Let’s talk a little bit about personal planning in real estate.
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: There’s opportunities in every market, but there are also opportunities regardless of the market, dependent upon where you’re at in your story in your lifetime, and what you can do to maximize the opportunities.
Bob Nelson: Well, you know what would be interesting? What would happen if you ended up with several houses that you are going to rent? Being a landlord’s not that much fun. You can seek out professional management if you don’t like to do it yourself. Or, frankly, it’s not that big of a deal as long as you’re very, very selective on the tenant that you take in because it’s a partnership. That tenant is going to want to enjoy the property to its fullest. You’re owed that opportunity to give that to them. Then, in return, they give you rent to make the mortgage payment.
Marcia Edwards: How selective can you be in the process the way it’s set up now, requirements of the process, be very pure in who gets the opportunity to rent that property?
Bob Nelson: That’s why I would suggest professional property management. It’s very possible to violate a tenant’s rights in how you become selective. It’s not on the basis of race, color, creed, national origin, familial status, and physical handicap, but it is on the basis, solely, of economic capacity to deliver that rent check as obligated.
Marcia Edwards: Let’s say that you want to put that structure together and the endgame would be to live in one of those rentals free and clear and not have to pay gain tax.
Bob Nelson: That would be fantastic. That would be absolutely fantastic if you could hold that property until it was free and clear, move into it yourself. Yes, you would be paying the insurance and yes you’ll be paying the property taxes. Those are not exactly lightweight things, but that’s your full “rent” that you pay for the opportunity to enjoy that property. Then live there for at least a two year period of time. It would possible then to sell it and exclude from the amount of gain that you have enjoyed in owning this property 250 thousand dollars of gain untaxed. That’s a gift from the federal government.
Marcia Edwards: That would be great fun in this marketplace if you had that property because what you could do is fix it up to the standard of home ownership-
Bob Nelson: Yes.
Marcia Edwards: As opposed to the surfaces being more durable and-
Bob Nelson: Yes.
Marcia Edwards: Less high end-
Bob Nelson: Yep.
Marcia Edwards: Once you’ve got them high end, you enjoy it for two years and then you sell it as a high end property for that price point and area.
Bob Nelson: If you happen to have a spouse who’s in joint ownership, they also get to exclude 250 thousand dollars of gain. That’s a lot of money. That’d be 500 thousand bucks not exposed to taxation on the sale of that property.
Marcia Edwards: We gave you that idea for free.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30 on KPNW for the “Real Estate Today” radio show.