All Forum Posts by: Jessie Elder
Jessie Elder has started 1 posts and replied 6 times.
Quote from @Jaycee Greene:
Quote from @Jessie Elder:
Quote from @Jaycee Greene:
Quote from @Jessie Elder:
Quote from @Jaycee Greene:
Quote from @Jessie Elder:
Hello! My name is Jessie and my husband Tyler and I have been debating on whether to jump into the real estate world for a bit now. We built our current home with my husband being the GC and are interested in potentially building to sell, but am not sure about capital gains and other fees etc that would prevent us from making a profit from it. It would be more ideal for us to find a buyer who can carry the builders loan vs us, but we have already talked to our bank about it and would be able to use a heloc to purchase land and then our current home for collateral. Would this be a good decision? I know with capital gains you should hold the property for 2yrs. I have 2 small kids and really don’t want to move from our home that we initially built to be our forever home. We now don’t know if we will stay here forever, but still am not wanting to move my kids every 2 years, plus would like to build more than once every two years for additional income.
Our other option would be rentals. The market seems very difficult to buy rentals from right now so I figured the BRRRR strategy would be something we could do. I don't know much about renting to others and honestly have no idea where to start. I've been listening to the real estate rookie podcast starting from the beginning, but am only on episode like 17 I think! I am kind of interested in this as well so that we could get a property manager and have more of a somewhat passive income. My grandpa had them for years though and had a lot of issues with renters and evictions etc so it makes us nervous.
Thanks so much for your input/help! Have a great day!
Hey @Jessie Elder, welcome to the BP Forum!
You’re asking all the right questions early, which already puts you ahead of most first-timers. I work with a lot of folks who start where you are — they GC’d their own home and realize they could do it again for profit.
Here's my 2 cents:
Build-to-Sell: If you build and sell within a year or two, profits are taxed as ordinary income, not long-term capital gains. A 1031 exchange only works if you rent it out first, which adds complexity.Financing Options: Using a HELOC and land loan is fine if you have reserves and a clear exit. Having a buyer take over your construction loan isn’t typical unless it’s a presale.
Rentals / BRRRR: The market is tight, but BRRRR still works if you buy right and add value. A good property manager helps reduce the renter headaches your grandpa dealt with.
If you prefer building over landlording, look into small-scale spec builds or partnering with investors.
Hope that helps!
Hi Jaycee,
Thanks for the reply! I did not know that about the capital gains. So if we were to build a home and list it for sale then we would only be taxed like regular income and not anything additional?
What do you consider a good reserve? It’s hard to get started without a huge amount and we just don’t have that. we would use the heloc to purchase the land out right, then have a construction loan for the home and have the rest of the heloc for backup/extra cash if needed. I’m not exactly sure if that’s a smart move or not, we just don’t have a ton of expendable cash.
With the buyer holding financing, it was going to be more like a custom home build. So I’m not exactly sure how we would work that, but it would be more where they are just paying us to do the job for them and run the build with picking out their finishes themselves etc.
Do you have any advice on how building would work with an investor? At this point we will need to work our full time jobs, so I’m not sure how large scale we can make it at this point. We have talked to a realtor about what good options as far as what’s in need in our area for purchase. I just need to figure out some more in depth numbers and go from there. I appreciate the help!!
@Jessie Elder A "good" reserve is whatever allows you to complete your project AND sleep at night! ;-)
In your example of the "buyer holding financing", you're basically operating as their GC. It helps alleviate the cash outlay, but you don't actually own the property.
If you work with an investor, you can have the investor put most of the money in and you all share the profits whatever way you agree upon.
If you build a SFH, what size would you look to build and what would be your build cost/SF?
I know everyone always talks about the meetups etc. What other ways do you find investors?
Ideally we would build around a 1600sqft 3bed 2bath home. I truly do not have a full budget for that and need to do more research before I can give you a number. I’d like to say we could do it for 230-250k but I’m not sure and need to do more research.
@Jessie Elder I would recommend reaching out to real estate agents in your area that are listed on fix/flip properties. I suspect THEY might be interested in investing themselves and/or would know other folks that would.
Good to know. Thanks so much!
Quote from @Jaycee Greene:
Quote from @Jessie Elder:
Quote from @Jaycee Greene:
Quote from @Jessie Elder:
Hello! My name is Jessie and my husband Tyler and I have been debating on whether to jump into the real estate world for a bit now. We built our current home with my husband being the GC and are interested in potentially building to sell, but am not sure about capital gains and other fees etc that would prevent us from making a profit from it. It would be more ideal for us to find a buyer who can carry the builders loan vs us, but we have already talked to our bank about it and would be able to use a heloc to purchase land and then our current home for collateral. Would this be a good decision? I know with capital gains you should hold the property for 2yrs. I have 2 small kids and really don’t want to move from our home that we initially built to be our forever home. We now don’t know if we will stay here forever, but still am not wanting to move my kids every 2 years, plus would like to build more than once every two years for additional income.
Our other option would be rentals. The market seems very difficult to buy rentals from right now so I figured the BRRRR strategy would be something we could do. I don't know much about renting to others and honestly have no idea where to start. I've been listening to the real estate rookie podcast starting from the beginning, but am only on episode like 17 I think! I am kind of interested in this as well so that we could get a property manager and have more of a somewhat passive income. My grandpa had them for years though and had a lot of issues with renters and evictions etc so it makes us nervous.
Thanks so much for your input/help! Have a great day!
Hey @Jessie Elder, welcome to the BP Forum!
You’re asking all the right questions early, which already puts you ahead of most first-timers. I work with a lot of folks who start where you are — they GC’d their own home and realize they could do it again for profit.
Here's my 2 cents:
Build-to-Sell: If you build and sell within a year or two, profits are taxed as ordinary income, not long-term capital gains. A 1031 exchange only works if you rent it out first, which adds complexity.Financing Options: Using a HELOC and land loan is fine if you have reserves and a clear exit. Having a buyer take over your construction loan isn’t typical unless it’s a presale.
Rentals / BRRRR: The market is tight, but BRRRR still works if you buy right and add value. A good property manager helps reduce the renter headaches your grandpa dealt with.
If you prefer building over landlording, look into small-scale spec builds or partnering with investors.
Hope that helps!
Hi Jaycee,
Thanks for the reply! I did not know that about the capital gains. So if we were to build a home and list it for sale then we would only be taxed like regular income and not anything additional?
What do you consider a good reserve? It’s hard to get started without a huge amount and we just don’t have that. we would use the heloc to purchase the land out right, then have a construction loan for the home and have the rest of the heloc for backup/extra cash if needed. I’m not exactly sure if that’s a smart move or not, we just don’t have a ton of expendable cash.
With the buyer holding financing, it was going to be more like a custom home build. So I’m not exactly sure how we would work that, but it would be more where they are just paying us to do the job for them and run the build with picking out their finishes themselves etc.
Do you have any advice on how building would work with an investor? At this point we will need to work our full time jobs, so I’m not sure how large scale we can make it at this point. We have talked to a realtor about what good options as far as what’s in need in our area for purchase. I just need to figure out some more in depth numbers and go from there. I appreciate the help!!
@Jessie Elder A "good" reserve is whatever allows you to complete your project AND sleep at night! ;-)
In your example of the "buyer holding financing", you're basically operating as their GC. It helps alleviate the cash outlay, but you don't actually own the property.
If you work with an investor, you can have the investor put most of the money in and you all share the profits whatever way you agree upon.
If you build a SFH, what size would you look to build and what would be your build cost/SF?
I know everyone always talks about the meetups etc. What other ways do you find investors?
Ideally we would build around a 1600sqft 3bed 2bath home. I truly do not have a full budget for that and need to do more research before I can give you a number. I’d like to say we could do it for 230-250k but I’m not sure and need to do more research.
Quote from @Nicholas L.:
Hi Jessie. There seem to be a lot of overlapping questions in your post, so I'm not sure how to tackle them. It's fantastic that you and your husband can GC a build. That seems like a major advantage. I don't know much about build to sell, so I'm not the right person to advise you on that.
The market IS very difficult for buying rentals right now, period, so kudos to you for recognizing that. BRRRR is very tough too. Step 1 in BRRRR is: find a distressed property that's distressed enough to allow for an ARV boost, but not so distressed such that the rehab isn't worth it. And even that is tough because there is such tremendous competition for inventory. Another challenge with BRRRR right now is that a lot of the good contractors are booked up - but if you and your husband can do some of the work yourselves that could mitigate it.
Issues with renters and evictions can be mitigated via proper screening and a quality PM but again, you're right to carefully consider the options.
I'm not a big "go for it no matter what!" person. I think that is dumb advice. It's not the case that everyone should invest in RE and that everyone should start no matter where they are in life.
Hope this helps. Happy to answer any questions you have. I've done a bit of everything. Currently working on a BRRRR myself.
Thank you for the reply! All of your information about the BRRRR strategy is what makes me nervous about them. I don't want us to get into something over our heads, but at the same time I do feel like we have talked about it on and off for a few years and we could have been well on our way now. I wish I would have thought about it when I was younger as just a few years ago my grandparents sold all of their rental properties and if I was smart I would have tried to purchase them from them some how. You live and you learn is what they say!
Where are you located and how did you get started in RE? Thanks so much for the reply and info!
Quote from @Michael Smythe:
DM @Jaycee Greene for a consulting session, it'll be worth your time!
Thank you for the reply! We will definitely look into it!
Quote from @Jaycee Greene:
Quote from @Jessie Elder:
Hello! My name is Jessie and my husband Tyler and I have been debating on whether to jump into the real estate world for a bit now. We built our current home with my husband being the GC and are interested in potentially building to sell, but am not sure about capital gains and other fees etc that would prevent us from making a profit from it. It would be more ideal for us to find a buyer who can carry the builders loan vs us, but we have already talked to our bank about it and would be able to use a heloc to purchase land and then our current home for collateral. Would this be a good decision? I know with capital gains you should hold the property for 2yrs. I have 2 small kids and really don’t want to move from our home that we initially built to be our forever home. We now don’t know if we will stay here forever, but still am not wanting to move my kids every 2 years, plus would like to build more than once every two years for additional income.
Our other option would be rentals. The market seems very difficult to buy rentals from right now so I figured the BRRRR strategy would be something we could do. I don't know much about renting to others and honestly have no idea where to start. I've been listening to the real estate rookie podcast starting from the beginning, but am only on episode like 17 I think! I am kind of interested in this as well so that we could get a property manager and have more of a somewhat passive income. My grandpa had them for years though and had a lot of issues with renters and evictions etc so it makes us nervous.
Thanks so much for your input/help! Have a great day!
Hey @Jessie Elder, welcome to the BP Forum!
You’re asking all the right questions early, which already puts you ahead of most first-timers. I work with a lot of folks who start where you are — they GC’d their own home and realize they could do it again for profit.
Here's my 2 cents:
Build-to-Sell: If you build and sell within a year or two, profits are taxed as ordinary income, not long-term capital gains. A 1031 exchange only works if you rent it out first, which adds complexity.Financing Options: Using a HELOC and land loan is fine if you have reserves and a clear exit. Having a buyer take over your construction loan isn’t typical unless it’s a presale.
Rentals / BRRRR: The market is tight, but BRRRR still works if you buy right and add value. A good property manager helps reduce the renter headaches your grandpa dealt with.
If you prefer building over landlording, look into small-scale spec builds or partnering with investors.
Hope that helps!
Hi Jaycee,
Thanks for the reply! I did not know that about the capital gains. So if we were to build a home and list it for sale then we would only be taxed like regular income and not anything additional?
What do you consider a good reserve? It’s hard to get started without a huge amount and we just don’t have that. we would use the heloc to purchase the land out right, then have a construction loan for the home and have the rest of the heloc for backup/extra cash if needed. I’m not exactly sure if that’s a smart move or not, we just don’t have a ton of expendable cash.
With the buyer holding financing, it was going to be more like a custom home build. So I’m not exactly sure how we would work that, but it would be more where they are just paying us to do the job for them and run the build with picking out their finishes themselves etc.
Do you have any advice on how building would work with an investor? At this point we will need to work our full time jobs, so I’m not sure how large scale we can make it at this point. We have talked to a realtor about what good options as far as what’s in need in our area for purchase. I just need to figure out some more in depth numbers and go from there. I appreciate the help!!
Hello! My name is Jessie and my husband Tyler and I have been debating on whether to jump into the real estate world for a bit now. We built our current home with my husband being the GC and are interested in potentially building to sell, but am not sure about capital gains and other fees etc that would prevent us from making a profit from it. It would be more ideal for us to find a buyer who can carry the builders loan vs us, but we have already talked to our bank about it and would be able to use a heloc to purchase land and then our current home for collateral. Would this be a good decision? I know with capital gains you should hold the property for 2yrs. I have 2 small kids and really don’t want to move from our home that we initially built to be our forever home. We now don’t know if we will stay here forever, but still am not wanting to move my kids every 2 years, plus would like to build more than once every two years for additional income.
Our other option would be rentals. The market seems very difficult to buy rentals from right now so I figured the BRRRR strategy would be something we could do. I don't know much about renting to others and honestly have no idea where to start. I've been listening to the real estate rookie podcast starting from the beginning, but am only on episode like 17 I think! I am kind of interested in this as well so that we could get a property manager and have more of a somewhat passive income. My grandpa had them for years though and had a lot of issues with renters and evictions etc so it makes us nervous.
Thanks so much for your input/help! Have a great day!