All Forum Posts by: Chuck Drinnan

Fred and others

If you get too complicated in your matters the IRS will just declare that all this stuff is solely designed to evade taxes and shut the process down and tax and fine you.  I was involved in a scheme like some of these in a completely different area and that is what they did to me.  I am not saying this will happen to you but be cautious.  Remember that something that seems to be too good probably is. 

Interesting.  The margins seem too low for the level of the investment.  How much demand for rental properties?

Joe Hope you come to Houston.  We have been happy here for a long time.

I am considering rehabbing high end apartments (not a whole group but single units) and condos in the Houston area. There are some good opportunities because a distressed condo is very hard to sell and typically needs to be sold quickly. One must deal with HOA's - that may be enough to rule them out. I think you can sell or rent the right units fairly easily to young professionals. Can you get a reasonable return selling them to firms that hold and manage large inventories of condo's.

Will any of you share your views  and experiences on rehabbing high end condos?

Loren

I think you are right about identifying investment opportunities within an IRA. The easiest way for the industry to setup IRA's is with mutual funds which of course are promoted by the big mutual fund houses. Some companies even allow you to invest your funds in their companies. If you step back and filter all the BS why should and IRA favor mutual funds over real estate? In my earlier career I moved my IRA into big investment real estate companies. They did quite well but not as good as people who really worked the real estate market.

After the market crashes why do we think our best investment is some mutual fund?

My experience is that you need a CPA and the big houses like H&R Block just fill out the forms and do not give you advise.  You need a CPA who has the experience to help you structure your business aggressively, who can represent you if you are audited, and who knows what you can and shouldn't do to avoid audits.  When you start a business you need to know what you can write off.  Don't start doing things that are illegal or unethical but do get all you are deserved.  A CPA is like a Doctor or a lawyer - you wouldn't go to a poor Doctor or a half time lawyer.

The deal sounds like a win/win.  The lady is in an untenable position and will probably be pleased with the 12K.  You sound like you have a good deal and the neighborhood ends up with a better neighbor.  You must have a good web sight of promotion to achieve this.

Folks

My personal experience is that drawing money prematurely from an IRA costs a lot of taxes. I suspect you could find third party financing at a much lower cost. The seminars I have gone to recommend transferring your traditional IRA funds to a Roth which costs you taxes now but shelters your profits in the Roth. In any case the seminar recommended that you setup the IRA's as self directed. For small investors I suspect you have a lot of freedom in how you do this as long as you are obviously not just ripping off the IRS. I am trying to find an aggressive CPA who can help me accomplish this. There may be trusts involved in all this

I attended a rehabbing presentation that offered a program that included a detailed estimating tool that was obviously developed with Home Depot.  You could specify a type of kitchen for example and get a detailed bill of materials and labor steps down to the sku numbers.  The cost of the whole program was high and I don't know how good it is.

In our own home when we had a flood the contractor (or inspector) had a detailed tool that estimated the repairs for the insurance people and could then be used to contract with any contractor.  Are any of these tools available to BP people?

We have sold two properties and rented four on Craigslist. Some basic guidelines:

• Make the add as self contained as possible.  Put pictures there and make the points you would in a personal pitch.  You may have to link to a picture source but put some in your listing also.
• People who want to buy from Craigslist don't want to deal with a company, realtor, etc.  So make a good ad but don't plaster it with corporate logos etc.  Don't lie about who you are but don't flaunt it.
• Most people on Craigslist are lazy.  They put a two line description full of buzz words and wonder why no one listens.
• Know your customer -- Craigslist isn't for high end buyers.
• We made a handout from the same source as the ad.
• You have to screen your buyers (qualify them) but you have to do that anyway.
• My phd son is moving to Connecticut and we asked him how he was going to find a place. He said Craigslist was his starting point and was surprised we asked.
• I am not seeking a business opportunity regarding this but if you want I can resurrect some of our ads.  I would have to change them to protect the people who bought the property before I showed them to you.  Drop me a note if you are interested and are willing to pay a small fee for the effort.