All Forum Posts by: Jason Barnett

I think you've got a pretty good plan. The opportunity for that particular property doesn't sound so hot, but consider the tradeoffs:

- When your company grows (larger), will you need a property as large as this one in order to do business?
- Will the property be large enough for the near future (5 years) ?
- Is the location good for your primary business?
- Do you really want to manage two businesses at once? The landlording business can be profitable, but it will take time away from your painting.
- What are the rents like in this area? What makes you think people will pay $200 / $400? Maybe rents out there are $500 - $700...

There are all sorts of things that you can consider here. Perhaps another option: you rent out the smaller unit to a handyman and have him do all of the maintenance on your property. In return you give him free rent...

You want to talk about disgusting... try the Dayton Ohio market (my market). There are lots of ugly houses, vacant homes, and job growth isn't exactly good. In fact unemployment around here has hovered around 7% for the past year.

But it's a good market. :mrgreen:

The thing that you have to understand is that with the different markets you're going to need to focus on different types of properties. Figure out what kind of demand you have in your area. If you're in a stagnant / declining market like mine then you probably aren't going to make a fortune buying pre-construction homes. However, there are a lot of opportunities where you can buy a home for around $12,000 do some rehab work and then resell that home for $40K - $50K. Again, it's just a change in mindset. Oh and I've also found that the multi-family homes do very well. You can buy these for a very low price and earn a nice sustained ROI.

CPA =Certified Public Accountant. You will want to hire one of these people (preferably one that specializes in Real Estate Investing / Tax Issues). They can save you a lot of money and saved money = biggerpockets!!! :mrgreen:

I am thinking about converting an old water-heater system into a forced air heating system with central air. Size of the building is approx. 3200 Sq. Ft. with 2 stories / basement / attic. Main problem: the house has walls made out of stone so the GC would have to go through closets and/or extend walls in order to run the ductwork.

What kind of price would I pay for a project like this?

As an alternative a friend of mine suggested that I look into "chillers". Basically these would chill down the water that runs through the radiators / pipes in the house and this could cool the house down in the summer. Does anyone know if this works well? Is it good / efficient?

For those of you that operate in the state of Ohio you need to talk to your tax advisor about the new CAT tax:

http://www.ohioscpa.com/advocacy/article.asp?article=3976-1

This new bill is a major change in Ohio tax law and can put a hurt on your bottom line if you are a major player in the state of Ohio. Consult with your tax advisor, but as I see it there are several important impacts for RE investors:

- The CAT tax applies to all entities, regardless of how they file taxes with the IRS. This means the CAT tax applies to C Corps, S Corps, LLC's, basically any business structure.
- The CAT tax applies to rents received in the normal course of business although it does not apply to the disposition of capital assets. So if I buy a rental property and sell it a year later then I pay CAT tax on the rents I receive, but I don't pay the CAT tax on the sale of the property itself.
- The CAT tax applies to your gross receipts, regardless of net income. So it doesn't matter that my rental property shows a tax loss on paper; I still pay the CAT tax as a percentage of my rents.

Thanks for your suggestions!

I actually intend to do rehabbing and at some point the houses that I purchase will qualify as inventory, but I don't (currently) do these deals so it isn't an issue yet. I'll set up a separate GL for that company when I do.

I've been checking this out recently. I found out that whenever a HUD-foreclosed home is on the market for 6 months that it automatically gets sold for $1. Obviously homes that get sold like this are going to need work, but has anyone else ever tried buying / rehabbing one of these homes? It seems like a heck of a lot of potential (hard to go wrong for $1 plus rehab costs :mrgreen: )

If you want some (free) help with developing a business plan then you can also talk with your local SCORE counselor.

http://www.score.org/

My common sense advice: hire a new management company.

My experience: try cleaning up the front yard, planting flowers (not this time of year though), install a fancy looking front door, install new windows in the front of the house. Tenants really seem to like those cosmetic changes that give your building curb appeal.

I've never done a project like what you're suggesting, but no one else has answered so far so I'll pitch in my $.02

You want to first make sure land is zoned for your purpose; I've heard that it can take 6 months for the government to approve zoning changes.

Constructing 6 5 bedroom houses: I have no clue. :roll:

Marketing and selling: this depends on your goals. If your area is hot then you can sell the land / houses for a discount while it's still in pre-construction phase and sell everything before you finish construction.