Selling your Roseville rental properties, 1031 Exchange and do a Deferred Sales Trust

 

1031 Exchange into Deferred Sales Trust (DST)

I’m going to start off assuming you have heard of and know what a 1031 exchange is, but are you aware of what a Deferred Sales Trust is?  

Typically sellers will do a 1031 Exchange, selling one property and buying another.  A simple concept to roll your proceeds into another property without paying taxes on the gain.  A DST is similar; however, you buy a partial ownership of a property that is professionally managed.  There are many to choose from; they can be apartment complexes, hotels, shopping centers, etc.  The cap rates vary but they’re around 6%.  This is the stress free way to park your cash and collect a check every month.

We’re seeing more baby boomers that are tired of managing their rental properties.  With all the repairs and dealing with tenants it can feel like a full time job and be draining.  Beyond the aggravation of managing your rentals, you might be at or past your depreciation 27.5 years.

I personally have 3 rental properties and manage them myself.  It would be less burdensome if I have a management company but I don’t want to pay 10% management fees.  I’m 48 years old so I’m still willing and able to manage them, but down the road I will certainly look to move my assets into a DST.

I have helped several clients move their money into a DST and they are happy they did so.  I’m actually helping my mom in Arizona do a 1031 into a DST as she’s at the age it makes sense.

Keep in mind, I don’t get paid on 1031 Exchanges or DST’s.  I’m simply looking to help people transition out of their rentals.  I’ve been selling real estate here for 21 years now.  If you’ve fully depreciated your rental and want to 1031 into another property, of course I can help with that too!

Feel free to contact me if you have questions.  My team is ready with the experience to answer any questions and guide you through the process.

Thank you,

Chad Phillips, Broker Associate

Re/Max Gold - Roseville

916-390-1476

Chad.remaxgold@gmail.com

Best Roseville Realtor

 We're in a very competitive Roseville real estate market in 2025.  Finding a realtor in Roseville with the best skills to help you sell your house for top dollar and negotiate terms in your favor are key.  They say 20% of realtors do 80% of the work and I believe that to be a true statement.  Most business I do comes from repeat clients and referrals.  Taking care of my Roseville buyer and sellers are at the utmost priority.  

I'm currently working on several properties to get ready to list on Metrolist.  I have 3.5 acre horse property in Penryn that also has views of downtown Sacramento.  Another property is in Fair Oaks, on Hazel Ave.  This is 1/3 acre property that might work for an investor who is looking to flip property in Sacramento.  This is more than just a cosmetic fixer in Fair Oaks.  The house needs a complete over haul.  I will be listing it appropriately!

Several houses I have coming up for sale in Roseville are due to deaths in the family.  The parents have passed away and the kids are calling me to help sell the house.  When they don't have the family trust setup properly, new it's looking like a probate sale in Roseville.  I'm having them meet with a local real estate attorney in Roseville to get an idea of the time frame involved.  Depending on if there's a will can effect the time frame of the probate.  In all cases there are multiple people looking for their inheritance and that can be more problematic when trying to disburse funds.  

The amount of houses in Roseville for sale are on the rise.  Between new construction and spring around the corner, we're used to seeing inventory pick up this time of year.  Interest rates have ticked down a little bit so that promising. Mid 6's right now, or so I'm told.  Still a majority of houses I'm selling now are all cash.  Investors are out there and looking to park cash.  I think some folks are looking to diversify and get some money out of the stock market.  It's a smart play.  I only have a fraction of my money in the market, and I have 3 rentals.  I'm looking to buy another rental home in Roseville this year.  The cap rate is around 6%.  

I'm hearing more and more people excited about doing Airbnb.  A realtor friend in Orangevale has software they pay for to analysis on a property and project what you will make.  I ran the software on my Rocklin rental, and Citrus Heights rentals.  After all the fees it looks to break even with what I'm making with rent.  I suppose location is the key factor when it comes to a airbnb.  If it's in walking distance to downtown area, sporting events, then you'll be able to cash flow better.  I don't want to have to furnish my rentals, easier having a good long term tenant in my opinion.

Real estate prices have held steady in Roseville.  We're expecting values to increase this year in Placer, Sacramento and El Dorado counties.  Interest rates need to come down into the 5's before it's more affordable for buyers.  I heard you need to make $140,000 a year to be able to qualify for a house now with where home prices are.  Not a lot of people make $140,000 a year, especially first time home buyers.  Folks that work in Roseville and make $140,000 a year probably already own a house.

I'm seeing more properties come up for sale that make sense for investors in Roseville.  Finding a Roseville rental property that cash flows has been tricky.  We at Re/Max have more properties that we're working on that will be available soon.  I'm personally reaching out to people who own 3+ rentals and have had them for 10 years or longer.  Baby boomers are getting to the age where they might not want to manage their Roseville real estate any longer.  There's something called Deferred Sales Trust.  I'm sending out information to these people to educate them about this.  They can sell their rentals and do a 1031 exchange into a DST.  A DST is where you sell your rentals and put that money into a project and you are a partial owner and it's professionally managed.  Typically they are apartment complex's, or hotels, office spaces, shopping centers...  The cap rates are around 6% and you get a check every month.  In fact my mother has several rentals and she is looking into doing a 1031 Exchange into a DST.  She is tired of dealing with tenants, fixing things at the properties and vacancies.  

Partition - Referee / Broker Sacramento County

 We usually see the rolls of broker and referee as separate people, but I've been playing the roll and warring both hats for 13 years.  I think there's a benefit to the owners in that I charge a flat fee of 1% as the referee and 2.5% as the listing broker.  If my roll has to take on duties above and beyond I will typically charge $175 an hour.  For example, if I have to be at the property while the owner moves things out of the house, I will charge an hourly rate on top of my fee. 

All partition actions are different, for many reasons!  Doing my best to work with the defendant to cooperate and get things done smoothly is my goal.  Things don't always go to plan.  Some people simply don't want to recognize the Superior Court of California and ignore court orders.  I've had to evict and lock people out before; however, that's after repeated efforts to get cooperation.

As an experienced partition referee and real estate broker, you get the best of both worlds when I'm involved. I've been doing partition action referee sales for 12-13 years. If you are an owner who has questions about the process or you're an attorney looking to recommend a referee to the court, give me call. The area I primarily work in doing partition sales is in Placer, Sacramento, El Dorado Counties. With that said, I've done several in Solano and Yolo as well.

 

 

Chad Phillips Real Estate Broker Associate  RE/MAX GOLD 916-390-1476 | 2998 Douglas Blvd #125 Roseville CA.  95661 |chad.remaxgold@gmail.com | www.RealEstate-Roseville.com

Fall Roseville Real Estate Agents Update 2024

 Re/Max Gold - Chad Phillips

10/8/2024

We're officially in Fall now and we're seeing the Roseville real estate market holding steady.  Inventory is picking up so we're seeing a more balanced equilibrium with supply and demand.  New construction is still hot and heavy; however, there are a certain amount of buyers out there like myself that refuse to buy new construction with the minimal lot sizes that they are doing now.  It would be nice to know what percentage of people refuse to consider new construction due to the lot sizes, anyways...

We're about 30 days away from the election.  It makes sense that folks are wanting to hold steady and see how things unfold.  Our economy will look drastically different depending on who wins this presidential election.  No one knows how things will really boil out either way.  Truthfully, I think Trump will be the best choice for our economy and country as a whole but I've personally have done well under the democrats too.  I just hope that we don't see home prices plunge again like they did in 2008.  I fully understand the circumstances that came into play with the mortgage crisis.  We're in a different situation now; however, I firmly believe we could experience the same thing if inflation isn't under control.  Different situation, same result!  We cannot spend our way out of a market crash.  The solution is simple but no one will deal with it.  At the nucleus its the government spending that needs to be managed.  There's no oversight or penalties for them to just print more money, and raise taxes.  I liked when Warren Buffet said he could fix the deficit in 5 min. "Congress doesn't get a paycheck if they don't balance the budget".  Hold them accountable!  It's not a crazy notion but how do you get the folks who make the laws enact one like that?

What are home prices going to do this winter in Roseville, CA?  I can tell you that there is decades of data that suggest home prices will come down around 3-5%.  This is a cyclical thing and pretty predictable.  The question is, what can we expect next year?   I am not going to answer that, that would be a fools errand and a guess at best.  I can say inflation is the key here and what interest rates look like.  I foresee demand to hold stead so that's good, but affordability needs to be there too.

I don't see any need to panic, seems the feds are keeping a close eye on interest rates.  I think most people are holding steady to see how things unfold.  Hell, we could be 6 months away from WWIII.  If Kamala wins I think it would be bad globally.  I don't think she will be able to temper things or command attention.  Trump has shown that he has no reservations when dealing with other countries in a firm and demanding way.  When it comes to terrorist organizations, they know to fear him.  I don't think Kamala will have the same effect.

I wanted to talk more about real estate and I will but our economy has direct effects in how people are able to afford to live.  We haven't had move up buyers in many years now as interest rates have been on the rise for 4 years now.  Rates historically are good around 7% yet you cannot ignore the Roseville home prices.  If you just look at rates and say yeah, they are good you are correct but look at the big picture.  What were mortgage payments historically and now?   It used to be your mortgage was around 25% of your take home pay, now its around 50%.   Double!  Most loans max out at 48% LTV.  Are banks going to raise that so people can buy a house?  Would that lead to another 2008?

The DOJ laws that went into effect Aug 17th 2024 are going as expected.  We're adapting and doing more paperwork.  I think the whole thing was a money grab by attorneys and completely unnecessary.  More lawsuits will follow and that I can promise.  It's business as usual thought, we simply negotiate the selling agents commission in the purchase agreement now.  I know we don't call it commission anymore but I'm old school now.  God... I've been at this over 20 years now.   

I'm confident that 2024 will be another good year for me.  I'm going to prepay my office bill.  I only prepay my bill if I think it's going to save me money in the long run, being a good year and I sell a lot of homes in Roseville.  I was ranked in the top 3 of best Roseville real estate agents in 2018.  It's a silly website, but still was kewl.  I have accumulated a lot of real estate knowledge over the years.  There's things like partition actions.  I've been working partitions for 10 years now and work with multiple different attorney firms around Sacramento and Placer county.

No one reads my rants and I know I'm all over the place.  Kinda feels more like a journal and therapeutic for me.   

DOJ & changes in the real estate business Aug 2024

 I'm sure most have heard at least something about the recent changes in the real estate business.  Our government decided that commissions that were negotiated in the listing agreement isn't the best way to go about things and so now the selling agents commission is to be negotiated by the buyer.  There is some logic here; however, it can easily be argued that things are less transparent now.  

Now all buyers will need to sign a BBA, (buyer broker agreement) and that commission is and has been negotiable.  Most sellers I talk to are happy to pay the industry standard 2.5% to the selling agent.  The selling agents commission will need to be in the contract as a seller credit to the buyer.  We'll see more changes as we work thru this. I assume buyers might be able to finance the commission in their loan in the future.  Most first time buyers don't have an extra 2.5% on hand to pay that fee.  The buyers might already be looking for a seller credit for their closing costs and depending on the loan they cap how much a seller can credit the buyer.

At the end of the day, it's more paperwork and slight changes in the commission structure.  As a broker who mostly handles listings, I can tell you I will no longer be giving any percentages as to what my sellers are willing to pay.  That opens the door for a potential lawsuit!  I will simply let folks know if my seller is willing to cooperate or not.  Like the listing price, commission... oh I'm sorry, compensation is negotiable.

To switch gears, I wanted to touch on the market.  Inventory is still low.  Houses in Roseville if priced right are selling fast.  Pricing a house right in Placer and Sacramento County is essential.  If you look at the statistics, houses are selling 99% of asking price.  That means that buyers are waiting for a Roseville home for sale to come down where it needs to be before writing an offer.  I deal with the seller mentality all the time to price it high and they can negotiate down.   It's normal, we all want and think our house is special and worth more than it is.  You need a good experience Roseville real estate agent such as myself to give it to you straight.  I hope what I tell you is music to your ears, but that's not my goal.  I've been going beyond lately and helping people get their house in the best condition for sale.  Sometimes its difficult to get reliable help out there.  From handymen, painters to trash out guys... I had to step up this week and make a dump run, install a garage door opener, and finish nailing in some baseboards.  All in a days work.

I realize that last paragraph has way too much going on with no structure.  Word salad, I'm tired... Just got a new listing on the market today.  Half Plex in Lincoln, 365 R. St.  Great investment, rental.  It will cash flow, I was thinking of buying it.  I have another listing I'm taking in South land park tomorrow.  1227 Noonan Dr.  $525,000.  A house in Orangevale coming next weekend 8172 Woodlake Hills Dr. at $550,000.  Next week, a commercial property in Roseville at 9450 Atkinson dr.  2 acres zoned M2 priced at $950,000

Chad Phillips

Remax Gold

Partition Referee Northern California

 7/1/24

I have expanded my work with other attorney firms in California doing more court work as a referee on partitions.  If you don't know, partitions occur when there are multiple owners of a property and one forces the sale.  Typically this would be siblings that inherit a property and one or more want to sell and one doesn't.  When this happens, every party has the right to buy out the others portion; however, usually the are looking to sell the property and take their proceeds from the sale.  It's usually the one living in the house for free that doesn't want to sell.  Shocker!  

There are other situations where a boyfriend/girlfriend buy a house then break up.  Both on the loan and tied to the property and not able to afford another property.  It can also be business partners where they went into a property together then one side is looking to dissolve the relationship.

I've been assigned over 20+ referee roles in partitions.  The one thing that's slightly unique is that I'm also the listing broker when it comes time to sell these properties.  This is not the norm but there are advantages to this.  As the referee, I have the court authority to take control of the property.  Often times I might need to evict an owner, change the locks and put utilities in my name.  Similar to a foreclosure but I have power of attorney.  I say that loosely, but it's similar.  I set the price to sell the property, sign the contract and the deed to close escrow.

Partition sales are not that common but there's enough of them going on where this has become a niche that I am happy to be involved with.  Most brokers and real estate agents have no clue these even exist.  I have to explain this on a daily basis.  As a referee in Sacramento I bring confidence and experience to the table that councilors are looking for.  

Often times the estate has no money, other than the proceeds of the sale.  I'm willing to come out of pocket to pay for trash outs, repairs and inspections if it's deemed necessary.  I do get reimbursed at closing for those expenses of course, but often times expenses are needed to get the property sold.

I'm working with 7 different law firms that regularly come across partitions.  I have my resume updated for them to submit to the court with my recommendation.  There are times I have to report to the judge or appear.  There is a process that the referee needs to.  Attorneys are representing their clients and as a referee I'm involved in the accounting process.  Every partition is different!  The circumstances can be convoluted.    The referee needs to assist in the division of proceeds upon the sale.  The accounting phase is done when proceeds are sent to a broker trust acct and we're finalizing the disbursement of funds.  I'm working one now where I thought we had a solid agreement in place and one attorney is in disagreement with my decision.  I'm running it by our in house council here at Re/Max Gold per the request of said attorney in disagreement.  Again, they are all different!  The one factor that seems to be consistent is the defendant not being cooperative.  This is the part of the job that can be tricky!  Often times these are emotional situations and logic doesn't work.  I try my best to work with folks with in reason.  It's only been a couple times where I needed to get the sheriff involved.

If you have questions about the process or are looking for a referee that has been doing these for 10+ years, give me a call.

Chad Phillips

Remax Gold

916-390-1476

Top Producer Magazine March 2024 Sacramento / Roseville Real Estate

 Spring is upon us, and we're starting to see more home come available.  It's typical for the market to pick up this time of year.  I'm getting several properties ready for sale right now myself.  New construction is in overdrive, they are cranking out houses as fast as they can.  In 2023 new home sale accounted for 25% of the houses sold in the Sacramento / Placer / El Dorado Hills counties.  This is a substantial amount of sales occurring.  There's a shortage of resale homes and it's having an effect on those of us in the business.  There's simply not enough homes to keep everyone afloat in real estate.  

Prices are on the rise too.  I was working on several properties to get ready for sale and now we're revisiting the valuation.  There's a house I'm putting on the market next week in Serrano and we elected in the end of 2023 to list at $850,000.  Now I'm thinking we'll get upwards of $900,000 for it.  It will be the lowest priced house in Serrano.

I don't think I've mentioned this before but 3 years ago I bought a property in Roseville.  2.5 acres on Main st.  It's raw land that I entitled and broke into 10 lots.  It took perseverance and money to get the tentative map and brought all the way to final map.  I got multiple offers on my project and it's currently in escrow.   It was a great project, I learned a lot in the process and I stand to make a good profit too.

I mention the Top Producer Magazine as I was featured broker as a top selling Roseville real estate agent.  I've been in the business for 20 years now and I've built relationships with business professionals and past clients.  I've gained the experience and trust of clients and peers which makes things even easier in this tough and competitive business.  We're always learning and doing new things.  I specialize in partition sales and that's something I didn't even know about until 10 years in the business.  There's lots of different aspects to real estate.

Looking forward to spring 2024.  If you have any real estate questions, reach out to me.

Chad Phillips

Re/Max Gold

916-390-1476