All Forum Posts by: Tim Ivory

@Ryland Taniguch

2) Flips have less margin because you have to pay 10% in closing costs.

May I ask where you get this estimate from? Is it 6% Realtor fees, then 3-4% buying and closing costs?

@Natalie Kolodij Is there a chart I can look up to get an idea how much tax I will be paying on flips? If I'm in the 25% bracket, that doesn't mean I will be hit with a 25% sales tax on the profit, or will it? I assume not since the long term capital gains could be 15% on someone within the bracket of 33%. Is this only because it is classified as a long term capital gain, therefore, if it were held less than a year, then, indeed, they would then be taxed 33% on their profit?

Edit* One more question, if I may, couldn't I instead do a 1031 exchange on the flip and defer the taxes? How would that work, is it possible to use the profit 'housed' in a 1031 as a down payment for another fix and flip?

I live in Hamblen County TN with a population of 65k. I haven't found any local hard money lenders yet so I'm considering my only option may be to extend my search radius to Knoxville or Nashville (~100 miles away). Preferably, I would like to work with a hard money lender whom I can meet in person whenever I want, who actually have knowledge in my local market I could use. What is the market like for hard money lenders? Do the majority lend nation wide or state wide? Is it normal to apply for a hard money loan whose base is quite far from your local market?

Who are your hard money lenders, and how close are they to your local market? If they are within your local market, how valuable would you say there knowledge of the local market is in closing the deals or even helping you find future deals by linking you with other investors or cash buyers?

Interesting thread, had the same questions myself. Will bump to hope any further discussion comes.

I'm asking myself the same questions. At the moment, it sounds like I should focus on simply fixing and flipping properties since it might be an issue to refinance the loan at the present moment because I can't offer proof of income other than a paypal monthly balance sheet (no tax returns for the last two years - was not legally obligated to do so).

Ideally, I'd want to BRRR for the cash flow and perhaps more profit in the long run, however, a fix n flip makes things a bit easier. I don't need to worry about property management or refinancing, though the taxes will hurt as well as any realtor fees.

I'm guessing a 1032 exchange wouldn't apply since the house is not owned free and clear, is this correct? Any way around the tax hit?

@Levi Graziano Thanks. I've added them to my short list of lenders to check out. After reading a book on financing, It's becoming more clear what my options are.

Thanks for the Knox invite. I was about to add it to my calendar earlier today since I was also planning on gong to the REAI in Knox on the 14th. 

As of now, both are cancelled until I can sort out a sudden car issue :( I literally had to call a taxi half an hour ago cause my car wouldn't start at the mall, lol.

Maybe I can make other accommodations, though. May I ask if you guys ever go to different places (that isn't a bar)? Is there a site or thread I can check out to learn more. I'm very interested. Cheers.

 Yes! I like this idea. The investor in question might even be willing to show me the ropes. I could tell he really loves real estate :) He is a real estate agent, but I know he works on off market deals. He has banks calling him for offers and other owners. The first thing I will ask him if the deals he can show me are off market.

Specifically, even though it is obvious, is there any other reason it needs to be off market other than the deal is in plain site?

Thanks guys.  I appreciate your thoughts on subject.

@John Warren Can you please expand on what you mean by I would get crushed without capital? Do you mean without access to funds for a large downpayment? I'm hoping if the deal is good, I would be able to find partners or private lenders on the deal. I don't really know my credit situation so my next step is to learn what I can about the financing aspects, before I approach the lenders. Then get some level of financing in place in case I need it. I don't want to waste anyone's time (or my own), but actually follow through on the deals I can.

Can someone recommend a good book about loan types/financing? I'm sure there are different types and I should probably be very specific on the type of loan I'm interested in getting and its duration. I'm sure whatever terms are associated will effect he interest. There are non recourse loan, loans without income verification (if this is true?) etc.

Where to go looking for transactional funding, is this more HML or more credit union territory?

Are there any well written books on commercial investing anyone can recommend?

@Joel Owens Is this because it is more of a sellers market? Is that in general for real estate or specifically for commercial? Where do you go to read on market trends, national and local level.

Apologies guys for so many questions. When I read posts that have more than a few, I usually cringe myself. Even answering 1 is enough ;)

I had quite an interesting conversation with a broker today who happens to also be a developer and an investor. He brokered many commercial real estate deals/investments around my area.  In fact, he sounds like he either developed, or had a hand buying and selling, nearly all the major commercial centers in my general area (wal mart, grocery stores, shopping centers). The most interesting part of our discussion however was the strategies he says he was using to structure these deals - buying low (really low) from distressed owners, using lease options to pay off the owner in full once he actually sold the deal on his end, buying at auctions, repairing, selling for much higher, structuring million dollar deals with none of his own money down.

I never even considered to look into commercial real estate but it sounds like much of what I'm learning on the residential side is applicable on the commercial side. Is this reasonably accurate? Can anyone share any major differences  and similarities between the two?

Are all the creative, no money down, investment strategies applicable on the commercial side? Can I sign a purchase agreement with contingency to pay only after a buyer is found, on a really good deal, then locate funding from private lender (JV or interest) or even HML to eventual refinance? In short, can I also get as creative as I want (or need) in the commercial sector in the same way as it is possible in the residential side?

He invited to show me some deals in person and sounds like he could have some seriously good deals he's working on (like 10 cents to a dollar ones). It was quite fascinating talking with him. Being a neophyte, I'm just glad I was able to understanding mostly everything he was talking about. I'm definitely going to take him up on his invitation, if only to hear more of his experience, though I honestly feel a bit out of my barring here on the commercial side, understandably, since I haven't even done any residential deals.

Assuming he has an amazing commercial deal (around or below 50% appraisal), how would a rookie investor like me take full advantage of the situation without too much capital (10k, hardly worth mentioning), average credit, an self employment income? I would imagine I would need to JV with some private lenders on the deal, assuming HML is out of the question (refinancing might even be an issue). Not the greatest starting assets, but it is what it is and I need to work with what I have or go around it entirely.

Any thoughts? I'm very eager to hear how you guys with more knowledge and experience would approach or structure a really good commercial investment deal from a beginners standpoint. 

with respect,

Tim

Just called an appraisal's office and asked the question, kinda got an answer I wasn't expecting. They said if there are major issues they recommend the owner hire a house inspector to gauge a repair estimate. So far answer is still unclear but seems pretty obvious. 

Appraisals are actual value of a property as is, not an ARV value or market value.

A 100k dollar house with 80k needed in repair would appraise for 20k, this right?

I'd like to know if the appraisals listen on a tax assessors site are ARV prices (if the home was in perfect condition), or what the house is worth as it sits. So, if the house needs major repairs (new roof, new pool) does this already show up in the appraisal value? So, if a house needs 50k in repairs, but gets an appraisal and its comes in at 200k, but then does the repairs, I assume the appraisal will then jump up around 250k, taking into account the new repairs.