All Forum Posts by: Jack Clough

Thank you @Nghi Le , @Brian Garrett, @Rohith Janga, @Dustin Verley -  I found the deal through a wholesaler who was trying to sell the property for 180k originally. Nothing against wholesalers but this one was up to nothing good. 

So, I found a way to get in touch with the owner directly. I left him a voicemail and just told him honestly that I was here to help and offer advice. I let him know that I'm interested in a deal, but if a deal was not possible then I could at least offer advice for his situation. Three weeks went by and finally he called me back. We had a nice conversation and set up a meeting. We met for coffee and chatted about real estate, family, etc... Trust was established in both directions and we settled on a deal at 40k (the building was on the verge of being condemned and he could've ended up with nothing).

I honestly wanted to help the owner and by having that frame of mind while at the same time staying focused on my own goals I was able to get a deal. But it took a lot of patience and persistence (and shortly thereafter I found and closed on three more deals). The BP podcasts definitely helped me to visualize the kind of scenario that unfolded. So, mega thanks to BP for the podcasts.

Every day I have to tell my 10 yr old son to put his shoes on and he always says "I can't find them", but the fact is that he never looks. 

I believe that deals like this exist everywhere, in any market, and in any economy, but you will never find them unless you look. The searching is the education. At least it is for me...

Last November, a partner and I purchased a quadplex in Newport, DE for 40k after negotiating directly with the owner who was way in over his head trying to rehab by himself (much more to that story...). 

This was a complete gut job of 4500 sf. There are two 3/1 units, one 2/1 unit and one 1/1 unit. It was a very big job, but my partner's construction company has done all the work and we are 90% complete after 3 months. Hoping to have it fully rented by 4/1. Then we'll refi and do it again. And by the way I have a possible deal on 6 duplexes (12 units) and could use some hard money lenders.

Summary

Purchase = 40k

Rehab = 160k

Total = 200k

ARV = 450k

Unit 1 = 1400/mo

Unit 2 = 1200/mo

Unit 3 = 900/mo

Unit 4 = 1300/mo

Total Rent = 4800/mo (2.4% of investment)

Interior pics to follow in a separate post but here are the exterior...

Before

After

@Brian Wert, looks like a decent rental property and should be easy to rent. Yes, it's a busy road and right next to 95 but it's just a 3 bock walk to downtown. It's close to Pennsylvania Ave which is a good thing. The further away from Pennsylvania Ave you go the more sketchy it gets and quickly. Good luck.

Fostering two kids under 2 years old is really the amazing part of your story. Great flip, even greater story! Congrats!

@Nikolai Skhirtladze

I have experience with the sheriff sale here in New Castle county DE. I've tried to be the buyer and it's basically a full time job. I went through the process a few times: narrow down the list, go visit the properties, peak in the windows (or walk in the door if possible), calculate the numbers, pay for a lien search, etc...

I narrowed it down usually to about 10 properties. The lien searches cost me approx $75 per property. I knew the max price I would pay for each property. I knew I did everything accurately when each of these properties ended up selling for 5-10k more than my max bid.

The banks buy back most of the properties where the amount owed on the property is higher than any investor is willing to pay (probably 60% of the properties are bank buyback). Another chunk of the properties the city is the plaintiff because the owner hasn't paid property taxes. If the liens plus the back taxes on these properties are less than what an investor is willing to pay then an investor will bid on it, otherwise the city will buy it back.

The remainder of the properties are bought by a handful of investors. So, it's competitive and difficult to buy one but not impossible. I've chosen to avoid the whole thing and just keep finding properties off market which I've had success doing thus far.

@Eric Waterman

I have a quadplex in Wilmington, DE, I used Drass Insurance agency in Newport, DE and they got me a builders risk policy through Zurich (Azzure US). It was $1500 for a 6 month policy. When we finish construction I'll change it over to mixed use habitational commercial or whatever it's called...

@Spencer Karr

I have an LLC for consulting work. Company A pays me $100k to consult. Currently this income would be added to any other income I have and I would be taxed at the rate that it puts me in (say 35%). So I take home 65k. The new tax bill would mean all that income would be taxed at 21%. I take home 79k. No double taxation at all. Make sense?

@Christian Hutchinson

SALT stands for state and local tax. People can DEDUCT their state and local taxes when they file. So if you live in Jersey for example then you're able to deduct a LOT more than if you live in a state like Florida that has 0% state income tax. So, basically the federal government is encouraging states to raise their taxes and rewarding the people in the states with a handout.

With this tax bill, taking away or capping the SALT deduction will level the playing field for all the lower income tax states. More importantly it will force the high income tax states to lower their taxes.

This country was built on state sovereignty. The best way for it to work is to allow states to compete and if they're going to compete then the feds have to treat them equally. If Jersey wants to have higher taxes than PA or Delaware then fine, that is their right. But the feds shouldn't subsidize that behavior.

@Bob Okenwa

You have your mind set on higher taxes and bigger government. Good luck with that. We can peacefully disagree and move on.

@Bob Okenwa

First of all, how many companies do you think are publicly traded? The vast majority are not.

Secondly, if a company buys back stock then who benefits? Stockholders. Why? The company is investing in itself, the value will be greater. And all those millions of Americans who have investments through mutual funds in 401ks, 403b’s and public funds (like teachers, firefighters etc) will benefit.

Drain the swamp!

What matters most in the tax bill is the cut in the corporate tax rate to 21% from 35%. When you cut taxes on small business they will invest and grow. 70% of U.S. workers are employed by a small business. The other key is the repeal of the health insurance mandate. 

Business's are getting crushed by health care costs. If they are not forced to provide health insurance then the insurance companies will have to lower costs in order to compete for and retain that business. One new executive order that was recently signed allows individual citizens to form groups which can purchase their own insurance and negotiate the way a larger business would. Another order allows purchasing across state lines. Previously if you had restaurants in several different states then you would have to purchase insurance separately for each one instead of having one plan for all your employees.

The small business owner is the growth engine of this country. Everywhere you look there is a small business and people trying to grow their passions into a livelihood. Ask a small business owner what this tax cut will do for them. 99% will tell you that they will be able to grow their business and hire more employees.

As a result, we will see the entire economy hit a reset button and no longer will I believe that stocks are over-valued. We could see GDP growth double. The whole idea that you have to offset the tax cuts in order to be deficit neutral is hogwash and counter to basic economic principle's. If the economy grows then the tax base grows.

A strong economy will equal a strong real estate market. Wages will grow and the buyer pool will grow. Millenials may even move out from mom and dad's house and buy one of their own. But they will still have that college debt, which is a whole other issue that the government created (and by the way, you can directly correlate the increase in college tuition with the government involvement in funding for college tuition). The Heritage foundation provides statistics for all that is mentioned here.