All Forum Posts by: James Vermillion

That is $25 they won't have next month...thus the cycle often continues.

Tommy,

If you are wholesaling the income will be earned income (not capital gains), just like income received from a job and will be taxed at your marginal tax rate.

Jennifer makes a good point here. Talk to different brokerages in your area because there are a variety of fee structures, commission splits, etc out there. If you talk around and do some negotiating, you can find a setup that meets your needs better than others.

In every instance I have heard of you need to be an active agent, with a broker to be granted access to the MLS.

Tommy,

There can be certain tax advantages depending on the entity setup you choose. One benefit of an llc is the ability to choose how you are treated in regards to taxes. Whether or not there are real benefits will depend on what type of investing you plan on doing. I would definitely meet with a real estate savvy CPA to discuss how you can best structure your business.

That is not the case at all. Appraisers use various methods to determine the appraised value of a specific property.

1) The cost approach: This method looks at what it would cost to build a replacement of the property in questions. This method is used most on newer homes, since that is easier to determine.

2) Sales Comparison: This is the method most people think about on standard single family properties. The appraiser will look at very recent comparable sales and make adjustments for differences in the two properties. Typically an appraiser will use no less than three comps and come to a determination based on the adjustments versus those comps.

3) Income: Income is primarily used in commercial or multi-family properties. This is when the terms cap rate and revenue multiplier are used. The goal is to determine the value of a property based on the income it produces.

What you real estate agent is referring to is the idea that appraisers simply take the contract price and make the appraisal meet that price. Sure, it happens quite a bit (especially when appraisers are backed up Im sure) but that saying that is what appraisers do is non-sense. That is like the equivalent of taking any job, real estate related or not, and completely over-simplifying it. Take a look at some appraisal reports and you will see how much work and analysis goes into it. As with anything, there are good and bad appraisers, but lets not generalize the whole career field.

I got a little behind (shame on me!) and am getting caught up as we speak. One of the moments that I loved was Arthur's story about the 90 year old topless lady (show 6)...that one should be rated X.

I love the podcasts...you all do an amazing job!

Elizaveta, I will take a crack at it since no one has responded yet.

1) My first deal was a fairly in depth rehab which included foundation repairs, window replacements, garage roof replacement, electric work, plumbing work, floor refinishing, and a lot of the things we do to almost all our rehabs (new light fixtures, new outlet covers, new appliances, new doors, etc). We found this property on the MLS. It was an REO and had been on the market for quite some time and recently undergone a large reduction. In the end we spend about $23K in rehab costs and came away with a profit of around $22K.

2) We decided to purchase this property after having looked at many and putting offers on quite a few, always to come away empty. At the time we did not have a lot of capital, but finally found a bank that was willing to lend to us (rehab costs included), but we still needed something fairly cheap to be able to make the down payment and have funds left over for reserves and paying other expenses (utilities, insurance, mortgage payments, etc). This property met all of our investment requirements so we made an offer and after several rounds of negotiating we had the property under contract.

3) I would still do that deal today. The biggest thing I would have done differently would be in the negotiations to purchase the property. That was my first ever property purchase (investment or personal) and my lack of experience led to us paying more than the property than we could have. I should have stuck closer to my offer in the early stages to see how they wold react. Overall though, I am beyond happy with how we handled the acquisition, renovation, and sale of our first property.

By starting with rehab flips we were able to generate more capital and have since started expanding strategies to include holding rental properties. I am a big believer in the fact that there are benefits to many different strategies and if you are able to use multiple strategies to reach your end goals, go for it, just make sure you are educated and prepared to initiate multiple strategies.

That is the very short version, but hopefully if helps a little.

Welcome to BP Rasheena!

I noticed this is your first post, so please consider intruding yourself in the New Member Introduction section of the forums:

http://www.biggerpockets.com/forums/55-new-member-introductions

I do not know the specific fees and structure of Keller Williams but have you met with several other brokerages yet? If not, you should consider it, that way you can compare the various companies with one another and make sure you choose the one that best suits your needs.

It is pretty amazing when it only takes you 10 minutes to realize the value of a site...welcome! Take some time to check out the forums, blogs and podcasts...there is a wealth of information here through various mediums.

Since you are specifically interested in owning rentals, check out the Rental Property section of the forums:

http://www.biggerpockets.com/forums/52-rental-property-questions-landlording-issues