ALBERT & CHRISTINE

TIME TO THINK AHEAD

When our son was about a year old, we started thinking about where we wanted to be long term. We were living in our house in Mountain View—we still are–and I was working in San Francisco. We owned a rental in San Jose. I’d lived there before we got married and it made for a terrible commute. With the whole future on the table, we decided Palo Alto made sense. Great schools, great community, plus we felt an investment property there was going to hold or rise in value over time.

My tenant in San Jose was leaving, so it was a good time to sell and look into Palo Alto, see if there were any interesting rentals for sale there. Long term, it’s the most desirable city in the Bay Area, That’s what my parents said, and they were right. And Christine loves it.

“Basically, how it works is, when you sell the first rental, you don’t have to pay capital gains taxes if you buy another rental property within 45 days. It’s called a 1031 exchange. So there are two moving pieces and a ticking clock.” — Albert and Christine

“Basically, how it works is, when you sell the first rental, you don’t have to pay capital gains taxes if you buy another rental property within 45 days. It’s called a 1031 exchange. So there are two moving pieces and a ticking clock.” — Albert and Christine

Making the Pieces Line Up

Ideally, you want the first rental to sell first so you have money to pay for the second one. There’s a time urgency to find something you like and then win it.  Kevin helped us sell the rental in San Jose, and then he helped us find the new rental in Palo Alto. The timing’s pretty tricky because you don’t have a lot of days to find something and the market’s quite  competitive right now. That was a bit stressful.

Shirt Sleeves and Spreadsheets

Kevin helped us get the San Jose rental in shape to sell it. He identified the issues with it, painting, new carpet, patching some holes. He arranged for all the contractors to come fix things. He arranged the inspection reports and all the tours. One day I stopped by to see how things were going and found Kevin with his sleeves rolled up, fixing something himself. Every one of his contractors was good, and they were all less expensive than we could have found ourselves.

From a timeline and a spreadsheet to update emails every step of they way, Kevin was on top of the process. We took offers the second week.

Shirt Sleeves and Spreadsheets

Kevin helped us get the San Jose rental in shape to sell it. He identified the issues with it, painting, new carpet, patching some holes. He arranged for all the contractors to come fix things. He arranged the inspection reports and all the tours. One day I stopped by to see how things were going and found Kevin with his sleeves rolled up, fixing something himself. Every one of his contractors was good, and they were all less expensive than we could have found ourselves.

From a timeline and a spreadsheet to update emails every step of they way, Kevin was on top of the process. We took offers the second week.

Shopping While You Sell

During the same time we’re getting the first rental into shape, we’re looking at places in Palo Alto. We placed some offers in Palo Alto before the San Jose property sold. If we’d gotten one of those, the second deal might have closed before the first one, which creates a “reverse 1031” with a different set of rules. Fortunately, Kevin knew some experts who were able to advise us on how that works and what it would mean, tax-wise. We were ready if it came to that, but then we got lucky.

“We ended up with just two weeks between the two transactions. We sold the first one, took that money and put it into the second one. Fortunately, it’s a seller’s market. We got something like $100,000 above our asking price.”

“We ended up with just two weeks between the two transactions. We sold the first one, took that money and put it into the second one. Fortunately, it’s a seller’s market. We got something like $100,000 above our asking price.”

Finding the Best Tenants

Kevin was gracious about helping us find a tenant for the Palo Alto property. He put it on Craigslist and other sites, interviewed the potential tenants and picked two or three he thought were good. Then we met them and they toured the house.

He checked their references and provided the rental contract, all with no fee, as part of his standard service.  We closed on the property in late July and rented it mid-August. And the tenants are terrific.

Christine’s parents are thinking about moving here from Maryland. We’d send them to Kevin because he’s trustworthy. I see real estate in the Bay Area as a relationship-driven business. Kevin grew up here, and his web of relationships was at our service.”

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