Posted on June 30, 2009 @ 8:45 pm - Written by BawldGuy
Some weekend when you’re lookin’ for something to do, grab a clipboard, a legal pad, and a pen, then head over to one of your income properties. Start at ground zero and pick a direction to start walkin’ and talkin’ with tenants in the neighborhood. I can almost guarantee an eye opening hour or two. I’ve had clients do this for years as a hands on exercise designed to show them all the things they didn’t know about the area, and all the misconceptions they may have had.
One client called me up laughing. Seems he came upon his high school sweetheart living a couple streets down. Ya never know what you’ll find and/or learn, but you’ll do both if you’re focused.
Here are some suggestions you may wanna incorporate. Read the rest of this entry »
Posted on June 16, 2009 @ 7:23 pm - Written by BawldGuy
I know, I know, too subtle, yes? I love saying this ‘cuz it’s true — some of my best friends are agents specializing in the listing and selling of single family homes, condos, and the like. The first seven years of my career were spent learning the ropes doing just that. After doing something for that long one gets the feeling they pretty much have figured out where the bodies are buried. Though I was pretty good after a few years, it became painfully obvious that those with far more experience did indeed have more knowledge, more and better skill sets, and were categorically better agents.
More simply put, they produced higher quality results, most of the time more quickly than I did. As I put more years behind me, I began to understand what Dad and many of his silver haired agents told me. They said after enough time I’d ‘get it’. Who knows when that really happened, but after about five years, my confidence level seemed to be much higher.
I compare it to umpiring at the Division I level of college baseball. You clearly don’t get to that point without having proven yourself. Watch umpires at any level of baseball and observe their body language. You can tell the grizzled vets, right? They’re always where they’re supposed to be at the right time. I used to help train youth umpires while working for the NCAA, and the rookies were an easy spot. Tentative was their middle name. They were never really sure of where to be, the rules, or sometimes even whose call it was.
It gets worse. Read the rest of this entry »
Posted on May 4, 2009 @ 9:14 pm - Written by BawldGuy
As long as I’ve been doin’ this, leaving your real estate empire to heirs upon your demise had a preordained happy ending. The real estate investor who passed, did so knowing his kids (usually) could sell some or all of his properties without paying a cent in capital gains taxes. He knew this, and what was even better, relied upon this due to IRC Section 102. Section 102 is fairly wordy, but in essence it’s the hook on which taxpayers have been hangin’ their hats for a long, long time.
In a nutshell it (102) says the heirs take the property(s) tax free. Good enough — as far as it goes. But, you ask, what if I wanna sell it? What happens then? On what does the heir then calculate their capital gain? Is it a capital gain? Will the heir have any tax liability?
Section 1014 of the IRC, in a nutshell says no. It’s called ’stepped up basis’. The property is valued at Fair Market Value at the time of death. This acts to effectively raise the basis from whatever it may have been to current market value, more or less. Because of Section 1014 any rise in value of the property in question which occurred during the decedent’s lifetime may never be taxed. I know, sounds to good to be true, but I’ve dealt with dozens of heirs over the years, and except for the amount of sales price exceeding the value at death — their was no tax liability incurred by the heirs. Read the rest of this entry »
Posted on April 29, 2009 @ 8:19 pm - Written by BawldGuy
What’s better than a case study in real time? Especially one for which we’re only pretty sure we know the ending? 
This is a superb example of gettin’ things done on Purpose, with a Plan, while taking full advantage of all the tools available. The lemons you ask?
Try three rental houses in San Diego — two of which were, regretfully, not performing as planned. Not only that, but the timing of their acquisition was not the best. They’re both upside down now. Between them $8-10,000 a year in negative cash flow is generated.
The third house spit out positive cash flow, and had appreciated nicely, even accounting for the recent backslide in prices. At first glance we guesstimated this property’s net equity at somewhere between $150,000 and $200,000.
I was contacted by the owner, who asked me my opinion of his situation, and whether he should use the cash he had on hand to separately acquire any additional income property.
Here’s a summary of Bill’s status quo at the time, which was around the end of last year. Read the rest of this entry »
Posted on April 20, 2009 @ 10:35 pm - Written by BawldGuy
Disclosure: In order to avoid hurt feelings I’ve taken some liberty with some of the facts of the example used. These changes are insignificant as they relate to the main theme. They’re required, in my judgment so as to protect the privacy of others. You’re free to continue reading now.
This example recently took place in a smallish northern California city.
First of all let’s face something that may be our currently reality — it’s entirely possible real estate in general is beginning its painful U-Turn as we speak. It’s also entirely possible it ain’t. From my vantage point, which allows me to see more than a few markets up close and personal, there’re too many signs for me not to think something might be afoot. But I digress, and besides, we’ll not know for sure until our rearview mirror tells us, right?
Buyers in markets so heavily tilted in their favor tend to behave accordingly — Duh. They make sometimes insultingly low-ball offers. Insist sellers pay a large part if not all their closing costs. Want price adjustments at every turn, mostly from the leverage they perceive available to them during the inspection period. They do it until they sense the seller is about bleed out, then smile, back off, and wait for the escrow to close. Read the rest of this entry »
Posted on April 16, 2009 @ 5:24 pm - Written by BawldGuy
There’s an old story that illustrates an older principle. It’s about one of the Navy’s subs that was experiencing constant problems with the miles of pipes on board. They called in the experts who usually bailed them out, but this time a solution eluded them.
Finally an old salt remembered a consultant who had impressed him years ago. The consultant was called in.
After inspecting the pipes for a good two hours, the consultant went to his tool box. He pulled out a small hammer and proceeded to tap a couple pipes in three separate spots. He then put the hammer away, grabbed his stuff, and left. Read the rest of this entry »