Real Estate Investing and 1031s

[Senator]

I figured I would I would give an update on this real estate post.

http://www.early-retirement.org/for...al-estate-investing-88212-12.html#post1947359

I did some fix up on the St Paul property when I returned from my FL winter and sold it on a 1031 Exchange. It is not the time to own property in St Paul, MN.

I did buy a place when I was there over the winter too. A place that was 10-years old, vacant for 6+ years, and in nearly perfect condition, near Ocala…

Here are the details. There are still real estate deals to be had, they are hard to find and have more competition.
Purchased contract for deed 12/30/2015 for $38,353. Original owners rented until 7/30/2017.

Sold/closed for $175,000 on 7/16/2018. I took many trips during that time period. Circle Tour around Lake Superior, Glacier National Park trip, 3 months in FL for the winter.

Costs ~$750-man hours. Maybe another $35K in materials and outsourced labor. Rough gross profit, $100K.

I closed on a new vacation rental property in FL, about 1.5 miles from the Disney World exit. I now own two Florida properties.

Purchase price $175K, exactly what I sold the St Paul Property for. When the 1031 exchange was netted out, I had to pony up another $13K or so. I did receive a $1,091 check (25% of his commission) from the realtor at closing for using him.

The new place is 110 years newer. 800+ sq. ft larger, and has a garage. And it has much less functional obsolescence. I get a lot more depreciation and travel expenses to deduct.

Here are a few picture of the remodel. It's hard to see, but the blue bathroom door to the left of the picture is 30" wide, and the door way is only 26"... Now it is a 28" door, same as the door way.

 

[kgtest]

WELCOME BACK! Being a fellow MN Real Estate investor, I was grieving your loss Senator! Hope you had a great break. Just booked our flights for a Sarasota Scouting trip to visit neighborhoods for our next potential "rental unit".


I am always interested in the 1031 exchange stuff. So far only sold one out of the portfolio about 5 years ago, plan to reset the basis on a few others way down the road if/when rents slow down.


My buddy had a tough time selling his STP place for what he wanted so he decided to rent it out. I offered him cash, but he wanted a better price.

 

[Senator]

A few more before/after. With a limit of three attachments, it's hard to show the full effect. But the price I sold it for does.

It has 100% new pex plumbing with LOTS of shutoffs. New electrical wires in the kitchen, and a new circuit breaker box, changed from a fuse box. New light fixtures, appliances, vinyl laminate floor, paint, recoated exterior basement wall, etc. All new six-panel doors where the old door was leaning... New functional closet doors. New main door in the kitchen. Lots of cleaning too.

 

[kgtest]

100k profit plus some nice tax harvesting, over 3 years. Not bad at all. The only house I flipped grossed 50k over two years. All about buying low.



Sounds like you caught somethin on your fishin' trip after all! Congrats.

 

[Senator]

WELCOME BACK! Being a fellow MN Real Estate investor, I was grieving your loss Senator! Hope you had a great break. Just booked our flights for a Sarasota Scouting trip to visit neighborhoods for our next potential "rental unit".


I am always interested in the 1031 exchange stuff. So far only sold one out of the portfolio about 5 years ago, plan to reset the basis on a few others way down the road if/when rents slow down.


My buddy had a tough time selling his STP place for what he wanted so he decided to rent it out. I offered him cash, but he wanted a better price.

Thank you.

I listed my place with the following strategy.
Listed 5/26/2018 for $174,900
Lowered the price to $167,900 after 7-days on market
Lowered the price to $164,900 after another 7-days on market.
Took it off the market on 6/15 (7 more days), put it back on the market on 6/16 for $159,900. That made the days on market (DOM) = 0, looking like a new listing. The CDOM (Cumulative DOM) was still like 21 or something. It needs to be off market for a month to zero that out.

I received an offer of $175K, and I paid 3% of the buyers closing costs, $5,250 and a commission of $4,725.

 

[Senator]

100k profit plus some nice tax harvesting, over 3 years. Not bad at all. The only house I flipped grossed 50k over two years. All about buying low.

Sounds like you caught somethin on your fishin' trip after all! Congrats.

Although it took ~2.5 years, I had renters in the property until 08/08/2017. It was only vacant for 10 months. And for about five of those months I was traveling.

They could not make the contract for deed balloon payment, so I purchased the C/D and keep them as renters. Their previous equity payment became rent.
They were giving me a 15%+ return on my investment.

 

[Offgrid Organic Farmer]

We bought property #1 in California with three houses. We lived in one house and rented out the other two houses.

Then we were transferred to Scotland where we bought property #2, a five-unit apartment complex.

We sold property #1 and we put that profit into the mortgage of property #2.

Then we were transferred to Connecticut where we bought property #3, a Tri-plex building. We sold property #2 and we put the profit into the mortgage of property #3.

Then we were transferred to Washington for 5 years, where we bought property #4, a four-plex building.

Then we were transferred to Italy for 3 years.

Then the Navy put me onto pension and we moved back to Connecticut to property #3. We sold property #4 and we put that profit into property #3's mortgage.

At that time property #3's mortgage was nearly paid off. So we refinanced it, and used that cash to buy our retirement home.

Our retirement home has no mortgage, as we bought it using cash.

 

[Dtail]

Welcome back Senator. Even though we don't have AA in real estate, I appreciate your posts.

 

[MarieIG]

Welcome back Senator. Love your posts. DS asked me about real estate investing earlier today and I thought of you. (He's not ready yet, but he's starting to think about it.) I mentioned a few things I read on your posts, including the criminal and credit checks that you recommend, and will have to direct him to your website.

P.S. Love that tub.