All Forum Posts by: Jaden Ghylin

Terry, the first advice I give any new investor is to get full access to the MLS. I'm sure it varies by region, but if you don't have access to information that others do, you are behind. This is not a business where you want to be at a disadvantage right out of the gate.

In my market, there are great websites with MLS data, www.themlsonline.com, but they are nowhere near what you get from full MLS access. Honestly, the private websites here probably give you 5% of the picture that the full MLS gives. It is astounding how much data is in there.

I hope that helps. Get MLS access otherwise you are flying blind! You don't need to be licensed to get access, but getting licensed is also a good idea. It will teach you how to run comps and write purchase agreements. If you are not licensed you will need to rely on someone else to write PAs on your behalf and they may not be available when that hot deal flies past your desk.

-Jaden

Greg,

I am amazed that noone has responded to this post. Have you had any luck with setting up an NFP to get first look? I just learned about this and am trying to determine if it's possible and how to go about it.

I'd love to see properties before they hit the market. Is noone on BP doing this now?

-Jaden

I've seen some various explanations of this on the web, so hopefully someone here can point me to the true answers. I've got two questions regarding redemption in MN.

1) A primary mortgage for $200k goes through sheriff's sale and the certificate sells for $60k to the bank that foreclosed. Why? Usually they seem to sell for the mortgage amount.
2) Now that the certificate has sold for $60k, the property is in a 6 month redemption period. Does the current occupant need to come up with the funds to pay off all of the existing debt or do they simply need to come up with $60k to redeem?

The property has not other mortgages or liens on it.

-Jaden

Thanks J Scott. Do you have any tips for deductions to take against that income? Do you end up faring any better on taxes than you would from W2 income?

-Jaden

I’ve got problem that I could use the communities advice on. I've completed one flip this year and about to do another and really want to get the tax situation under control since I'm in a high bracket already.

Have you found any way to reduce or defer taxes from a flip?

Here are the strategies I’ve looked into:

1) 1031: IRS will not allow this if hold-time is under 12 months, with intent of resale
2) SDIRA: Again, IRS will not allow if hold-time is under 12 months
3) Rent for 1 year or rent to own for 1 year then sell: 15% capital gains rate
4) Offset short-term gain with depreciation from rentals (although, there is no way I can get enough depreciation to fully offset flip gains)

The only way I can really see to minimize taxes is to hold for 12 months and try to offset with rental depreciation. Any other ideas?

-Jaden

J Scott, thanks for your input. You say I can't afford to get hit hard by the tax man, but it sounds like there is nothing I can do but to get hit hard by the tax man.

Would it help if I purchased a rental property so I could at least deduct startup costs and depreciation against these short term cap gains?

-Jaden

I just broke the RE investors code. I jumped into flipping a property without having all the details hashed out ahead of time. I came across a good deal and had to move, so now I've got a property that's almost through rehab owned in my name and I need to figure out how to sell it without incurring massive taxes. I've seen some posts claiming taxes as high as 50% if SE and state tax is included. I'm in Minnesota, so state tax is a major factor also.

I've got a few questions. What happens if I just sell it as a sole proprietor as it sits right now and turn around and buy a rental property with the proceeds? Will I still pay short term cap gains on it (I'm almost certain the answer is yes. The rental will just give me some deductions to take against it)?

Can I transfer it into an LLC, then sell it? Does this help me roll the cap gains into the next property?

I'm also looking into self-directed IRA for flips, but I don't think I'm ready to jump into that on this one.

How are you shielding your short-term cap gain income from taxes? Please offer your insights.

-Jaden

In Minneapolis, the tax credit expiration has been an extreme shock to the market. Pending sales are down 50% from pre-tax credit levels. At the same time there are 3 new listings for every pending sale driving inventory up. There is very little pressure on buyers. Interest rates are going down, inventory is going up, foreclosures are still on the rise in Minneapolis, and good jobs are not being created fast enough. This is not a market to be selling houses in. Buy, hold, and rent is one of the few viable strategies as foreclosed homeowners drive up rental demand.

Downward pressure on prices is mounting, but won't be reflected in stats reported in the news, as more homes are selling in higher price ranges. I.e. prices are still falling, but they are starting to fall in the higher price ranges causing more houses to move at those levels. This has the effect of pushing the median sales price higher even as the market is experiencing falling prices. Repossessions had been slowly creeping into higher income suburbs earlier this year and as of June are at a breackneck pace as banks repo'd 40% more homes than the previous monthly high.

Due to the 6 month redemption period, there will be a wave of foreclosures hitting the market in the dead of winter when demand will be even lower than it is now.

I expect the market bottom to occur Feb/March and the market to stabilize in the spring. A long, slow road to recovery will follow.

Data that I referenced can be found here:
http://www.spaar.com/_uls/resources/Weekly_Market_Activity_Repo_30.pdf

-Jaden

Has this had any effect on RE prices yet?

-Jaden

Welcome to BP George. We're glad to have you here. Maybe you can enlighten us on the new developments in the Costa Rican market. I hear that a new highway is opening up development opportunities in the southern part of the country. Any good deals?

You will find that BP is very well managed and spam is absolutely not tolerated. On that note be very careful about posting in the appropriate forums and soliciting deals or offers in the wrong places. There is a place on here for everything, but most of the forums are for information purposes only and should not be advertised on, so just be aware of that.

The moderators do a great job of keeping this place clean and informative. I think you'll find this to be a great resource.

-Jaden