All Forum Posts by: Lesley Resnick

There is a lot to report.  I have been busy and not had much time to update.  I have decided to take a hard money loan out against this property.  I have a lot cash tied up in it and need to free up some additional capital for other projects.  This is a big project and is taking longer than I would have wanted.  It is going to be awesome when it is finished.  I am going to get 90% of my purchase price and 100% of my reno.  I expect I will own this property for another 60-90 days.  I have one more Reno going and another about to get started.  I am about to close on a 3rd property.  I will pay off the loan when I sell the house.  The money is going to be really expensive, but I need the money to keep everything rolling along.  I will have 2 properties to refi in April.  After the April refi I will be accelerating my pace and will need more money again.  By the end of the summer I will be back at the hard money.     

The investors I work with in in Jacksonville are doing quite well.

I think some of your numbers are a bit high and you may want to adjust your strategy.

I am not a big fan of condos or HOA's.

Property management should be more in the 10% range

2160 a year for repairs in a condo is really high.  

A property like this should not turn over every year and it is unlikely to stay vacant for a month a year.  The turn cost is quite high as well.  If you have been maintaining the property there should not be much cost.

If you did nothing more then find property without an HOA and lowered your management fee to 10%. The outlook is very different (112+24) = 136 a month. However, I would suggest in reality you will realize much lower expenses and a significant increased cash flow. In the current scenario you will have a tax loss. Mortgage pay down, appreciation, rent increase, depreciation (tax) and a few dollars in cash flow. I would suggest that a 20k investment provides a solid return. If you disregard everything else, only consider the 136 a month (1,632) a year cash flow on a 23k down. The return is in the 7% range. The real numbers annualized is probably 2x that. You mention risk, I am not sure what would be a better alternative?

They just went out in the mail today.  I was going to do it myself, but printing out the red ink is a problem.  I had my accountant do it.

I had no idea it was so onerous.  I have a many contractors that I have spent more than $600.  How do people manage this?  It seems like it will take more time than actually keeping the books.  

Could someone clarify when I need to issue a 1099?

1.  I hire a contractor to install A/C in my rental.

2.  I hire someone to rake the leaves in the yard.

3.  I hire a landscaper to mow the lawn every week.

Is an invoice the determining factor?

The contractors I use are typically focused on investors.  They generally do not have trucks with names on them or sophisticated web sites.  Most of them work from home.  This allows them to price competitive.  The good ones are hard to find.  They are good until they are not.  This generally happens when they get busy and can't manage the volume, their quality suffers.  

Hi John,

It is going to be tough to say I want a C or B at $x, at any given moment you may not find something that fits. B's are getting tougher to find at this moment. I am doing a BRRR in Murray Hill (B) that I have decided to flip instead, the BRRR numbers were just not there. My C BRRRs are rocking. If you want to see the projects, I have posted both on BP.

Did the feds meet this month to provide guidance on the regs?   There are still a lot of open questions.  Is it a fund, dollar  based or asset?  Can I buy and sell in the fund or am I committed to the asset for the term?  This makes a huge difference.  

Has substantial improvement been established, does it include land and what is the basis?

The biggest increase in value is finding a value add, increase the square footage, add a bathroom and modernize.

Most projects like this are older houses.  They have not been maintained or have just become obsolete.  This house has both.  The roof leaked and caused a lot of rot.  It was a 3/1 and the use of space was just strange by modern standards.  

We are making progress...

The roof leaked and did a lot of damage to the fireplace.  What came out of that space was just nasty! 

Its a little hard to tell, but this is going to be the kitchen and eating area. This was the dining room, see pics above.  I have removed the wall to the bedroom behind the kitchen.  The house has a more open feel now.  I wanted to move the electric panel, but the cost was insane.  We will just build around it. 

There is a lot going on in this pic.  Straight ahead is going to be the full bath, it was a half.  To the right is a new bedroom that was a, well um, I am not sure what purpose it served, playroom?  To the left is the third bedroom.  you can see where the old entrance to the bathroom was located.

We are using a pocket door to save space.  They are a great tool when working with old houses that have unusual space.

Straight ahead is the back door and laundry room.  To the right is the kitchen.  This section of the house is an addition from the 60s.  If you look carefully you can see where the old stoop was.  On the left is the new bedroom.

Looking at the new bedroom from the kitchen

You will also notice the ceilings are in.

If you go back to the early pics you can see the difference.

I hate that stupid fence.  The trees have grown into it.  It is going to be to big a pain to remove.

You can see how high the branches are and they were swinging from them like it was nothing.