Posted on September 4, 2008 @ 12:31 am - Written by BawldGuy
It’s so easy to talk about moving real estate equities from here to there like your rearranging furniture in the living room. In practice it takes real experience, knowledge, and expertise to pull off. Though I’ve ‘captained’ hundreds of tax deferred exchanges (stopped counting), each one has to be executed to near perfection ‘cuz that’s the only thing the IRS understands. It’s not rocket science, which is what so many real estate folk want you to believe. Still, do it with a cocky attitude and you’ll find out in real time what a bad day’s all about.
For the record, Brown & Brown has never, not once, failed to successfully finish a 1031 exchange. How do you know that’s true? ‘Cuz I’m alive, dude! What would you do if an agent messed up your exchange, costing you six figures in capital gains taxes? Exactly.
Let’s talk nuts and bolts first. How do you sell a property in a place like San Diego these days? That’s no walk in the park, as you may have guessed. It’s not like yer able to head over to the parts store like Grandpa used to, when the family jalopy needed work.
Gonna be brief tonight.
When selling property in a buyer’s market, which is also known for it’s relatively high prices, you must be serious. I’ll only talk tonight about the first step, which is simple as pie. Read the rest of this entry »
Posted on August 27, 2008 @ 9:46 pm - Written by BawldGuy
Ironically, pics tonight will be of Durango and Silverton trip. As you might expect however, after this post there’ll be San Diego pics galore just around the corner.
It’s now been almost five years since we begun refusing to sell anyone San Diego investment property to investors. Shortly after Labor Day we’re reentering the San Diego market. Don’t jump to any premature conclusions about this turn of events. We still won’t sell local property to investors. The lone exception is if their Plan is to live there also. Even then, it’ll be a last resort.
To subtle? We’re comin’ back to help local real estate investors move their SD equities Outa Dodge and into far better areas for capital growth. That is why you invested in the first place, right? You know, grow yer capital so your retirement would be the best you could make it? Thought so. We will not assist folks in the acquisition of local property. The lone exception will be for those few who will be living in the property. Even that exception will be considered a last resort. See? No change of heart whatsoever. We believe with all our hearts San Diego is truly Paradise — as a place in which to live. It’s where real estate investment portfolios go to die though. Just so ya know where we stand. Kinda left subtle in the dust with that one.
BawldGuy Axiom: San Diego (Paradise) is the best place on earth to live, but not the region in which real estate investors should put their capital. San Diego income property is over for the foreseeable future. Read the rest of this entry »
Posted on August 25, 2008 @ 7:07 pm - Written by BawldGuy
Things not always going as planned is par for the course when traveling. As you’ve no doubt surmised, I”ve been without wifi since early Friday morning. I’m writing this as we careen bumpily through the air back to Paradise from Durango via Denver. The thought of turning on the laptop tomorrow morning has me feeling like I used to sometimes when I had to run 15-20 miles while training for marathons. I knew I had to do it, but, well…
The email is gonna be daunting, as Josh, the Brown coming right after the ‘and’ in Brown and Brown, also wasn’t able to access email. Even with slivers of time appearing in our schedule, we either were away from our ‘puters or with someone. Life in the left lane — seminars in Durango. Sweeeeet.
Speaking of seminars. The best question of the day? “What’s yer take on cash reserves?” Thanks fer teeing it up, Big Guy. Gotta love those Sominex Accounts. Old Skool all the way.
So, Durango.
San Diego is still Paradise. But it has nothing, nada, zilch on the infinite gorgeous views offered by Durango. Whether is was by glancing down Main Street downtown, or any of the various places we found ourselves, the views were incredible. Mountains, rivers, streams, farms and ranches with cattle, horses, and whatever else we saw lookin’ back at us. Durango is much like San Diego in some ways. Real estate in Durango was, like San Diego, very high priced. Read the rest of this entry »
Posted on August 20, 2008 @ 11:43 pm - Written by BawldGuy
Everyone and their Uncle Bobby wants a tried and true formula so they know when to make their next move. Often, one of the choices to be made is whether to keep the property(s) or not. If the decision is made to move forward in an effort to enhance their investment agenda, the next topic for discussion will, or should be how and through what structure are they gonna move forward? Surely the so-called formula doesn’t include a miracle. The miracle to which I allude, would be a formless voice arising from your analysis sheet.
Are there formulas designed for real estate investors to figure out whether to exchange or not? Yep. Do they do the job? Eh. Here’s the problem. I stopped counting the exchanges I’ve done when I hit a couple hundred, and the analysis for each one was indeed designed to assist in that single decision. No matter what though, there are choices to make almost every time. I’d say the 80/20 rule probably applies. 20% of the time the analysis pretty much screams which decision makes the most sense. Even then, sometimes there are subjective factors for which the analysis is simply not equipped to handle.
It’s called life. You’ve seen the bumper stickers, right? It happens.
I’ve structured transactions which included tax free cash to my client; installment sale treatment; boot was received; (cash or other property received by taxpayer, debt relief, etc. in an exchange which is taxable) and threw in a hypothecated note just for giggles. How often will a real estate investor incorporate all those techniques in one transaction? I dunno. I’ve only done it twice. But both times it was the right thing, (things?) to do. The decision to incorporate more than one technique flowed naturally from the client’s Purposeful Plan.
It’s an entirely different post, but pretty soon I’ll write about what generated the transaction’s structure. Read the rest of this entry »
Posted on August 16, 2008 @ 8:34 pm - Written by BawldGuy
First thing Dad told me back in June of 1967 as we drove south down the 5 freeway towards San Diego, was the only real downside to livin’ there. He said, “The only thing I can’t stand about SD is figuring out where to go on vacation.” True enough. He moved here in 1962 and never left.
I love San Diego and can’t imagine livin’ anywhere else full time. But the investing side of Paradise has left the building, people. If you think paying $400-700,000 for a 30-50 year old duplex doesn’t make sense today, how’s it gonna make more sense if that duplex rises in value? It loses money today with a 30% down payment for Heaven’s sake.
I’ve had some pretty good conversations with SD income property owners recently, who admitted under their breath, they wouldn’t pay today’s prices, much less more. And there it is. It’s only gonna get worse, any way ya slice it. If prices go down here, it’s no good. If they rise, who’s gonna pay 40% down for the privilege of breakin’ even every month? The logic is as plain as day.
You think I liked having to leave San Diego, taking my clients elsewhere? I resisted it so much and for so long, I was a year late in execution. Please take a step back and objectively ask yourself this question:
Would you buy your San Diego investment property even at today’s low prices? I didn’t think so. I won’t tell anyone you said that though, promise. Let’s talk — isn’t it past time you executed a tax deferred (1031) exchange, and Got Outa Dodge? You bet it is.
Here are the Zombies with a tribute to San Diego income properties.
