All Forum Posts by: Curt Bixel

I am wondering if anyone has any idea how much it might cost, and if it is even a good idea to purchase a property in Columbus, Oh, that has some serious foundation issues.  The home is a duplex in Clintonville, 2000 square feet total, two story, built in 1910.

The problem is that the poured concrete foundation appears to be from a bad batch of concrete.  It looks like what is called "Sulphur attack," and the concrete is simply crumpling away to nothing.  In many places, it seems like I could likely stand in the basement and dig all the way through the 10 inches of poured concrete wall to the dirt on the other side with my bare hands in about 5 minutes.  

If the property can be bought at a hundred thousand dollar or more discount, would it be possible to dig new footers and replace the entire existing foundation with steel beams to support the sill plate.  

Any idea how much it might cost to have footers dug and beams installed to fully take the place of an unviable poured concrete foundation on a 2000 square foot two story home?  

 $100,000?  

I got an email from a wholesaler regarding a property in an area in which I would very much like to buy.  It is a duplex, and I have another duplex less than a quarter of a mile away, that is very clearly of the exact same design and layout, likely built by the same builder.

It is being wholesaled, so I expected problems.  What I found was a problem that makes me pretty uninterested in the property, as it seems huge, but I wanted to post this on Bigger Pockets, as people here may know of a solution that would actually make this a viable property.  If I don't hear back, I will most certainly NOT buy this property.

The problem is with the foundation.  The foundation is poured concrete, and the property was built between 1910 and 1920.  The concrete reaches well above ground level, putting the sill plate about 3 feet from the ground.  The concrete wall leans out about 4 inches in the space between the ground and the sill plate.  There was one space where the concrete is crumbling, and I can pick it apart with my fingers.  At the rate it was crumbling, it seemed that I may well be able to dig through all 10 inches the concrete with my hand, all the way into the basement in about 10 minutes with only my bare hand.

Is the cause of this deterioration something due to the original concrete mix 100 years ago or is it some sort of environmental issue, like water.  

In any case, am I correct that this is likely a total loss and the building will likely need to be torn down in the next 10 to 30 years?

The common thought on this seems to be that you should schedule regular maintenance on your HVAC systems in rentals.  I wonder if anyone has ever really dug into this to know.  I don't really do that and I do get calls every so often from tenants about an HVAC system that is not working.  At the same time, I save the cost of the maintenance visits and I don't have to bother scheduling them and inconveniencing the tenants until there is a real need.

I imagine that there are people out there with so many rental properties that they actually have the data on how many emergency service calls they get per year despite having regularly scheduled maintenance in place and the cost of those emergency service calls.  There are likely also people out there who have many rental properties who don't have regularly scheduled maintenance in place who also have records of expenses.

I am wondering if any of these people can share their experiences. 

I imagine there is a third group of people who have really, really, strong feelings about this issue either way, but don't really have much in the way of data or experience to back their feelings up.

I am interested in hearing from anyone, but it would be helpful if you could first share the basis for your take on this issue.  

I am considering purchasing a property that may only need a moderate amount of rehab.  I know that the more I fix it up, the more it will be worth, and thus, the more it will be taxed.  Is there a sweet spot to aim for or any strategies out there?  Here are some thoughts that immediately come to mind, but these thoughts are not fully baked.

If I chose to spend money on things that would make the rental property attractive to renters, but do not need a permit to be pulled, will the city simply continue to tax me based upon the value established by the purchase price?

If I do a full rehab with a high level finish, does the city enter into the property so that they can do a full appraisal and raise the value and thus the taxes as much as possible?

If I do any work that requires a permit first, allow the city to do any appraisal that raises the assessment of the property value and thus the taxes, and then do the cosmetic rehab later, would this be a viable strategy for keeping the taxes down?

Is any of this even ethical?  I wonder, as it is really just trying to avoid taxes?  Is this underhanded, or is it playing the game by the rules and thus expected behavior?

I am in the process of setting up a Self Directed IRA. My goal is to use my Roth IRA to lend funds to an organization that primarily flips homes. While reading through the documentation of the company helping me to set up the SDIRA, I can across the following language:

Client understands that if IRA funds are invested in certain assets, there could be special tax consequences. UBIT (Unrelated Business Income Tax) applies to IRA investments in active businesses. Client also understands that IRA is expected to invest in long-term passive investments for retirement and cannot run a business itself, so there could be problems if IRA is too active in its activities (such as flipping houses). Active enterprises need to be run in an entity outside the plan. UDFI (Unrelated Debt-Financed Income) applies to passive investments that utilize debt financing.

Does this present any sort of issue with my plans for my SDIRA?  I am not a lawyers, but does the fact that I would simply be lending the money to someone who flips houses separate me enough from the activity to satisfy the IRS?  

Thank you for all your responses. I have another question. It seems that the best advantage of a self directed IRA, is that, if it is a Roth IRA, you can avoid capital gains taxes.

I wonder if the following would be a good way to get the most benefit out of this setup.  It is so simple, and seems like it is cheating the system, so I imagine it is somehow against the rules.  

What if you had $100,000 in a self directed IRA and another $100,000 to invest in a regular checking account. A borrower wants to borrow $200,000 at 10% interest per year. Could you lend them the $100,000 in your Roth IRA at 18% and then loan the $100,000 in your regular checking account at 2%, thus concentrating the capital gains in the account where they are not taxed.

That can't possibly be a legal strategy can it?

I am interested in some feedback on different self directed IRA companies. The first one I looked into has a $1000 fee for a one time setup. This may be well worth the money, but I want to make sure I chose a good company first, as it looks like changing companies later might be quite expensive.

Any suggestions?  

Thank you for your advice.  I guess a more direct way of staying my needs would be as follows.

I am new to private lending.  I need an attorney who is experienced in this area, and I would also benefit from talking with another experienced investor who would be willing to guide me.

If you can suggest someone, Feel free to private message me with their contact information.

By the way, I am in Columbus, Ohio, and would prefer someone who is local that I could sit down with, face to face, or mask to mask, at this point.