Rental property for sale question - Posted by Lisa

Posted by Mike on July 21, 2001 at 02:27:57:

Harry’s suggestion about using a 1031 exchange is a very good one. The advantage to using this when trading-up is that there are no Capital Gains taxes to be paid, because you are “trading” one property for another. The only thing is that you must trade “like for like” property, i.e.: rental property for rental property. You may not trade a rental property for a home for yourself, however there are creative ways around this.
I once traded a building lot for a piece of property with three rentals. I was able to do this because the building lot (about 1-1/4 acres had been rented out to someone who kept horses on the property. It was rental property. I traded “like for like” and still own the property with the three rentals, though I am thinking about trading-up again. If I do another 1031 exchange (and I wouldn’t do it any other way)I still won’t have to pay Capital Gains as long as the property I’m trading for has a higher price than the property being traded.
I would like to recommend a book I bought and read 30 years ago called: How I Turned a Thousand Dollars into Three Million in Real Estate in My Spare Time. Although I still have the book (and plan on rereading it soon) I can’t remember the name of the author, and am not sure where the book is or I’d be able to give you his name.
I highly recommend this book for anyone who is starting out to invest in real estate. It is a quick read and tells you how to go about investing and building equity, step-by-step, chapter-by-chapter.
Good Luck!

Rental property for sale question - Posted by Lisa

Posted by Lisa on July 03, 2001 at 07:50:34:

We own a rental property and my husband insists on selling it. He wants to get the equity out of it and apply it to our present home. The house has a recent (last week) market value of $110,000. We owe $50,000 with loan payment under $600. Currently rented at $800+ but we have a management company taking care of it. It will need a new roof in the next two years. We have rented this property out for six years and it has never been vacant.

I would like to trade up to an apartment building someday, and so talked him into holding on this long to build equity. I’ve sat down and listed my options:

  1. I can refinance and purchase from “us”. Is there tax liability for that? If he wants nothing to do with it I can form an LLC and the LLC can purchase the property. Would that work?

  2. We can just sell and be done with it.

  3. Figure a way to Lease Option so that he has no worries and we still get an income as well as future equity. Problem, less equity now, but he may be o.k. with that if there is a profit guaranteed.

Any help would be appreciated.

Re: Rental property for sale question - Posted by Harry

Posted by Harry on July 05, 2001 at 19:17:12:

Ask your property manager or real estate advisor about a 1031 exchange. There is also information for some title companies. Check it out, I think you will like the defered tax.

Re: Rental property for sale question - Posted by Lisa

Posted by Lisa on July 06, 2001 at 10:29:58:

Thanks, that sounds better yet. Hubby originally wanted to pay down current residence, but investing in a newer apartment building is sounding better to him. We have a ways to go until retirement and would like to build something for the future with the money from the rental house. Already making extra payments on the current house.