All Forum Posts by: Henry Clark

@Swetha Ramaiah

Run the numbers 

1. Where your at.  Primary residence. No taxes on gain as long as you live there 2 of 5 years.  Change figures. Say $80,000 gain no taxes on $400,000 condo?

2.  Buy OOS.  Cash flow $200 per month. Income tax?  Gain $80,000 in Ohio on a $150,000 property? Less tax. 

Change numbers as needed.  Risk on each?  Probability it happens?  Stress level?  Is this a one time deal or are you going to ramp up, thus ok on learning curve investment and building team?

@Matthew Rensel, @John Mocker

Follow Johns recommendation in 1 above.  Your chipping away at your coverage and need to approach this as a business.  

@Matthew Rensel

Would be helpful if you summarize the coverage you have

Otherwise:  Construction policies, cleanup, deductible levels, definitely get the income loss, D&O, make sure you have a business travel or commute coverage - you send someone for a bucket of paint and they get in a wreck, your regular policy might not cover. 

@Brandon Plombon

Please see projects in play above. It’s like the snowball rolling downhill, it gets bigger and bigger. 

We are actually slowing down on new investments.  My wife and I decided we hit our number a while back and have enough investments.  Just finishing up on projects in play. 

But now that I have developed the Developer “eye” there are great investments everywhere.  Have to wait 10 years till my son is 30 and see if he wants to ramp up on his own. Then we might get back into developing with him. Right now just wrap up our projects and sit back and eat our bananas and pineapples. Walk down and swim in the river.  Supposed to be a high of 9 Saturday.  Wish we were down there now.

@Terry Friesen

Contact Gabriel Zetina. Realtor and grew up in San Pedro. Ask him to show you different properties

Contact Noelle Ayala.  Unda da sea adventures. He grew up there also.  Do the all day snorkel extravaganza. Rent a golf cart. Pay him to give you an all day ride around and tour of the island. 

Recommend you check out Placencia for a few days. Different feel than San Pedro. Price point $200 to $300k lower than San Pedro.  Not as touristy though for rentals. 

The key is to either do a managed and gated property or have a live on site housekeeper. Theft. 

@Terry Friesen

I have never researched this property but here are some points

1.  Research Coastal Living prior projects.  Call current and past owners or units for sale.  Stay at some of them and research

2.  San Pedro research water, sewer and electricity on the island

3. Check out buying timeshares.  Now imagine you own the whole 52 weeks. Ask all the questions you should be asking

4.   Contact two different realtors and have them show you properties similar to the one you would invest in.  Get another view of the market

5.  Covid?

6.  Don’t buy in Belize unless it’s your fun money and you have visited and researched about 6 times.

7.  Turn your tourist vision off.  Look with investor eyes unless it is just fun money  

Reading your prior post and background recommend you don’t invest down there unless this is for fun and not as an investment  

Also your LLC and your personal financials will always be requested. They will want a personal guarantee.

Finance companies want:

A.  Your collateral

B. The property’s value 

C.  Personal assets or guarantee. 
They want as much financial backing as they can get.  

1.  Brrrr and you mention investors? Why both?

2.  Investors and you mention bankers?. Why both?  

3.  Establish a relationship with just one finance company. Otherwise you will have collateral scattered all over you can’t use. Also view them as a team member. Don’t go shopping. 

4.  Ask them their loan cap rate.  Make sure they have the loan capacity to grow with you

5.  On a piece of paper or a spreadsheet put your properties down and add dummy projects to reflect your growth. At some point you run out of collateral and either have to sit tight while you build equity or find a new finance model. Investors, syndication, etc. 

Realize you want the money and the answer, but if you just take another loan out with someone your adding to the issue. Not solving your finance problem.  Do 5 above then bring it back to this post. 

@Jonathan Fontaine

No. You won’t be able to refinance.

1.  Since owner financed they have the first lien position. A bank won’t take a second position

2.  You would have to refinance the first property with the finance company you plan to do the second property with

3.  The new bank will want you to have 25% up to 40% equity in the first property.  Then you would need another 25 to 40% to cover the second property. Thus you couldn’t refi into the second property until you had 50 to 80% equity in the first property assuming same valuation. 

4.  Another option is an SBA loan which you can get down to 10% equity position.  But you can only use any future collateral in these projects with another SBA loan. Can’t go through a commercial bank. 

@Haley Stephens@Cedric D'Hue

A.  Full disclosure I was a CPA at the largest firm in the world at their second largest office in the world. Just the one office, 400 auditors, 300 tax, 200 consultants.

I quit doing my taxes a long time ago. Could “Save” $900 per year but I would “lose” money

B.  My team member, my tax accountant will always respond to questions.  Plus he knows my entire financial positions and how to optimize them, versus an isolated question.

C.  Please explain “I” did a cost segregation study.

D.  We have 8 storage locations. I love mowing grass. Forces me to slow down and look at our properties versus driving through them fast. One of our locations is 40 miles away. Has three locations. A local person mows our grass there for $15 per hour. Uses his own mower and buys his gas. He costs $2,500 per year. 

Should I mow my grass there and save the $2,500?  Note we are developing two large storage locations and doing a housing subdivision at the same time.

Answer:  Get a tax accountant. Develop your team.