[HLS]

To say that the “depreciation is tax deductible” is very misleading…
Your cost basis of the sold property is transferred to the acquired property. You do NOT get to write off more depreciation of the new property based on the selling price, (up to an equal amount) It’s still based on your original cost.

Eventually depreciation is recaptured and figured in cost basis.

By buying out of state, depreciation can be much better, as the land value is low in many places, sometimes only 15% of the assessed value, while in CA it can be 50% or more.

Doing a 1031 in that situation can be a bit tricky, but still should be able to be done.

[HLS]

There is a 45 day identification period and 180 day closing date, so I am confused by your time line.

If you need to CLOSE by Dec 15th, it’s already too late to identify.

SORRY, I missed the post where you state that you alreday identified your 3. My bad.

[HLS]

There is a 45 day identification period and 180 day closing date, so I am confused by your time line.

If you need to CLOSE by Dec 15th, it’s already too late to identify.

SORRY, I missed the post where you state that you alreday identified your 3. My bad.

[HLS]

Dec 15th closing meaning that you closed escrow on your 5 plex on June 15th ?

Paying the income tax is throwing away $200K FOREVER.

Buying in CA is not your only option. For a full 1031,
You will probably need to purchase a property of equal (or greater) value, AND carry the same amount of debt that you had on what you sold.

Although you stated your selling price, what was your final amount of debt, and how much cash do you now have ??

Buying a $1.5M+ multi unit residential complex out of state in a stable market can bring you a cap rate of 10%++

With $800K in cash, depending on the rest of your financial picture, I would consider properties in the $2.5m range with 30% down. The gross rents could easily be in the range of $20,000-$25,000 per month and your adjusted depreciation would be huge, carried forward if not needed at this time
and providing you with an excellent stream of income.

If you are looking for long term gains AND don’t need the cash, I cannot fathom why anybody would recommend paying Uncle Sam $200K and walking away with the cash.

Conservatively, that $200K would be 40% down on a $500K building, still providing you with great net income that would be ZERO from $200K paid in taxes.

Again, I am NOT talking about buying in CA.

[HLS]

Dec 15th closing meaning that you closed escrow on your 5 plex on June 15th ?

Paying the income tax is throwing away $200K FOREVER.

Buying in CA is not your only option. For a full 1031,
You will probably need to purchase a property of equal (or greater) value, AND carry the same amount of debt that you had on what you sold.

Although you stated your selling price, what was your final amount of debt, and how much cash do you now have ??

Buying a $1.5M+ multi unit residential complex out of state in a stable market can bring you a cap rate of 10%++

With $800K in cash, depending on the rest of your financial picture, I would consider properties in the $2.5m range with 30% down. The gross rents could easily be in the range of $20,000-$25,000 per month and your adjusted depreciation would be huge, carried forward if not needed at this time
and providing you with an excellent stream of income.

If you are looking for long term gains AND don’t need the cash, I cannot fathom why anybody would recommend paying Uncle Sam $200K and walking away with the cash.

Conservatively, that $200K would be 40% down on a $500K building, still providing you with great net income that would be ZERO from $200K paid in taxes.

Again, I am NOT talking about buying in CA.

[HLS]

Has the transaction already closed ??

If you have taken the money from escrow, it’s too late to do a 1031 exchange.

[HLS]

Has the transaction already closed ??

If you have taken the money from escrow, it’s too late to do a 1031 exchange.

[HLS]

RAYB

[HLS]

RAYB

[HLS]

Ray….
SCOTT has the quick answer. I hope that makes sense.
Does it answer your question ?

Your actual payment is based on your RATE.
The APR factors in the allowed fees that get financed.

When you have fees and finance them into the loan amount, your actual home loan is a lower amount and then you are financing fees.

A no point loan is NOT a no cost loan. A low rate can be made up for in higher fees, but not called points.
It’s semantics.

That low rate is low. Seems too low… The par rate (zero points) that I had today (for $400K) was 5.98% with $9000 in fees or 6.125% with $6500. At 6.375% Fees of $2500… A “no cost” loan would be 6.50% with an APR of 6.50%

Fees include origination, lender underwriting, title & escrow, etc.

I have no idea what one needs to qualify with them.
At 6.125% PAR today I wouldn’t make a penny without charging a fee.

I am cheaper than the big names, I think. The big names still get most of the business.

Some people get great loans, some people think that they get great loans, and a whole lotta people have been screwed on loans, and continue to fall for tricks.

It’s all a matter of QUALIFYING. I hear about bait and switch from others all the time, and some crazy fees being charged.
Although quoted a low rate, they have you submit everything and pay for an appraisal or application fee, THEN tell you that you don’t qualify for that lowest rate.

It happens all the time. It’s very difficult to shop by rate alone. Maybe some have had good experiences.

Most people just don’t understand the tiny things that can go wrong before a loan closes, due to lender underwriter, doc drawer or funder. They can get REALLY picky sometimes.

As in most businesses, nobody can claim to be cheapest all the time, and plenty of expensive ones stay in business by not being cheap but giving good service etc.

If you had a 6% loan and paid all fees in cash,
OR
had a true no cost loan, your Rate AND APR would be 6%…

With a true “no cost” loan, the Rate and APR should be exactly the same if all “APR allowed” fees are actually included. There could still be other “non APR” fees. No cost loans are often misleading.

There is a lot of confusion about APR’s.

Generally, the following ARE allowed to be included when when financed to figure the APR:
Origination Fees/Points
Discount Points
Processing
Underwriting
Tax Fees (not property tax)
Flood
Prepaid Interest
Escrow Fees
**********************
What is usually NOT included in the APR figure, even when financed is:
Credit Report
Appraisal
Title Insurance
Recording
Hazard Insurance or Impound
Property Taxes or Impound

[HLS]

Ray….
SCOTT has the quick answer. I hope that makes sense.
Does it answer your question ?

Your actual payment is based on your RATE.
The APR factors in the allowed fees that get financed.

When you have fees and finance them into the loan amount, your actual home loan is a lower amount and then you are financing fees.

A no point loan is NOT a no cost loan. A low rate can be made up for in higher fees, but not called points.
It’s semantics.

That low rate is low. Seems too low… The par rate (zero points) that I had today (for $400K) was 5.98% with $9000 in fees or 6.125% with $6500. At 6.375% Fees of $2500… A “no cost” loan would be 6.50% with an APR of 6.50%

Fees include origination, lender underwriting, title & escrow, etc.

I have no idea what one needs to qualify with them.
At 6.125% PAR today I wouldn’t make a penny without charging a fee.

I am cheaper than the big names, I think. The big names still get most of the business.

Some people get great loans, some people think that they get great loans, and a whole lotta people have been screwed on loans, and continue to fall for tricks.

It’s all a matter of QUALIFYING. I hear about bait and switch from others all the time, and some crazy fees being charged.
Although quoted a low rate, they have you submit everything and pay for an appraisal or application fee, THEN tell you that you don’t qualify for that lowest rate.

It happens all the time. It’s very difficult to shop by rate alone. Maybe some have had good experiences.

Most people just don’t understand the tiny things that can go wrong before a loan closes, due to lender underwriter, doc drawer or funder. They can get REALLY picky sometimes.

As in most businesses, nobody can claim to be cheapest all the time, and plenty of expensive ones stay in business by not being cheap but giving good service etc.

If you had a 6% loan and paid all fees in cash,
OR
had a true no cost loan, your Rate AND APR would be 6%…

With a true “no cost” loan, the Rate and APR should be exactly the same if all “APR allowed” fees are actually included. There could still be other “non APR” fees. No cost loans are often misleading.

There is a lot of confusion about APR’s.

Generally, the following ARE allowed to be included when when financed to figure the APR:
Origination Fees/Points
Discount Points
Processing
Underwriting
Tax Fees (not property tax)
Flood
Prepaid Interest
Escrow Fees
**********************
What is usually NOT included in the APR figure, even when financed is:
Credit Report
Appraisal
Title Insurance
Recording
Hazard Insurance or Impound
Property Taxes or Impound

[HLS]

I think that this post proves, beyond a reasonable doubt, that even with a qualified, interested buyer, there are participants in this foursome that just don’t know what they are doing. When homes were 20% of today’s prices the same nonsense was going on.

It further confirms my belief that so many “professional” people involved in the industry aren’t really professionals.
Lack of skills, lack of common sense, lack of acumen.
Many just got lucky. It wasn’t because of skill or wisdom that many RE agents have done well.

In ANY market you should be getting better representation than it sounds like you are getting, but especially in this market, AND the dollar amount of the commissions is huge.

Regardless of how successful any of the parties have been, there are some poor business decisions that were made here.

In this case, I think the buyer will ultimately benefit by the sheer stupidity of the other players. We’ve got an intelligent buyer that knows what he wants, an nobody to keep a deal together ??

With this kind of money involved, sounds to me that there are high school athletes trying to play in a professional league.
Too many agents only knew how to convince people to buy something that they didn’t really want, telling them that it was going to go up, don’t worry. They don’t know how to deal with a REAL buyer that doesn’t need to be sold.

I don’t have the whole story, but I’m not so sure that the buyer’s agent is the right person for the job.

I have negotiated terms and bought properties for less than I ever thought possible because I insisted that the agent write an offer regardless of anything that was said.

This buyer has been looking for awhile. If I were representing you, you’d probably be having your 2007 Thanksgiving dinner in the wired house and I’d make sure that you had plenty of cranberries or whatever else you needed.

Please let ME know if you are looking for a loan.

[HLS]

I think that this post proves, beyond a reasonable doubt, that even with a qualified, interested buyer, there are participants in this foursome that just don’t know what they are doing. When homes were 20% of today’s prices the same nonsense was going on.

It further confirms my belief that so many “professional” people involved in the industry aren’t really professionals.
Lack of skills, lack of common sense, lack of acumen.
Many just got lucky. It wasn’t because of skill or wisdom that many RE agents have done well.

In ANY market you should be getting better representation than it sounds like you are getting, but especially in this market, AND the dollar amount of the commissions is huge.

Regardless of how successful any of the parties have been, there are some poor business decisions that were made here.

In this case, I think the buyer will ultimately benefit by the sheer stupidity of the other players. We’ve got an intelligent buyer that knows what he wants, an nobody to keep a deal together ??

With this kind of money involved, sounds to me that there are high school athletes trying to play in a professional league.
Too many agents only knew how to convince people to buy something that they didn’t really want, telling them that it was going to go up, don’t worry. They don’t know how to deal with a REAL buyer that doesn’t need to be sold.

I don’t have the whole story, but I’m not so sure that the buyer’s agent is the right person for the job.

I have negotiated terms and bought properties for less than I ever thought possible because I insisted that the agent write an offer regardless of anything that was said.

This buyer has been looking for awhile. If I were representing you, you’d probably be having your 2007 Thanksgiving dinner in the wired house and I’d make sure that you had plenty of cranberries or whatever else you needed.

Please let ME know if you are looking for a loan.

[HLS]

Myito,,
You have mail… Thanks.

[HLS]

Myito,,
You have mail… Thanks.

[Author]

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