All Forum Posts by: Bill Plymouth

@Lakeitha Henry ^^

A 10-31 exchange is a tax form that protects you from capital gains tax(tax on your profit from selling a property) as long as you are buying a similar property.  There are more rules and regulations to that.  I would give it a google.  I can't explain everything about the process confidently.  

In order to calculate your equity, you have to find out the ARV (after repair value) of the property. Here's an example:

Property A, in its current condition, is worth $50,000.  It needs $40,000 worth of repairs.  Your all in price (purchase+repairs) is 90k.  After your repairs, Property A is worth 130k.  130k-90k=40k.  You have 40k of equity in the property.

The rule/equation that flippers use is called the 70% rule. The 70% rule says that you purchase a property for 70% of its ARV minus the repair costs. The example above is the 70% rule in play.

@Lakeitha Henry I’m gonna be straight up, I haven’t done my first deal yet.  I’m still working towards it.  I know a lot of things in theory, but not application.  With that being said, I believe the objective of this strategy  to hold the property long term.  I think 5-7 years would be a solid amount of time to hold the property.  It allows time for appreciation and loan pay down.  Honestly, you could hold the property forever.  A good play would be to sell and wrap up the cash into a 10-31 exchange and buy a higher cash flowing property.

If you are renting to own a property you plan to Brrrr, make sure you are getting it for under market value.  The strategy only works if you can add a decent amount of equity with the rehab.  Otherwise, you can’t pull the equity out and put it into another property.  

@Lakeitha Henry Brrrr stands for Buy, rehab, rent, refinance, and repeat.  

The strategy is to buy a property in need of repairs under market value, rehab the property increasing the value and giving you equity, rent out the property to bring cashflow, refi the deal to pull your money out and use it on another deal, then you repeat the process. 

@Alex T. I’ve spoken with a few big developers.  Though I have no experience myself.  I’ve gotten ranges of 25-50k for complete demolition.  Hopefully someone with more expertise can chime in. 

@Caleb Heimsoth I just DM-ed you.  I'm curious about your experience.

@Caleb Heimsoth I have!  I'm weighing all of my options.  I want to get the best returns.  I understand that investing out of state is 10x more difficult, but I'm thinking the returns outweigh the risk.  

@Chase Keller Thank you very much!  

@Chase Keller I'm still about a year out from buying my first property.  I live in Philadelphia, which is a solid market, but I know that there are better markets with better returns.  I'm spending the rest of this year looking for other good markets.  In my research, I found Des Moines had low unemployment and lower cost of living.  Is this accurate?  I'm looking for SF and small MF properties.  Looking for about $175-250 per door.  I'm not shy about working through light-medium rehabs as long as I'm able to get boots on the ground in the area.  Obviously neither of us have a crystal ball, but I'm looking for a steady history of appreciation in the area as well.  I'm looking at Des Moines and it's surrounding towns.  Prairie city is another area that came up in my search. 

@Darson Grantham I will send you a DM!

@Chad Daniel I m looking at Des Moines due to its low unemployment rate and low cost of living (based on stats I came upon in my analysis).  Figured it would be a good out of state market to explore a little more in depth.

@Charles Willie Harris Will do!  If I chose to go in this direction, I will need some reliable folks out there.

@Justin Rank Thank you.  Will do!

@David Bokman that is what I mean!  I could do both, but would want to focus more on the wholesale aspect.  The brokerage I work for is called The Investor Brokerage.  I’m looking to focus in Germantown and West Philly