All Forum Posts by: Craig Jeppesen

The dollar is the worlds most stable and dominate currency in the world. Every single currency is compared to it including crypto. Crypto has a long way to go, probably a few generations will pass and then people will need to stop speculating with it. Now some country’s like Venezuela which have hyper inflation right now, they are starting to use crypto as it is more stable. We would have to have a major inflation issue like that here and that would be bad news for the entire country.

Basically when you have too much debt and not enough cash, reserves and equity for when issues come up like evictions, repairs,  loss of income, job loss etc and you cant meet all your obligations and start robbing Peter to pay Paul and before long it is a mess and the bank forecloses on you.

Most brrr projects will not work if it is a property that you can do traditional financing on. Why would someone sell you a house without issues for 70% ARV? You can finance with a hml or private money or a heloc on your personal residence but you will probably not get a Fannie Mae loan from your local financial institution. You are usually solving someone's problems to purchase the property and need cash whether it is yours or someone else's. I recommend that you should bring some cash Incase you have issues. The refinance after is just to recycle your initial investment and build instant equity and cash flow.

I would add to make sure you are budgeting  and being intentional with your money. It probably is harder having a girlfriend vs a spouse if you have separate accounts. Hopefully your new house is reasonable in payments to your income. Keep paying off the consumer debt and increase your income. Once the baby comes you should get a bump in income from Uncle Sam due to your income. Use that money to save up for a down pmt on your first investment in a couple years. Patience and persistence will go a long way and you will be successful before you know it.

It is not scary, just make sure you understand how everything works. People get in trouble with all kinds of things in life because they don’t take 20 minutes to read and understand what you sign. Good luck. 

Let’s dumb this down with an example.

Suppose I own some land that is overgrown and you ask me if you can mow the property and take care of it and return store some RVs on it. I say yes and pretty soon you have 10 rvs charging your customers $25 each a month. You deposit the funds in an Acct separate from your personal finance. Do you pay taxes on the $250 a month you made? The answer is yes. What is the difference with this example and yours. In my example you asked permission. In yours you did not. Nothing else is different. You have a rental business on someone else’s land. It does not matter that you don’t own it. Do the right thing and amend your taxes and report your income. It is better and cheaper to do it on your own vs having the IRS do it for you. Good luck.

Amend your 16,17, and 18 taxes now and claim the income for these years. Work with a CPA and tax attorney. As of right now, the IRS can go back forever if they audit you. If you fix the issue and amend they can only audit 16-18 right now so you limit your risk of paying a lot  more tax, interest and penalties. 

I am a CPA, but this is not tax advice.

A credit line is great for short term financing. If you want to flip or brrr then this will be great to use to rehab properties. Make sure you understand the term of the loan. Do you have to renew every year? If not is it a 10 year loan? If a 10 year loan is there a balloon pmt or does it convert to an installment loan? How do interest rate changes and your monthly payment calculated. What index does the rate follow? If a balloon pmt make sure you redo the loan well in advance. You would not want to be in the middle of a project when your access gets turned off and get a bill to pay next week for $80k.

$100k is not a lot if it is your only source of funds unless you are in the Midwest. You might need to save up some funds as well or you will still have to get a partner, investors, or hml to do a deal.

If you are doing brrr, make sure your numbers are right: ARV, rehab and purchase price need to be right or you won't get your money back to pay off the credit line. A lot of people pay too much money for a brrr house and can't refinance. Just because your house is updated does not mean it is worth more than standard houses selling in your market.

I like to purchase a house that needs work as I buy instant equity. I start watching houses that hit the market that need a lot of work but most times they are listed for not much less than a retail turnkey home. I can usually pick up a small percentage of these homes but often they get purchased for way too much money. I believe these are brrr investors that pay too much and then wonder why they can’t refinance. I don’t know if these people don’t really understand the market, under estimate rehab costs, or don’t understand how a cash out refinance works. To me the purchase price so important to get right. If you buy for the right price, and get your rehab on budget then a brrr works. I just think too many people jump in and don’t really understand it.