All Forum Posts by: Jake Baker

Hi @Bikramjit S Grewal

In Florida, the intangible tax on a mortgage is calculated by multiplying the mortgage amount by 0.002. For example, a $200,000 mortgage would incur $400 in intangible tax.

Sellers are typically responsible for paying the Florida Documentary Stamp Tax on the deed, while buyers who are financing usually foot the stamp tax bill on the mortgage itself.

Hi @Ben Taub

I have no experience in your market which is a big factor. Airdna can be misleading if you are just going of their prediction. 

Make sure to furnish it to a high standard and get professional photography. Be in the top 10% of quality compared to your competition. This will ensure you stay booked through the slow times. 

Hi @Hyeseong Park

Yes, there will almost always be a "draw" system with Hard Money Lenders. i.e. A $60k rehab with 3 draws of $20k per draw. You have to complete the first phase out of pocket, and then they reimburse you the $20k. Theoretically, You can use that first 20k draw to pay your contractor for the second phase. 

Tip - develop a good relationship with your contractor. They can be flexible with you on payment dates if you communicate the draw schedules with them. 

Hi @Garrett Haynes

The best thing you can do is get your personal finances in order and start earning and saving as much money as you can. 

Next, I would find a house hack. There is good financing right now for primary residence on 2-4 units. Buy a triplex or quad and rent out the other units to help with the mortgages. House Hacking is the best way to jump into real estate. 

Repeat this every 2-3 years. Do this 4 times and you will be set for life. You can always go into wholesaling, flipping, or whatever the next shiney object is, but House Hacking will always build wealth. 

Hi @Wilber Perez

ARV - Rehab Costs - Holding Costs - Profit = Your Offer

1. Figure out the After Repair Value first. Comp it yourself with an Agent or use DealCheck. 

2. Ballpark estimate the rehab. I agree with @Marcus Auerbach that J Scotts book is a great resource for this. 

3. Estimate your Holding Costs - Hard Money/loan costs, insurance, taxes, etc.

4. Add in your profit margin. 

5. Once you have these 4 numbers, back into your offer price. 

6. If your offer price is relatively close to their asking price, give them a verbal offer with the caveat that you need to walk the property to better estimate your rehab. 

7. Bring a contractor to walk the property with you and bid the job. 

8. Rivise your offer if needed. 

You don't want to waste your time, the contractor's time, or the seller's time to the best of your ability. The market is pretty slow right now for contractors, so I'm sure you can find one that will be glad to walk the property with you. 

@John Santiago

HMLs require a lot of due diligence, so be prepared for that. The benefit of this is that they double-check your numbers. They won't lend on your deal if they don't feel it is safe. 

HMLs lend on a draw schedule for the rehab. Have money set aside for that. i.e. 60k rehab in three phases. 20k in each phase. You have to complete the first phase then they reimburse you 20k once it is complete. So you have to essentially fund the first phase out of pocket. 

HMLs sometimes require appraisals and/or survey reports during escrow. This can add time to your escrow. Be sure to account for that when submitting your offer. I prefer to offer a 21 day escrow to allow for all the due diligence to occur without having to delay closing. 

@Patrick Butler

For managing rentals: Stessa is free with a BP Pro subscription and can handle all of your landlording needs. 

For Accounting: dibg is great for reporting come tax time and your accountant will like it a lot. Most bookkeepers and accountants are used to QuickBooks online because it is the most common and they know how to use it. 

It depends on how big your portfolio is as well and how much rehab you're doing. You should be fine with Stessa+digb but larger portfolios might prefer QBO because of it's accounting and advanced reporting capabilities. However, digb is adding a QBO integration which I am excited for. 

For analyzing deals I prefer DealCheck

@Arron Paulino

From my understanding, you have an LLC created with the state in which you intend to transact real estate.

1. You should get an EIN here if you haven't already. This is the social security number of your business. Be careful of scam websites when searching for the .gov website. You will need an EIN to open business accounts. 

2. Go to your bank and open up business accounts. It is best to separate all your business activity into your business accounts as much as you can. 

3. I recommend the Chase Business Ink unlimited card. 0% APY for the first 12 months. Go into the branch and apply with a banker. You will likely get a higher limit. They will grant you a limit based on your personal credit. Only do this if you feel you can be responsible with a credit card!

@Luke Werkmeister-Martin

These properties will provide great cash flow which gives you a lot of financial independence. Return on Equity is rather low, however. 

ROE = Cash Flow/Equity = $84k/$1.35M = 6.22%

It really just depends on your goals. You could cash out refi House B and buy another rental or two. This will put you in a better position to capitalize on appreciation over the long term. 

@Michael Hoover

Congrats on all your success. You sound like a hard worker and deserve all of that equity. 

What parts of the business do you enjoy doing? Consider outsourcing the other parts. This will take out a lot of the stress for you. 

For a portfolio this size, I would recommend hiring a bookkeeper. For a couple hundred bucks a month, they can take a lot of the accounting work off your hands.