All Forum Posts by: Jason Prendergast

The long term goal is to have enough passive income to not work a regular job.  We figured starting out by flipping would increase our cash, and at some point yet to be defined, we would pick up a rental property.  

we will have 25k in repairs and renovations on this property.

My wife and I have been talking about flipping for almost 8 years.  Well, we finally picked up a great little house in Debary, FL.  We're working with an agent that not only flips properties himself, but is also part of a mentoring program for people like ourselves (he lives 2 houses over from us).

Now to get to the point. We picked up a "720 sq ft" 2/2 REO on a double lot (.6 acres) with a large 2 car detached garage for $50k. The listing agent didnt list the square footage correctly, and is more like 1100 (will be 1400 after we finish closing in the back patio). The game plan is to have it back on the market by the end of april. We're torn on whether to sell and pay through the nose in taxes or rent for 1000-1100/mo. All of our cash (50k) and about 25k worth of credit card debit will be in this place. The ARV will be somewhere around 109k. What are some of your suggestions?

We have successfully made a deal on an REO home, but have some questions on a 1031 exchange for it. The idea is to take the home (purchased for $50k), put $15-20k into it and sell it for up to $100k.

1) The purchase price of the home was all of our cash plus $8k on a credit card.  We will use credit for the rehab as well (totaling about $28k).  Lets just say we sell the house for $100k, making a $50k profit.  Is there a way to pay off the credit cards with the profit, without paying taxes?  If we do have to pay taxes on the portion we paid the debts off with, can the remaining be kept in the 1031?

2) Does my realtor work with an intermediary?

An accountant told us it would be cheaper to just pay the taxes on the profit (whether its in our LLC or personal name) than to "pay the lawyers to do a 1031 exchange". Any thoughts on that statement?

Liability is not my main concern, just one of them. I want the tax benefits and the ability to take out loans in the LLC name shortly down the road.

So if its in the LLCs name, and the mortgage is in my name, and someone gets hurt on my property, that wont protect us?

You didnt mention anything about the tax benefits, or that we eventually want to take out a loan in the business name.

After a previous post I made the other day, We are 95% certain that we'll have a PM manage it.

Ive asked this question a bunch of times, and get very different answers (from people I meet). We both know when we buy our first (or first couple) properties, they will have to be in our names. My question is, how do I get it into the LLCs name after the fact? I want it there for tax and liability benefits. I have heard a lot about quit deeding, and do not want to go that route.

We want the business to show a profit for the next few years so we can eventually take out a loan in the LLCs name.

Excellent points. Thank you all.

Seems like the majority here really likes a PM.

I understand the value of a good real estate agent, mortgage broker, GC and real estate attorney, but are property managers worth it? Ive called and emailed some of the property managers in my area and never been able to speak with someone over the phone (red flag). Ive received canned email responses, too. Im willing to pay someone the 50%-65% of a first months rent to get a good tenant in there, but not sure if I can justify the 8-10% fee per month. What is everyone elses opinion on this?

We're ok signing for the first couple properties for now, as long as its legally in the LLC. The mortgage broker is telling me "by putting it in the LLC will limit the number of banks willing to lend as well as increase the interest rate". If its a slight bump in interest, im ok with it. Also, we dont need 10 banks to lend us money, just 1 (for this property).