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Old 08-03-2010, 09:12 AM   #41
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A few things I've learned about rental real estate. If you buy an existing rental property, make sure you see the current owners "books". If they won't show you, run away. If you are not the handy type, make sure you have a network of people you trust to do repairs for you, before you buy. Talk to existing tenants, find out about any "deferred" maintenance items they've been complaining about. If you don't have the resources in the bank to cover vacancies and unexpected major repairs, don't buy until you do. Don't depend on credit cards and loans for your cash reserves. It's ok to use a real estate agent to find a tenant, but I have found that property managers don't care about the place like I do. Good luck.
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Old 08-05-2010, 11:36 AM   #42
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Originally Posted by kyounge1956 View Post
My parents owned & self managed a rental until a few years ago, but they are getting up in years and the building they owned was clear across town from where they live. I think they had done several tax-free exchanges from when they started to the last building they self-managed, and the capital gains tax hit would have been substantial if they had simply sold it when they didn't want to self-manage any more, so they did one last exchange and hired a management company. I'll ask them for their words of wisdom on the matter.
Did they know that the capital gains rates are scheduled to go up next year (if most of the 2001 tax cuts go back to the levels they were at when it went into effect)?
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Old 08-05-2010, 11:50 AM   #43
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I plan on using the power of leverage in real estate for this.
I know that some people do take this approach. One thing I never understood is - if you want to use real estate as your investment instrument, why not use REITs instead of actual homes to avoid liquidity problems?
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Old 08-05-2010, 12:35 PM   #44
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why not use REITs instead of actual homes to avoid liquidity problems?
I think real-estate enthusiasts would say that buying physical properties allows use of more leverage and gives the investor greater control over the condition of the assets, mgmt, etc.
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Old 08-07-2010, 03:40 PM   #45
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Did they know that the capital gains rates are scheduled to go up next year (if most of the 2001 tax cuts go back to the levels they were at when it went into effect)?
Thanks for the heads up. I mentioned this to them when I was over there yesterday and suggested a talk with their tax guy. But it's probably too late anyway to put the building on the market and have it sell before the end of the year. I know hardly anything about estate planning and what happens on inheritance. I'm pretty sure whichever of them survives the other will inherit the rental.
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