Why not pay all cash for a property?

DEAR BOB: What is your reasoning for not paying all cash fora property if the buyer has the funds and wants to cut down on monthlyexpenses? –Renee DeC.

DEAR RENEE: If you buy a “bad house” or a”bad condo” for 100 percent cash, you are the “stuckee” whomight not be able to sell that property except to another all-cash buyer.

Purchase Bob Bruss reports online.

However, if you buy for a modest down payment of 20 percentto 25 percent cash, and obtain an 80 percent or 75 percent mortgage, you won’thave a large amount of cash tied up in one property.

Of course, if you are independently wealthy and you willnever need to see the cash you pay again, be my guest and take the risk oftying up that cash in a bad property.


DEAR BOB: I own a house with a rental unit. I am sellingthis property and buying another house with a rental unit. Does the rental-unitsale qualify for a tax-deferred exchange? –Ellen F.

DEAR ELLEN: Yes. Sale of the rental unit can qualify for anInternal Revenue Code 1031 tax-deferred exchange if you meet the easyrequirements. They are trading equal or up in price and equity, not having”constructive receipt” of the sales proceeds, having them held by aqualified third-party intermediary beyond your control, designating thereplacement property within 45 days after the sale, and completing theacquisition within 180 days.

If you own and occupy the house as your principal residence,its sale can qualify for an Internal Revenue Code 121 tax exemption up to$250,000 for a single home seller or up to $500,000 for a married couple filinga joint tax return. To qualify, you must have owned and occupied your principalresidence at least 24 of the last 60 months before the sale. For full details,please consult your tax adviser.


DEAR BOB: Roots from five trees on my neighbor’s propertyhave damaged a wall bordering our house. He refuses to remove the trees orrepair the wall. A lawsuit will likely be in my favor so I can repair the wall.Can he refuse entry on his property to remove the tree roots and the trees?What recourse do I have? –William D.

DEAR WILLIAM: Unless you have a court order (called aninjunction) allowing you to enter your neighbor’s property, the neighbor canrefuse to allow you to enter his land to cut the tree roots that are damagingthe fence.

If you file a lawsuit, be sure to ask the judge for a courtorder (injunction) allowing you or your workers to enter the neighbor’sproperty to cut the tree roots that are damaging the fence. For full details,please consult a local real estate attorney.

The new Robert Bruss special report, “The 10 KeyQuestions Smart Home Buyers Ask to Avoid Getting Ripped Off,” is nowavailable for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010, or bycredit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this columnare welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center

Copyright 2007 Inman News

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