All Forum Posts by: Jon Reed

Yeah... we always have a problem with break-ins on our properties that are under rehab. Doesn't matter if they are in an A+ or C- area... some idiot will see an empty house and bust in thinking that you left your tools inside that they can take the pawn shop. In our last house we had a nice neighbor who kept an eye on the place... but i still got broken into twice. We put in a security alarm but that just makes them smash and grab quicker, doesn't keep them from trying.

The police officer who came out during the last break-in attempt gave us probably the best advice. Get an inexpensive motion alarm and set it up next to the easy access point (back doors/windows) and hook it up to an external 120+ db siren and external flashing red lights. He suggested that it is so loud and distracting that every house around gets woken up and knows exactly what is happening. This way the person breaking in will be scared to death and it will give your neighbors a reason to keep an eye on the property... if they do their part to keep people off the property then they won't be woken up in the middle of the night with a tornado alarm going off next door.

I am sure there are people out there who can buy and sell small parcels of land quickly enough and with enough margin to grow wealth. However, the land game is a low margin and slow game (for most people). People who invest in land usually buy a large chunk and sub-divide it out or they buy land in expanding residential or commercial areas and sit on it for years until the right company/builder comes around and offers them a big chunk of money for it. 

If I only had $5,000 right now to grow into $100,000 within a few years I would start buy and flipping utility trailers. Right now construction is booming and all of these subcontractors are buying up trailers super fast to help them keep up with the work load. Then, once I get that to around $20-30K I would go into flipping houses. Moral is, $5,000 is not enough money to go into real estate without a partner because every deal needs a cash buffer on hand to take care of those things that we do not expect like a new HVAC, roof, or termite repair.

I would like to flip this question around. Having a list of all the ways to fund a deal can be made by doing a Google search on "how to fund a real estate deal". What I would like to know is what you plan on using for your first deal? How much capital are you needing? How much have you already saved up? What steps have you taken to secure that form of financing? 

Don't keep searching for a million ways to finance a deal, instead use that energy to start tackling the challenging of getting the funds. It doesn't matter which one you decided to try first, just try one. If it fails to work out then try a different way. 

I have never purchased a property next to a funeral home but my sister owns a funeral home. I would personally not be worried that the home was next to a funeral home. If anything it would be a plus. They are usually very well maintained and very quiet places. I would be only a few people would not purchase/rent a home next to a funeral home... they are probably the same people who are scared to live next to a graveyard. 

Without credit then you better have yourself a nice, solid, long job history with a good income and a big chunk of cash to put as a down payment.

If you love Jesus then check out Christian Healthcare Ministries! 

 I guess that is market dependent... Here, rents have a steady increase and properties have steady appreciation. So, good example of knowing your market. However, your cap-ex should not be the average of what it will be for the next 30 years compared to your current rent but the current cap-ex amount compared to the current rent amount.

Type: Lease Option

Rate: 5.5%

Amortization Period: 30 year

Length: 5 year

Option Payment: 15% of Purchase Price

Buyer has a lease on the property for 5 years with the option to buy the property at the end of the lease for a set price. Over the course of the 5 years the lease payments are calculated at the monthly rate of the (Current Property Value - Option Payment) amortized over 30 years with 5.5% interest. 

Purchase price of property at 5 years is calculated at (Current Property Value - Option Payment - Principal Portion of Lease Payments).

Over the 5 year lease the buyer takes on 100% of maintenance costs, improvement costs, taxes, and insurance. 

Man... this could be a great opportunity but I have heard that NY tenant laws are a TON more liberal that they are here in Missouri. I would go and talk to an attorney who deals in real estate first and see what the 'worst case' scenario would be and how much it would cost. Then, I would throw them a SUPER low ball offer and tell them that you will take the property with the current tenant issues. They may reject the offer at first... but keep an eye on the property and if it is still there in another month then give them a call with an offer that is just slightly lower then your last. Sooner or later they will hit their breaking point and sell it.

So... I am not tax professional but an LLC doesn't give any real tax advantage, it is just there for liability protection. You can take the same expenses for the property personally as you would if it was in an LLC.

Now, S-Corps are a whole different ball game and you should talk with a trusted tax professional and accounting professional about your personal cost/benefits to using an LLC vs and S-Corp.