All Forum Posts by: Emilio Ramirez

Looks like you are going to have to learn how to hit curve balls. Ok just kidding.

Don't know about the HUD program, but if you are living there to fix it up, why not stay for a year and a day which the IRS defines as two years or the minimum requirement to define owner occupied property. Then you could sell within five years and pay no capital gains taxes on it. I'm assuming that over the course of that year you will be able to remodel bit by bit and pay cash as you go from a paycheck.

Thanks for the props Rich. What makes this site so valuable is the contributions from others. So I will try to contribute when I can.

You control the terms of your lease. No one says it has to be a year lease. You can change your lease that you sign in October to be a 6 or a 9 month lease. Then the lease will expire in the summer. If we have tenants that are going to stay I always make them sign a new one year lease. Funny thing is there is more competition in the summer months as well. ...

Or you could just buy in a warm climate as Rich points out.

Well the numbers where very nice prior to my walkthrough of two of the three units this past weekend. It appears as though the previous landlord had rented the place to a bunch of gangbangers as evidenced by their grafitti on multiple walls. The place was completely trashed and rat infested. Broken drywall, broken windows, worst carpet I have ever seen, copper piping ripped out, differential settlement, failing roof. I put the repair price at 82k including an accepted offer of 15k plus 5k for eviction and contingency. Prior to the walk through I had set my all in upper limit at 60k. I don't think I will be spending anymore time reviewing this project. Thanks again for all your input.

Check the tax records. Usually available online by city or county. Then a white pages or google search. I recently did this for an abandoned property with out of town owners. Two years delinquent property taxes, boarded up by the city and they were over 1400 miles away. Needless to say they weren't interested in selling. The city will acquire the property with one more year of deliquent taxes. Oh well.

What are his goals? Is he going to sit around and collect for 20 years? Does he want to be out of it sooner than that? Is he going to sell the note?

What about your terms, but over 40? Maybe a balloon at 20? That makes the cash flow much nicer. I've never purchased a building that large, but rules of thumb that I've read are your price- his terms, his price - your terms. 5% seems low for a seller finance.

Thanks for all your input fellas. I'm in Milwaukee. I've contacted a couple of lawyers about eviction costs and time frame. Quickly trying to educate myself on the process. Going to schedule a walk through in the next week.

Low Income Mixed race neighborhood - not a war zone. Lawns in the area are cut, but full of weeds. Walking distance to local shops and bus line.
Three unit property with almost no yard. A two family home on the front of the lot and a sfh on the back of the lot.
Asking 39,900 ( I'm thinking of a seriously low ball cash offer 15-25k)
All units three bedroom that rent at 600 each, but have seen properties in the area for 750.

Have not inspected other than a drive by. Seems to be in ok shape with some deferred maintanence. New roof pretty soon, peeling paint.

Turns out this is a short sale as the existing owner has given up on the property. The two family is vacant and I'm considering a walk through. The SFH is occupied by squatters who paid the current landlord first months rent and then stopped paying him and don't answer his calls or the door when he knocks. Apparently they are not letting anyone inspect the unit. Would be my inherited problem if I purchase the property. Other than reading up on eviction here on BP, what are your thoughts? Typical example of how you can turn a distressed property into a goldmine or run away fast?

Thanks - Emilio

Mike - have you found any more info on the program. I'm trying to get a project off the ground here in WI and when I mentioned the tax credit program to the local housing authority they somewhat snickered. Apparently many of these projects are currently stalled because no one has the money to purchase the credits. It is my understanding that the credits are either 9% or 4% of construction costs depending on the type of project and./or the presence of other financing.

For example a project that comes in at $10,000,000 could qualify for an annual tax credit of $900,000 (my state limits it to $850,000) times 10 years = $9,000,000 in tax credits. These credits are then sold to an investor at some discounted price which I've been told currently is around $.60 on the dollar. The developer then has $5,400,000 equity to put towards the project in exchange for guaranteeing the low income rentals for 40 years (if this is not maintained then the tax credits can be reclaimed by the IRS. sounds like a great deal, but after running the numbers, it is still very hard to make a project work because the rent must include all utilities.

When I asked about this I was told that the credits are typically sold through a brokerage to an investor or syndicate, not unlike an IPO. However, I was also told it wasn't worth pursuing because no one was buying because a lot of companies are cash poor right now.

Has anyone gone down this route and actually sold tax credits? I'd be interested to know a little more about how the sale works. I have a relationship with a potential investor, but not knowing the details, I don't want to approach them until I've figured it out.

Thanks. I'll check it out.