investment: property in LA or HSBC Savings? - Page 2

khitch1 · #11 07-25-2006, 04:14 PM

As an HSBC employee, I vote for the HSBC Savings account. Helps my company's bottom line which increases my annual bonus and provides job stability. I also strongly suggest that everyone reading this thread open an HSBC Savings account.

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SANguru · #12 07-25-2006, 05:11 PM

it will be a nonfactor if owned over 2 years.

Quote:

Originally Posted by rangerfan

If they are not buying a like kind property and owning it the same way, they won't qualify. From the brief fact pattern above, it doesn't sound like a 1031 exchange will work. Of course if you can make it work, you should.

Here is some brief 1031 Exchange info. http://www.1031.org/about1031/faq.htm You will need to get your accountant involved.

x5GuyInLA · #13 07-25-2006, 05:48 PM

Quote:

Originally Posted by SANguru

it will be a nonfactor if owned over 2 years.

are you referring to the $250K exemption after living in a home for 2 years?

JonK · #14 07-25-2006, 05:56 PM

Quote:

Originally Posted by crosvs

I had thus far planned to use the money as a downpayment on one or two condos down in LA, but due to the horrible housing market and some friends' advice, I'm now strongly considering placing ALL of the money into an HSBC Savings account.
--Marc

I personally will not touch any residential properties in LA area, especially entry level that is more crowded at least for few years. I speculate that there will be some more distressed properties popping out which will present you with some good deals for investors.
If you plan to live in that will be a different story.

HamannE53 · #15 07-25-2006, 06:38 PM

omg...stay away from hsbc and their PUTNAM/Mellon investments i lost big time with that, and if anyone has to lose my money i want it to be me. ....hot market or not...i know one thing you can never go wrong in realestate. especially long term....condos....land...multifamiliy...just throw it into real estate, do some reseaerch and consider other places that are developing since the market in cal. may not be "hot" to buy in...vegas..arizona...etc... (btw...i also like the idea about the euro's) just my .02

blondboinsd · #16 07-25-2006, 06:50 PM

I am also not a fan of HSBC, they suck!

fln8tive · #17 07-25-2006, 08:02 PM

No strategy that puts all your eggs in one basket should ever be considered. While sales are remaining somewhat constant, real estate inventory in Orlando is 4x what is was last year and interest rates (due to inflation related to energy costs) may rise even more. Me, I'm only buying if the price is right. Everywhere you look, people (many of whom have taken equity out of a first home to get an LC to buy an investment property) are trying to unload them. Wait, study the market, and then invest when you find the right deal---it is critical that you get good advice from realtors, investment advisors, and accountants.

Among other things, determine if the properties qualify as 1031. I believe only commercial property qualifies. Then look at all the tax consequences. Consider whether the property should be put in a trust, then transferred.

If you must buy real estate, buy vacant commercial land until you know the market metrics better. You can lease, sell, hold, or develop vacant land and you don't have to colect rent checks or evict tenants while trying to pass the Bar Exam.

You also have to consider depreciation allowances, cost basis, present vs future income, etc. Do you need to depreciate property now or when you are in a high tax bracket? If you have cash that must be invested, never put more than 25% in one basket--Look up the money manager Bill Miller, he's got a great track record...but don't stop there, and if you put your money with an advisor, make decisions in increments and don't invest in proprietary products just because they are being pitched. Also, there are many REITS that you can invest in that will put you in the real estate game without getting the distraction of management. G/L

Phester · #18 07-25-2006, 08:06 PM

Quote:

Originally Posted by accella4.4

Among other things, determine if the properties qualify as 1031. I believe only commercial property qualifies.

Any property held for investment of used in a trade or business qualifies...

fln8tive · #19 07-25-2006, 08:17 PM

Quote:

Originally Posted by Phester

Any property held for investment of used in a trade or business qualifies...

But only if held as an S-corp or LLC, right? i.e., an apartment complex vs a single family rental not held in a corporation...I can't reach any of the three folks I know who know this stuff inside out, so it's buggin' me. If you are a RE/Tax att'y, I am all ears.

hoop · #20 07-25-2006, 08:29 PM

Quote:

Originally Posted by rangerfan

If they are not buying a like kind property and owning it the same way, they won't qualify. From the brief fact pattern above, it doesn't sound like a 1031 exchange will work. Of course if you can make it work, you should.

Here is some brief 1031 Exchange info. http://www.1031.org/about1031/faq.htm You will need to get your accountant involved.

To preface my comments - I'm a commercial RE broker in Bend, OR:

The term "like-kind" is probably the most loosely defined term according to the IRS. For instance you sell a single tenant retail building you could exchange into raw land, a rental house, apartment complex, TIC, industrial buildings etc. What the current use of the property is will have an impact however. If it's a residence, then it will be more difficult to exchange it, but you should have up to $500k tax free (assuming a husband and wife ownership of 2+ years).

As far as the type of ownership ie. personal, LLC, LP, S-corp or otherwise, it makes no difference as far as a 1031 exchange is considered.

Now to the investment ideas -
Like people have said before, it depends on how long of a hold you're looking for. I wouldn't suggest investing anything in LA since Cap rates are probably somewhere in the mid to high 3% range for residential? This means if you buy a property for $1,000,000 you'll see $30,000 net income from that property. In Bend we're seeing caps from low to mid 6% for commercial buildings. Residential home values have literally gone up over 20% per year for the past three years or so - not normal!! Combine that huge appreciation with twice the cap of LA and this looks like a better move.
Depending on how much you have to invest, check some soon-to-be-hot markets like some of the smaller resort towns in Idaho or Montana and hire a property manager to take care of all the headaches. Don't screw around with trying to manage your own building, pay the 4% to a manager and be happy collecting your monthly checks.

:

ff rant::

that's just my .02

if you want more I could spew for hours....

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