1031 vs notes - advice? - Posted by Gordon

Posted by Sailor on May 22, 2007 at 17:20:25:

Gordon, you need a good RE CPA to advise you on taxes. I’m not
sure what you mean about creating mobile home notes. I do it in
another part of the country, but I own the land. I can’t advise you
on Calif. & nobody here has a crystal ball. What is true for SFH
may not hold for apts or commercial.

It sounds like it would be worth exploring doing your 1031
(maybe a reverse) in an area that is appreciating or @ least
holding its own. Personally, I would choke over the tax hit & try
to use the opportunity to delay it (post-mortem is my plan). If
nothing else, use the 1031 to buy your retirement property as a
rental & then convert the use later. Check on the time limits, but
you could later re-fi & pull out $$$.

Your seller may not be as cooperative as you think. He’s grousing
a bit, but I’m pretty sure he has mentally spent your $$$. That
doesn’t mean you can’t cancel, but it may not be that easy.

Note that there is $$$ to be made in any mkt, but you need to
make it on the buy, & not bank on appreciation kicking in.


1031 vs notes - advice? - Posted by Gordon

Posted by Gordon on May 21, 2007 at 22:20:05:

I have an apartment building in escrow as part of a 1031 swap. The seller would probably let me back out as he has had second thoughts about the sale. This would mean not completing the 1031 exchange and a tax hit of 25% of the total value, but then I would have lots of cash ready to invest.

I’m wondering if in a California real estate market that will likely have little price appreciation for years it makes sense to take the tax hit and start buying notes and creating mobile home notes, hoping that that over time the greater returns will let me make up what I’ve lost to taxes.

So the question I have for the community is how difficult is it going to be to find a home for this money? I’ll be working on creating my own mobile home notes but I’ll need to be quickly buying notes as well. I would need to get 30% returns to justify taking the tax hit - will I be able to find enough partials paying this kind of return?