All Forum Posts by: Andrew Erickson

I am looking at a few deals for houses that are very cheap. These houses are $40k - $60k each. The problem with deals like this is that I can't get a mortgage on them since most banks won't do a $30k mortgage. 

Is there a way to combine a few of these in the same neighborhood and finance them together? If I bought 3 very similar houses that totaled up to $160k, could I get a 75% loan on them on a refi? If a bank won't do it, is there a way to structure it to get private money? 

@Brandon Sturgill, do you only do Columbus? 

@Ashish Acharya that's great news! Plus it would have the added benefit of limited liability, right?

Can I sell it to an S Corp at an inflated price so my basis is higher? I'm sure there is a limit, but maybe I could sell it 10% over the "average" price. Or maybe sell it as a "turn key" premium rate since it will be fixed up and rented. 

My wife and I own a condo in San Diego. We are planning on upgrading to a "real" house soon  when kids come. We are going to hold onto our condo when we move. 

I see that we don't pay capital gains if we have lived in the home for two of the last five years. That is great! However, we'd like to own the condo for a very long time. Since California has very large gains I really don't want to pay taxes on all the gains. 

Is there a way to have my cake and eat it too? I expect to have over $150k in gains in a few years. Can I realize those gains and not pay taxes on them? And then pay capital gains after that? Would I have to sell the home and buy another one? Is there a way to sell it to myself or a holding company that I own maybe? 

Thanks! 

@Deniz Cengiz, Yes, the contractor would set it up for you. You would have to dig for the utility hookups and have the city connect you. Plus you need a contractor for the foundation too. 

@Don Konipol, yes it is just $20k for the home. It would cost another $15k in foundation and utility hookup costs plus another $5k-$10k in marketing and sales commissions. Still, it is about $40k to get a 400sqft home. 

That is a very good point about the land valuation. I know real estate finance people have certain rules of thumb for valuing properties. However, this is a income producing asset. An asset that generates $1,000/mo ($1200 rent - fees) should be valued at $150k assuming you expect an 8% return. It's worth double that if you want a 4% cap rate. 

I talked to a manufactured homes license guy who works for the state. He was very helpful. He gave me lots of material about this stuff and a few people to call who can help. I have lots of homework now! 

He was optimistic about the idea so that makes me very happy. Still a long road ahead, but making progress :-D 

@Jay Hinrichs, those container homes are very cool! I was looking at container homes too. Looks like these use the containers brought here from China and then construct the home in the US, right? I love that idea. I was hoping to do most of the handy work in China though. 

I see you were a guest on the podcast. I'll listen to that episode this evening! 

@Jon Holdman, good point. I'll have to read the regs closely to see how to modify the design to fit within the codes. Do you think I can read through every rule this weekend? I'd like to understand them enough to at least be able to hire someone to help me. 

I'm not really that scared of Trump's "trade war" with China. I already deal with import stuff and tariffs all the time. It's not a big deal. I'll wait until something actually happens before I react ;-) 

@Thomas S., yes, good point. The thing that got this whole idea rolling is that California just passed sweeping statewide regulations. The new legislation makes it illegal for cities to make 400 sqft granny flats illegal. Assuming you meet California code and a few other rules, granny flats can always be placed in a backyard in California. It is part of a plan to provide more affordable housing.