All Forum Posts by: Will Barnard

No, I think that covers it. What your true retuirn on the amount invested is and when you can expect the principle to be returned over time covers coc.

The key here is to realize that there are a number of calculations you must do on any investment to make sound decisions to invest. COC is only one of many.

I also have been getting an error message for over a week when I try to edit my blog post.

Thank you for your response Rob.
Unfortunately, the end investor's lendor will still see that the last transfer of title was for the original sale price. I am paying cash initially for the purchase, then want to sell to the end investor. It is their lender that will have the seasoning issue and the LLC does not circumvent that.
Any other ideas or thoughts?

Mike wrote:
"It doesn't look like it make sense unless you can pay all cash because you have the UBIT to worry about."

Not true. While you due incurr taxes when you use debt financing (unless you pay off the debt and hold for 365 days), it is not necessarily a bad thing. The taxes can be steep, but the net result could positively outweigh the tax bill due to the tax defered or tax free status of the SDI. The tax is the cost of the usage of leverage, which is one of the most powerful advantages to REI.

David,

Thanks for the response. It is how I operate and advise as well that any % could constitute a PT. Therefore, the option mentioned by Mathew is not an option at all if the investor wants to keep the IRA in tact.

Wholesaling is a form of flipping and the current market conditions throughout the US are not very condusive to that strategy right now. Flips were a sinch 3-4 years ago. Now, you must find a strategy that fits the market conditions.

I am not saying you can not flip or wholesale a deal, just to say that it is not as easy as before. So for those of you frustrated investors, we all feel your pain, but on the bright side, keep plugging away, it will come.

Has anyone here had recent success flipping residential properties to another investor WITHOUT running into sesoning issues for the investor buyer's lender?
Can you specifically explain how you avoided/circumvented the current standard seasoning of 6 months for a NOO loan (non-owner occupied)

Have you had success flipping to a retail end user and avoided seasoning issues of the standard 3 months on FHA loans?
Please explain.

Brian,
What you are describing "could" be treated by the IRS as a prohibited transaction (PT). Any company you personally have 50% or more ownership in (I have also heard 25%, and never got a legal clarification from the IRS to date) constitutes a disqualified party and therefore a PT.

Rick Tripp: I can help you with any questions you have on TPA's for SDI's. Just PM me specific questions.

Brandon,
I can assist you as well. In addition to SDI's there are 401'ks that are available for some business people and it reduces and eliminates a lot of the problems or hurdles associated with SDI's. PM me for info.

50% rule is a very quick way to analize a property's potential cash flow.
Take the monthly gross rents and dived by 2 (50%) the 50% is your operating expenses (which also include capital expenses according to this rule). The balance 50% is your net operating income (NOI). Then subtract out your debt financing and the balance is your cash flow.

Keep in mind this rule is based on making assumptions and averages and should not be used as the final decision to buy or not to buy.

In regards to your professional team members such as CPA's and attorneys, it makes no difference if you are new or seasoned. You can be truthful with them and get the help and assistance you need accordingly.
For other service providers, particularly property managers, handyman services, etc, you NEVER tell them you are new. That opens the door for them to take advantage of you. You must learn what to ask, what answers to expect, and how to speak and negotiate with tem to protect yourself and to be successful. Education in these areas is pertinant.