometimes I feel like making it is just too long and hard a slog and if my life were a business it would just be marginal and we should probably just fold. At least that’s how I used to feel 10 years ago financially.

Sometimes I think that feeling us transferred to taxes or money generally. That if it were just a bit more profitable everything would be cool.

Maybe

[SD Realtor]

All are good and valid points… with regards to the 1031 exchange, as it was posted it would indeed push your basis up HOWEVER it is simply an adjustment to your cost basis and in no way changes the depreciation recapture.

Paramount, before you do anything I suggest you read and educate yourself about PATs or Private Annuity Trusts.

[HLS]

CTR,
Regarding your comment:
“the remaining buyers the last 7 years (fha and va) have really low rate 30 yr fixed fully amortizing mortgages, meaning they are paying down big chunks of loan principle every month creating forced equity”
*****How does a low rate mean that “big chunks”
of principal are being paid ??
***************
Never get complacent with ANY market of any product.
The housing ‘market’ isn’t a normal market as it is one of the most manipulated, but this doesn’t mean that it isn’t subject to corrections.

[Author]

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