All Forum Posts by: David Huynh

Why does it need for rehab? I would probably budget that as much as possible. Congrats on getting your foot in the door and signing the line.

Edwin, Have you managed the same number of units before? If you have and it is a similar class group, then it makes financial sense. In addition to cap x, repairs, management, and vacancy - you may want to factor in rent collection and eviction (time and $$$) and see how you feel after that.

Let me know if you ever decide to sell them! If I was a full time investor (time wise) I think there's a fairly huge play in Milwaukee for the Cashflow play, minimal appreciations Ping me if you have questions about the neighborhoods here in the cities. Some blocks are less desirable and some are very desirable, one mile could be a huge difference. I'm sure you have the same situation in Chicago or anywhere else.

Hi Nate, It's difficult to find deals through the mls. They'll pop up every now and then but not often, and if they do, they are snatched up pretty quick. Expect to pay about 90k minimum per unit (2/1) for maybe $1000-1150 in rents and higher in the niche markets (i.e. Uptown) but those 4 plexus will go well over 450-500k Why are you not interested in the Madison and Milwaukee market?

Hey guys,

I'd like to understand the tax ramifications on cash out refinances. Is this a way to dodge paying taxes until a later date?

Let's say I find amazing deals a couple times a year and purchase with cash. 

Purchase price: 100k

Renovation: 10k

I get a tenant to rent it for $1500 and they pay all utilities. Now I have an interest in getting my cash out and it is appraised for 200k and the lender will do 75% LTV. The time frame is 8 months after the initial purchase and the surrounding properties have elevated in value and/or I just bought it in distresses position to score the property for 100k.

After the cash out refi: 150k out - 110k = 40k in my pocket. 

Help me understand - do I get taxed on that 40k? Say I did this method 5 times and successfully have 5 properties with 200k + my initial capital (110k), what happens from here? 

Did you guys meet yet? I sent you a PM @Blayne Midthun

Gino Barbaro Hey Gino, So with that large 4 million dollar purchase with the 1.6 million cash out, I assume you do not pay taxes on that, is that correct? Say down the road you sell the building for 10 million, it would be a capital gains off of the refinanced loan. Am I understanding this right?

The size of the rooms are smaller than typical. I would say you could get a twin bed in most and a desk/chair. Although I know student rentals typically have smaller rooms but I don't think it's larger than 11x10, even if that. I do have some pictures I'll post up when I get near my laptop tonight. I already told the seller I was out but I've been on the fence. My niece goes to school there and she said it's not a bad building but it's a junkier block. 6th Ave and 14th- I don't want to give away too many details. The seller and I want to work with one another, so if I change my mind and price I'm sure we'd be able to work something out.

@Rex King You stick to a 1% rule? If you don't mind sharing, how well is your portfolio standing in the cities? Are you looking for cashflow + appreciation or just appreciation? 

@Tim Johnson Hey Tim. I work with State Farm. The current owner has his rate at $1800/annual. I did just close on another 8 unit, similar sized in Wisconsin and that annual premium ran about $2900. Rates are just expensive.

The gentlemen owned half a dozen or so properties and moved out of state. He's been trying to manage it from out of state (for three years) and used property managers that just didn't ever fill it.... like 50% vacancy. He's been extremely frustrated with it.

Right now he is bringing it up to standards but there has been a LOT of deferred maintainence - 40k interior; 5k per unit (smokers in most the units), 10-15 exterior?

My gut tells me that there is money to be made here given that I spend this spring/summer getting it 100% to rent to Students. I do not think any student would realistically live there with the current tenants in place (noisy, late payments, smokers) and it is just a very dark, unlit area. I might light bulbs don't get changed and the "secured" doors don't even close. 

I did tell the gentlemen I'd have to pass unless we could get sub 400k but if we work out the CD terms correctly, I think I could still make it win. I'm just scared and hesitant on it. 

Running the numbers...

$900/unit = $7200 - Cashflow $1553

$1000/unit = $8000 - Cashflow $2353

I've put about 24% ($1920/month) aside for capX, vacancy, repairs, and management. Those above numbers are very conservative. If I renovate, repair, rehab all upfront I can cashflow realistically more obviously until the next 2-3 years when I need additional work. 

Seller is willing to CD this for 20 years @ 10% down. (This is why I think it is a winner) I just have to keep in mind the 50k downpayment and the 50k upfront cost to renovate and rehab the property.