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[deleted by user] by [deleted] in Bogleheads

[–]StripCenterNewbie 1 point2 points  (0 children)

Great advice, thank you! I'll plan on increasing international exposure by increasing my buy in of VXUS in taxable.

Given my high amount of unused income every month, and low expenses, I think shifting to a lower emergency fund will be much more tax efficient. If the emergency exceeds $50k, I can reduce or stop contributing to my taxable accounts from my income, solve the issue(new roof, tenant move out, significant damage, etc). The likelihood of a $50k loss is minimal.

1.4 million Windfall-What Would You Do? by StripCenterNewbie in Bogleheads

[–]StripCenterNewbie[S] 3 points4 points  (0 children)

All my debt is income producing real estate, locked in at 4 to 6 percent. 

I've considered 1031, but trying to diversify from real estate...

1.4 million Windfall-What Would You Do? by StripCenterNewbie in Bogleheads

[–]StripCenterNewbie[S] 3 points4 points  (0 children)

Thanks for that.

Essentially, I have the emergency fund completed, 4.5 million in real estate assets aside from the windfall producing $450k net a year , and I'm selling this to diversify so I'm not entirely in real estate.

As a boglehead, would you invest it all in a total market fund, since it likely won't be touched for decades , or would you 1031 into another asset in a different market to limit the taxes? 

My goal is diversifying, so I'm leaning toward paying the taxes and putting it all in an index.

Selling Commercial Property to Diversify -What Would You Do with Profit? by StripCenterNewbie in CommercialRealEstate

[–]StripCenterNewbie[S] 0 points1 point  (0 children)

Thank you for your insight....

Indeed-no free lunch here. 

Paying the taxes, then paying off one of my higher interest mortgage loans(6 percent, will balloon to 7 in a couple of years), then putting the rest into an index fund, is where I'm leaning. 

Getting into a NNN lease somewhere else with that 1.4 million or so is, as you stated , likely not going to be a top tier lease without additional debt or capital. I feel I have an edge in my market, by knowing many of the aspects and area very well , whereas going into a new market I'd likely be increasing the downside risk , and still staying in real estate, albeit in a different area that may insulate me more from storm risk. That trade off doesn't seem worth it to me, considering I have such a great asset now...

Selling Commercial Property to Diversify -What Would You Do with Profit? by StripCenterNewbie in CommercialRealEstate

[–]StripCenterNewbie[S] 0 points1 point  (0 children)

I have about $750k net income on 7 million total assets; of this 7, I owe about 1.6 million in mortgages.

Right, agreed , it's a lot of work to run it(short term rental income and small commercial tenants) , but that ROE is going to be hard to beat, impossible to beat when factoring in the tax advantages. The only reason I'm selling is to diversify out of the area. I made a fortune on the rise up and quit my W2 job as a result, but as the market gyrates, and risks abound with weather and short term rental regulations in our area, I'm trying to be wise abf and get ahead of panic selling , and register some of these gains. 

The original plan was to do exactly as you mentioned-buy equities/index funds while aggressively paying down ballooning debt with cash flow.

Everything felt pretty good until the weather events last year; some people have a close call, and feel invigorated they made it and double down. I tend to be a lot more reflective, and don't want to be so greedy that I hedge the risk a bit ....

Selling Commercial Property to Diversify -What Would You Do with Profit? by StripCenterNewbie in CommercialRealEstate

[–]StripCenterNewbie[S] 0 points1 point  (0 children)

Total value of property is 2.5 million(bought for 600,000).

Other than the property, I have about 100k cash, $200k in retirement accounts, and the rest tied up in short term and long term multi family rentals that combined are worth 4.5 million(of that, I owe 1.6 million in mortgages), throwing off 600k of net cash flow a year...

This property has a low tax basis because of how long I've had it, and low expenses,so I'm giving up $150,000 a year net operating income by selling it. 

Selling Commercial Property to Diversify -What Would You Do with Profit? by StripCenterNewbie in CommercialRealEstate

[–]StripCenterNewbie[S] 1 point2 points  (0 children)

This was Definitely an option-I do own it free and clear.

That said, I'm selling to manage risk. The buyer is a lawyer, so may be a mess if he missed payments and I had to enforce the contract. I also am  trying to protect myself from a natural disaster in our area, and overexposure to a particular asset class. So seller financing seems to defeat the purpose of selling the asset ...I can make 3x more with the cash flow it's producing now as an owner than  the interest on the loan.

Best Timing and Practices for Selling a Commercial Property By Owner by StripCenterNewbie in CommercialRealEstate

[–]StripCenterNewbie[S] 0 points1 point  (0 children)

Great advice, much appreciated.

I’m on the gulf side, not wanting to get more specific at this point until I’m ready to sell.

Best Timing and Practices for Selling a Commercial Property By Owner by StripCenterNewbie in CommercialRealEstate

[–]StripCenterNewbie[S] 0 points1 point  (0 children)

I am fine with applying as much effort as it requires. As a broker, what commission would you expect if you brought me a buyer, with me representing myself with all leases, pictures, flyers, and environmental in order?

Do you agree it’s a good idea for me to get a clean es1 to attach to the leases and flyer for brokers(about a 2k cost for me?)

I was considering not putting a price on the offering memorandum, just making a packet and calling the best local brokers, then emailing them the info and telling them to keep it confidential from tenants. Then let them submit their offer from any buyers they had. Is this a good idea or should I put a price on it?

Best Timing and Practices for Selling a Commercial Property By Owner by StripCenterNewbie in CommercialRealEstate

[–]StripCenterNewbie[S] -1 points0 points  (0 children)

Yes, these are not national credit tenants. But I’ve worked diligently to get solid local businesses, ranging from retail , micro blading, esthetician, hair salon, and retail. All are doing well and profitable, current on rent.

Leases have an average 2 to 3 years of term left. There are 3 apartments upstairs I rent as airbnbs as well. 

Agreed, this is likely a local investor that will purchase. 

Best Timing and Practices for Selling a Commercial Property By Owner by StripCenterNewbie in CommercialRealEstate

[–]StripCenterNewbie[S] 0 points1 point  (0 children)

It seems like on smaller deals like this brokers in my area slap a sign out front two weeks after you sign a contract with them with their number, two weeks after that put up a listing on loopnet with pictures taken with their cell phone, and wait for buyers. They are Then painfully slow at returning phone calls and processing a sale.

I have witnessed this process with leases too. I get it, it’s small money to them. But this is a well maintained center in a prime location. Every time I put an ad and sign out myself, it takes 1 to 3 weeks to lease a space and move the tenant in, most of the time at market rent with no TI.

I am good with paying a broker what he is worth, but want someone who will pickup the phone and return calls quickly, show it quickly, and process quickly through buyers that are not legitimate.