All Forum Posts by: Luciano A.

@Collin WIlkinson

If you were my brother I’d tell you to go at it with caution. That is a large house. You don’t want the largest house in the neighborhood. Depending on age of the home once you pull permits and start taking down walls or open things up you will have to bring things to code which can blow your rehab cost. If you have access to large amount of cash try buying a few rehabs and flip a few at a time if that risk doesn’t scare you. Just make sure you have good contractors who understand investors and are not charging retail especially if this is a higher end area. Contractors tend to bump up their price when they drive into a nicer area.

@Cesar Perini

Depends what price point you are buying. In my market most homes that cash flow is sold to cash or hard money buyers. However I agree with others. Cash buyers usually is a safer bet if they aren’t asking for unusual concessions.

@Justin Reyes

As a few mentioned your company might not allow you to liquidate it if you are still employed with them.

However you can take a loan to buy your first home and have 5 yrs to pay back. Use money to put as down payment using FHA loan on a duplex or triplex. You and your family live in one unit while you rent the other units. Fix up then sale after two years paying no capital gains (single up to $250k and if married $500k). Pay back your 401k and now have the money to do another deal or flip until you raised enough to buy rentals without having to live in it.

Given today’s current market take the time to educate and read, go to meet ups before jumping in. Best of luck

@Jases Brown

Sounds tempting but don’t do it. Speak to your insurance agent because this prospective tenant will be doing the work on your property thus you would be liable if they fall off the ladder or get hurt while performing these cosmetic repairs.

Another thing to consider..... what one person considers livable another person might not. What if they move in and do no rehab or updating. You lost $150 per month. After they move out you’ll have to spend that money to update and rehab anyways. Why not do it now so Neighbors and tenant’s in the area don’t label this house as a slumlord owner thus causing you to get only the bottom feeders as future tenants.

@Seth Williams

A good deal doesn’t sit on the market for 18 months. You have done your analysis and it doesn’t work at their asking. Stay firm as numbers don’t lie. Best to walk away and put the file in the drawer as a deal that didn’t happen. Seller wants a sucker so stand your ground.

Best of luck

@Melissa Williams

I like to use the word KISS when I talk to a newbie. Keep It Simple Stupid. Not here to put you down but sometimes we all over complicate our lives and never get started on what we want to do. I understand wanting asset protection and looking into the future but single member LLC doesn't give a lot of protection from liability so that myth has been told over and over how it can protect you from personally being sued is false.

I’m not an attorney but have paid a lot to them to help me grow to were I’m at.

I’d advise you to just get started given you’ve been wanting to invest for 10 years. If net worth not including your house is in the millions than look at LLCs and great insurance otherwise

Buy rentals in your name if you have W2 job for the first ten. You can get great loans with conventional versus commercial rates. For liability get great insurance policies with higher levels and umbrella policy.

For your flips get an LLC to give a professional appearance and help to run it like a business as you pay contractors and meet prospective buyers and sellers under that name. You can pretend to be the property manager or owner doesn't matter bc ur behind a company name.

In Texas franchise tax is I think over a certain amount before you have to pay. It’s in the millions so don’t worry about paying franchise taxes unless ur setting up in CA as they have you pay minimum per year regardless if you made money or not.

@Jenna Columbus

Try ntnonline.com if I’m not mistaken only charges $18-$25 per inquiry. We used them for most of our properties but switched to mysmartmove.com allowing prospects who met our requirements to pay directly for credit and criminal checks. This process helped us tremendously as only qualified prospects who were still interested in the unit paid.

Some states like Texas you have to give prospects list of your requirements and have them sign before collecting an application fee.

@Nathan Hui

Started buying foreclosures in Houston back in 2006-2010. When markets everywhere else crashed, but Houston was not suffering the same effect as other cities were. Was buying at $30 per sq ft for duplexes and SFR. Rents were going up. Cashflow normally was north of $300 but most higher given you were able to buy 3/2s in great school districts for under $90k. Still own a handful of them since 2006. Appreciated 3-5x and cashflow is very healthy but taxes and insurance is starting to become problematic but still cashflowing after refi cash-out to buy other properties.

I believe those who bought with positive cashflow didn’t suffer the same faith as thought who bought for appreciation with negative cashflow. Not all us investors lost properties in the last crash.

@Nicholas Morgan

Your friend needs to consider the taxes he will pay for having to recapture the depreciation he took all those years on his taxes. Might want to discuss with a qualified CPA about doing this deal.

In regards to doing the deal.

Rehab never goes the way you plan on paper. Once you open up walls you have to bring everything up to code. Unexpected things come up that cost more money than originally planned for.

The low cashflow for this house can make this house a potential money pit. You mentioned the rehab items so doesn’t sound like you will be doing full rehab just updating things cosmetically. If you are not handy a water heater can cost you $800-$1500 to replace. What about AC unit going out and needs replacing. Or foundation issues that can cost thousands. Many scenarios that can take a year or more to get you out of the red.

BRRRR a complete rehab so EVERYTHING is brand new and being able to put money in your pocket is home run. Otherwise take that $5k and put into savings for any potential issues you might come across in the near future until you have your reserves at a healthy amount to cover any issues.

@Nick Brubaker

Ask your ac guy if he has a friend in the field that can help him out since he is out of town. A guy who has been in the trade long enough always has that helper or buddy that he can call to help on big jobs or they work together on giving each other business if the other is busy.