Posted by Ed Garcia on February 25, 2001 at 14:24:14:
Chris,
That’s why I said at the end, “I think a lot would depend on what you have going at the time.” I think it’s a matter of what you’ve got working. You could always put the property up and test the market. Bet it wouldn’t hurt to have a 1031 exchange.
Ed Garcia
best structure for this sell - Posted by chris
Posted by chris on February 25, 2001 at 01:22:58:
I am new to the type of creative investing that I am learning about here, but I do have a rental property that I obtained traditionally. It has a mortgage balance of $50k and a value of about $70k.
I owned it free and clear and then used the equity in it to purchase a quadraplex that I get positive cash flow on, and live in for free. However, now, with taxes and interest, I am losing $100/mo on the first property. I am still living for free and netting cashflow when you consider the two properties together, but I feel like Im losing needlessly on the first property.
Should I sell that place and use the capital to get into another positive cashflow situation somewhere else? Its what I feel makes the most sense.
If so, would a traditional sale be the best means?
Thanks,
Chris (25 y/o newbie)
Re: best structure for this sell - Posted by Mike C
Posted by Mike C on February 25, 2001 at 16:38:34:
Chris -
While more information would help us know if this makes sense, I have to agree with Ed that a 1031 exchange might be a good idea for you. Here’s another trick - set yourself up with a lease-option on your own property with you as the lessee after the sale. In other words, do a sale leaseback/exchange. There are many investors looking for deals to help defer taxes but don’t want management. You might realize a better value for your property, and exchange up into something that has a higher overall rate of return. And you can still make the necessary improvements to your current property to get back into positive, or just break-even, cash flow. After the improvements, you may be able to take out the new investor to do it all over again. Sorry if I’m getting complicated, with who’s on first and who’s on second, but you might need a creative rather than “traditional” solution to your next deal.
Good luck!
Re: best structure for this sell - Posted by Ed Garcia
Posted by Ed Garcia on February 25, 2001 at 11:03:55:
Chris,
You crack me up. You kind of rob Peter to pay Paul, and then want to get rid of Peter because he’s coming up short.
What I think I would do is, first see if Peter can be a candidate for a rent increase.
If not, then I would see if Peter is in an area of good appreciation of 5% or more. If the answer to that is no, then Peter would be a good candidate for a lease/option which would once again give you a positive cash flow if done correctly.
Chris, you have many options available to you, I think a lot would depend on what you have going at the time.
Ed Garcia
Re: best structure for this sell - Posted by chris
Posted by chris on February 25, 2001 at 17:20:51:
you lost me
Re: best structure for this sell - Posted by chris
Posted by chris on February 25, 2001 at 12:54:45:
Thanks Ed. I appreciate your feedback. You are right, I do believe I could get the property back into a positive cashflow situation. What I still question is whether wisdom would be to sell it for the capital that I can use to get into a positive cash flow situation in maybe 2 more properties rather than just that one.
I am a full time student, so capital for acquiring more properties is not as easy to come by any more. I am trying to figure out a way that I can add more properties to my portfolio, and gain more cash flow. What do you think, put this one in a positive cash flow position and try and find other means of getting capital for investment?
Thanks,
Chris (newbie)