All Forum Posts by: Brennen Cook

Thanks for the quick response Wayne!

Thing is my uncle is in some financial troubles. He is basically retired ( Psycologist ) He can afford to live but I do now know about qualifying for a HELOC. Even if I cosign, would they even consider it if it is not my primary residence?

Hey BP! I need some help.

My Uncle owns a home with significant equity. My family, Uncle Included, want to take advantage of this equity to invest in real estate. Thing is, of course, there are a few hoops to jump through, but first let me get into some details.

My Uncle built the home himself and would rather not sell it if there is some other way. My uncle owes $151,000 on the property and currently has a $89,000 income tax lien on the property. The house is in need of serious repairs and as it sits, my educated guess ( Based on property tax values of comps and the fact that the same architect built 3 similart homes and his neighbor sold his house a year ago for $2.8 Million) its worth $1.5 Million or so. Completely renovated we've been quoted, priced to sell, at $2.95 million. He is also on Prop 13 tax rules!! VERY IMPORTANT! Our bottom line is to simply pull out the equity for use as we see fit. We are working with legal counsel on estate planning and the like but I thought I would reach out to the BP community.

My main concern is how can we achieve our goal in a timely manner while being the most tax efficient? Is there anyway we can gift the estate in its entirety without paying hundreds of thousands of dollars? Could we use a quitclaim deed ( Not sure if I even understand that or if I am using it correctly)? Any other ideas?

My uncle is fully on board to do whatever it takes. Create an LLC or whatver else.... If we have to renovate and sell we will. Trying to avoid that. Thanks again everyone. BP has not failed me yet!

Hey BP! I need some help.

My Uncle owns a home with significant equity. My family, Uncle Included, want to take advantage of this equity to invest in real estate. Thing is, of course, there are a few hoops to jump through, but first let me get into some details.

My Uncle built the home himself and would rather not sell it if there is some other way. My uncle owes $151,000 on the property and currently has a $89,000 income tax lien on the property. The house is in need of serious repairs and as it sits, my educated guess ( Based on property tax values of comps and the fact that the same architect built 3 similart homes and his neighbor sold his house a year ago for $2.8 Million) its worth $1.5 Million or so. Completely renovated we've been quoted, priced to sell, at $2.95 million. He is also on Prop 13 tax rules!! VERY IMPORTANT! Our bottom line is to simply pull out the equity for use as we see fit. We are working with legal counsel on estate planning and the like but I thought I would reach out to the BP community.

My main concern is how can we achieve our goal in a timely manner while being the most tax efficient? Is there anyway we can gift the estate in its entirety without paying hundreds of thousands of dollars? Could we use a quitclaim deed ( Not sure if I even understand that or if I am using it correctly)? Any other ideas?

My uncle is fully on board to do whatever it takes. Create an LLC or whatver else.... If we have to renovate and sell we will. Trying to avoid that. Thanks again everyone. BP has not failed me yet!

@Kyle J. A huge help! All these real world examples give me a better understanding of what I need to be looking for.

Okay... So I can see I should not have just jumped into this post.. Haha.. Let me clarify some things.

I had come up with a "target house" example for a light/medium rehab flip. Correct me if I am wrong. ( Specific details not included)

Target house: 3,2 1600/sf

Fully renovated price - $300,000

Renovation Cost - $80,000 / $50/sf

Personal Quiet Costs ( Cost of money, Agent Fees, Etc) - $30,000

Target Profit - 15% ( Of sale price) - $30,000

Highest Offer Price - $140,000

This leaves me getting the properties at just under 50%. I think this concept seems feasible. All my education into my "educated" guesses seems to point to yes. My hope is to get my confirmation on renovation cost estimates. If its a safe number to assume that I could use to aid me in telling if its worth to do a walk through or not. Sounds like I am going to have to make my best guesses at first and make sure I do my walk through and homework before I put in ANY offer. I guess I do have a subject to inspection clause...

Great info and I appreciate everyone help! I should also say that my $50/sf is only for renovation costs. I have accounted for my holding and other costs elsewhere and my end sale price in my thoughts was $250 renovated. But I like the way your looking at it. Very similar to the way I believe it to be. Getting some verification on things I thought to be true is very satisfying. Knowing these numbers helps me tweek my formulas a little bit in a more realistic position.

P.S. I am assuming that price per square foot for renovations does not include holding/quiet costs. Am I misunderstood in this assumption? I calculated this out seperately.

Cody

Completely agree. Maybe I should have specified a little more. 20 years old. Light to medium rehabs at a mostly standard level is part of my target. I'd be more than willing to discuss anything and can appreciate any experience beyond my own. But I'm new to BP so you have to excuse me haha. DM? I can give you my email if youd like.

Yeah that seems to be the consensus I am getting. Knowing you consider $50/square foot for a light-medium rehab is a great help in itself. Do you mind me asking a couple of questions, Dennis? Maybe through email if you'd prefer?

Hello everyone!

New here to Bigger Pockets so let me first start off by saying this community is great. I've been aware of Bigger Pockets for the past few months of have recently started doing some serious snooping around. There are TONS of questions answered here and many VERY productive discussions. Thanks to Bigger Pockets and everyone who participates!

Now about me. I'm currently in Sacramento, CA and am planning on jumping feet first into the real estate business. I've been spending the past several month educating myself, doing some small networking, and connecting with other individuals who flip by any means. For the sake of time Ill skip most of the story =P.

Long story short, after meeting with legal counsel, I now have a viable business plan, a VERY reasonable way finance my flips, and what I believe is a good understanding and education to start with. Although I believe I have most of my ducks in a row, the only thing I do questions is my estimation of renovation costs.

I've been to TONS of websites and probably used if not checked out, most of those "renovation calculators". Now before anyone starts hounding me, I do understand there is no substitute for a THOROUGH walk through with notes. I'm not looking for that. I know how to make a detailed list and i have my own personal programs with calculate cost of a more detailed level. I'm interested in a more general rule of thumb is Sacramento.

I've heard alot of different versions, but they all generally equate to the same thing. There are different levels of rehabbing. For the sake of this we'll say, Basic, standard, designer and custom. Most people then attach a dollar amount to each level of design.

With ALL this said, I am looking for someone with some experience to give me some more concrete numbers for the Sacramento Area in a costs per square foot format. AGAIN, I understand that rule of thumb is NO sustitute and I also understand it take YEARS of experience to be able to walk into a house and be within ballpark of renovation costs. I just want to know if anyone has a rule of thumb for sacramento?

For example, if I said I had a home that would be standard level ( 3,2 1600 square feet) where houses normally go for around $250,000. The house is in need of some rehabbing ( New windows, Floor and carpet throughout, new paint, kitchen remodeling, etc.) throughout the whole house. If I budgeted $50 a square foot for renovation costs is that at all realistic? To low, to high?

I am simply trying to develop a good educated guess or rule of thumb, so I do now waste my time on walking through houses with note pads and pens that I cannot realistically fix and sell on my terms.

ANY help or education is GREATLY appreciated!

Brennen