All Forum Posts by: Patrick Liska

If The property was put in service In December of 2020, if you advertised it. then tax wise you can deduct expenses and depreciation on 2020 tax returns. If you did not list it to rent until January, then it wasn't in service and you cant start claiming it until you do your 2021 taxes next April. I am not a CPA.

Have you and your partner tried to get conventional lending with an interest only loan? If this is your 1st flip, do you have the right contractors in place to pull off a renovation of a house in 60 days ( 2 months) on a house that must be in bad condition to be able to get at 45-55% of ARV, do not forget it has to get on the market and sold in 100 days, otherwise it will cost you more money with option 1. OPTION 2 is not bad, if there is no time limit for you, just remember he would be getting his money back plus 20% of the profit of the sale, still meeting that ARV valuation though.

They could be a wholesaler, they contracted to buy it, then found someone else to buy it from them at a higher price. especially in PA, the one making the deal with you is avoiding paying a transfer tax, if the agreement is amended before the sale.

Have your own LLC, You are the Manager, then you form an LLC with your Partners to buy the property under. your LLC is listed as one of the Managing Member of the Partner llc. this will help protect you from your partners liabilities. seek consul with an Attorney to confirm that your llc will help protect you.

I grew up in a Cape, granted we had 4 bedrooms, but 6 of us and one bathroom, the only problem you will have is hearing them fight over who needs to get into the bathroom. As others have stated here, look at the local laws as to occupancy loads per bedroom, if local does not have anything, move to county laws, then state and Federal, but to tell them to move because they are having another child is a slippery slope.

Ronald,

As suggested before me, have an Attorney write a letter and keep records of everything. It does sound like they are miss managing the property and funds, no reason given for Gas co. shutting off the gas? does not make sense unless they did not pay them. check and see if the town has a rent control board, fair housing board or some board that tenants can complain to, get the town involved in your fight.

Jay,

A lot of it is reputation, honesty, completing projects on time, on schedule and giving the customer what they want. Which is why I said the better the reputation, the more you may spend. As an example, I am overseeing a multi million dollar renovation right now ( hired to over see billing& pricing, help the homeowners in product decisions as well as be on the job every day to make sure the get what they want and the quality of work is done right). I know a lot of framing contractors, but I only brought in one because I know this contractor can do the quality of work that needs to be done, I have other contractors, but they are at different levels and different price ranges. The best thing you can do is socialize and ask around about contractors, maybe not even take the word from one lumber yard, try two. Most contractors do stick with just one for better pricing and better service, A contractor that does a million dollars in business at the yard will get better service than one that does 100,000.

Jay,

1st thing I would like to say is, that's great that you want to only have legitimate Contractors that do reputable work, doing the work. Keep in mind that Your costs will be more compared to the guy you find hanging around the big box store because of their experience and reputation. Then I want to add, the questions you asked above are exactly why I do not work with other real estate investors, they are actually insulting. If you are looking for a reputably Contractor, those are the ones that will give you a price for the project, be there to complete the project and complete it on budget. you asking those questions sounds like you want to micro manage their company, does anyone micro manage your co.? If you worry about price gauging on materials, then open your own accounts and purchase the materials yourself, this way you will not have any reason to question the price. Just to let you know, that will probably eliminate most of your top contractors, Contractors usually have more than one project at a time going and time is of the essence for scheduling, relying on someone else to get the material there can delay a job a lot. Where a contractor buys their material is of no importance to you, if they give you a fixed price for the project, as long as they get the material there, get the project done and for the price they gave you, this is their business and if they make a profit on the material then they are happy and have no problem getting the job done for you. I am not saying that all Investors here are the same, but too many like to buy the materials themselves and try to micro manage the contractors companies, I am sure that a good number of the stories here on BP about bad contractors have 2 sides to the story that people do not get to hear, I personally have just made it my policy not to work that way and have been working by word of mouth for 32 years as a general Contractor.

Now if you are talking about Time and Material project, then I would recommend you open an account at a local lumber yard, have the contractor purchase the material on your account, this way you know what exactly has been spent for everything. Also let them order and schedule what they need and when they need it.

Keep in mind, the contractor is running a business, he will charge you a percentage on top of material and labor, if you get it or them, they need to cover their overhead and make a profit.

If you are looking for A good contractor, the best place to start is your local Lumber yard - not the box stores. the guys at the lumber yard will know the most reputable contractors in town because they will know them personally, deal with them a lot and also know of feedback from the contractors customers. always ask any contractors you are thinking of hiring for a list of clients as references, and call them, they will know best about how a contractor is and give you unbiased answers to any questions you have about a contractor.

 Arta, I do not know anything about your house, but seems to be a lot for painting and cleaning a carpet. I used 10K in the example just as a number, depending on the size of your roof will depend on the cost. Look at your agreement with your PM, is there a provision in there that they can collect a percentage for themselves on top of any contractor they hire? some PM's will add 10-15% on top of the cost for themselves, again thats another thing that can be negotiated in hiring a PM.

You are correct, if in a perfect world there are no other repairs, Capex is usually major repairs, maintenance should cover minor expenses. 75% leasing fee from PM, on 1500 rent that's $1125, that can be negotiated, I pay $300 leasing fee. If you replace a carpet and re paint the place and the tenant only lasts a year, and you have to fix both again, that's not normal wear and tare you can take those costs from their security deposit.