Posted by Brian,WI on October 11, 2003 at 22:00:51:
That’s correct, it’s an involuntary conversion.
I had a property “taken” away from me by the city it was located in for PRIVATE developement purposes. Needless to say I’m still fighting to get the amount of money I believe I should have coming. Right now though I need to “convert” by year end or pay about $20,000, and again, that’s too much.
Thanks
Brian,WI
4 Family on small lot? - Posted by Brian,WI
Posted by Brian,WI on October 11, 2003 at 10:36:31:
Hi,
A 4 family came on the market the end of July. It was and still is listed for $169,000 with gross rents of $22,600. I know the seller will take $160,000, but no less.
Anyway, I looked at it when it was 1st listed. It’s a 3 unit building up front and another unit above the garage in back. All this on a 60x120 lot.
The seller was there at the time and let me know he’s going to subdivide the lot into 2-30x120 lots and the city is allowing this(I’ve checked and that’s true). He is planning on building a house on the other lot. The new lot line is about 6-8 feet from the side door of the up front units.
Now this property isn’t as attractive,(4 units “squished” together with not much of a yard for all to share, etc.), but it isn’t all that bad of a deal number wise either. It’s in a decent suburb of Milwaukee, and a decent neighborhood within.
Unfortunetly I’m a “motivated buyer”, and need to buy something by year end, here’s why: I’m in a 1033 exchange (don’t ask and it’s not a 1031, long story) and in order to cover my exchange I have to buy something by December 31, 2003. If I don’t my capital gains are going to be hovering around $20,000!
Now I know some people say to take the tax hit and go on until you find a property that makes money “on the buy”, BUT $20,000 is a little too much. I just paid $7,800 this year for using that thinking and not being able to convert a 1031 exchange. That wasn’t so bad and I didn’t have a big problem with it, and have since been able to use the gain for other gains, but again this new one is a little to much.
So, with all that, the main question is…What do you think of a 4-family building(s) being “squished” on a 30x120 lot?
Thanks
Brian,WI
Re: 4 Family on small lot? - Posted by E.Eka
Posted by E.Eka on October 11, 2003 at 21:50:58:
Brian,
I agree with Nate, I too live in the greater DC area and the current tenants don’t particularly care.
One thing though is, trying to avoid paying capital gains, sometimes shouldn’t be motivation to do a deal. Either way, this leads creedence to the importance of employing a good tax professional with experience. Good luck on your 1033 exchange!
Out of curiousity, why did you do a section 1033, involuntary conversion of property?
Re: 4 Family on small lot? - Posted by Nate(DC)
Posted by Nate(DC) on October 11, 2003 at 15:10:35:
Frankly, I don’t think it’s that big of a deal. In DC there are lots of 4-unit buildings on lots that size. There are some areas which have blocks and blocks of 4-unit buildings that are attached to one another, each with only a small backyard, which is generally barely used (if at all) by the tenants.
I wouldn’t think of it as a huge issue. What exactly are you concerned about? Parking? Space for the kiddies to run around?
NT