All Forum Posts by: Marc Rice

I'm purchasing a home all cash. In OH the seller gets to pick the title company and they cover the fees including title insurance from my understanding. I'm sending a large sum and want to be cautious. This is my first remote investment. They have told me that since I'm buying all cash I will be able to e-sign all closing documents. Is this correct? Any major red flags to look out for ? Any tips are appreciated thanks.

Hi all!

I am out of state investor, investing in Cleveland, Ohio looking for a real estate agent.

My criteria:

My criteria is C neighborhoods and better in Ohio. I would love any property with strong cash flow with cash on cash return over 10%.

I prefer packages of single family, and/or multifamily, and even apartments.

I am hoping to build my portfolio and go strong. I need boots on the ground. A good team who can be part of my family. A super star agent and a contractor. But again, most importantly- I need boots on ground.

My special/strong interest that entices the purchase are creative financing deals (like subject to deals).

I currently have 4 single family homes in Cleveland, OH under my LLC. From being scammed by a contractor, losing money, surprised rehab costs, evictions, tenants not paying their bills, etc (nightmares)… I had learned a lot since 2021.

I am still currently struggling to find deals. Also, I am struggling to find a trustworthy team to build my portfolio. I want to make a profitable journey with a team in the long run. 

How do I build my portfolio? I have been reaching out to wholesalers, real estate agents, trying to connect to investors, and trying to find contractors for over a year since I first started in 2021. I lost a lot of deals and haven’t had any luck. I read articles, follow and listen to podcasts, read books, connect with other real estate professionals; but it is still hard to figure out what to do. 

What advice can I get? At times, I feel like this journey is getting too dark. 

I want to buy my next investment. Looking for advice on way forward. Here is the skinny: 

- I have one rental property (VA loan)

- took out a Heloc to buy my second property 

- I live in the second property (VA loan also)

- I've used up my VA loan limit

- I have $50k saved for a down payment 

- I live in Las Vegas and don’t mind investing out of state 

- Best advice for third property? 25% down conventional out of state? Move out to a primary residence on a third property? 

- goal is not to sell the current two - they cash flow well 

Thanks! 
 

Hi all, 

I found a home that was completely renovated inside and now has the potential to be run as a bed n breakfast. I don’t want to run it as a bed n breakfast because I will not be living in the home nor cooking breakfast, but what are your thoughts on renting out by the room? 3 bedrooms total and each bedroom has its own king or queen bed with its own bathroom. Shared common areas would be a huge living room, chefs kitchen, sunroom and huge backyard. I could put entry locks on each bedroom to allow for individual room bookings or someone could book the whole home. I’m just wondering if there’s really enough of a demographic that would rent by the room aka share a home with strangers?? 

Looking to hear what others think is better for cash flow and brrrr, Ohio or Pennsylvania? For 2-4 unit multi families. 

Hey @Marc Rice I already used my VA loan to purchase a duplex, and then used an FHA 203k to purchase a four unit. The four unit is on about four acres of land. Three of that is undeveloped and wooded. That is the portion I am hoping to build on. Thanks for the insight.

@Dorian Gray, @Bill B. is right.  There is a way.  It'sl just not all tax-free.  You will have to pro-rate the gain (and you have to have owned it for at least 5 years.  So that guarantees some rental use and tax).  You also have to recapture depreciation.

There is no statutory holding period.  Only that you be able to demonstrate that you purchased the replacement property with the intent of holding it for investment.  There is actually a safe harbor for this in Rev Proc. 2008-16 of the IRS code. 

Of course, as long as you live in the property there is no tax due.  So another thought might be.  To purchase split those houses into a couple of different conversion candidates.  Instead of concentrating all of the gain into one primary.  Split it into two or more.  ane make your retirement job moving into your next rental conversion!  If you have children you could even extend this strategy one step further and 1031 into investment properties near each of them.  So Grandma's retirement job is moving next to the grand kids.  While you are living in one the others are managed by your children.  And if you die before converting all of them your children will get the step up in basis that Bill mentioned.

I have clients doing this who are happy as clams.  Yes they pay some tax.  But they also get some tax free.  And the tax they pay is from living in a nice house near their children.  Not bagging groceries or delivering pizzas.  

Hello. I am new to the forum and truly appreciate any feedback that is offered. This post will be lengthy as I want to fully describe our situation to give all you readers a full picture. I appreciate you sticking around to read the full story and give me some thoughtful feedback.

Here goes!

We have 3 single family homes. 2 are rentals and one is primary. We are planning to move to a new home about an hour away by June 2024 so we are in the beginning stages of planning what is the right thing to do with our investment properties and primary now so we don't regret a missed-step after things are in motion or after the fact. Btw, we do not have any LLC setup currently.

Properties:

Ash St. Rental: 15 yr mortgage w/ 3% rate. 8 years remain. Home value = $360k, Remaining balance = $94k. Mortgage = $1270/mth. Rent = $1750/mth. In addition, there is a HELOC up to $30k that I can tap into.

3rd St Rental: 30 yr mortgage w/ 6.25% rate. 29 yrs remain. Home value = $370k, Remaining balance = $210k. Mortgage = $1735/mth. Rent = $2000/mth

Primary: 30 yr mortgage w/ 2.875% rate. 28 yrs remain. Home value = $400k, remaining balance = $181k. Mortgage = $1030/mth. Potential rent = $2000/mth. In addition, there is a HELOC up to $142k that I can tap into.

My original intention was to sell all properties and 1031 exchange the 2 rentals into a multifamily and use all proceeds from sale of primary to put towards new primary when we move. Seemed like a straightforward and good plan as long as both rental properties sell fairly quickly and I can find a quality property to 1031 into within 180 days. This is a bit risky and could have some major tax ramifications if it doesn't work out all in time to meet IRS requirements for 1031. Also, I would be purchasing a new property and selling property that I am already familiar with and have solid renters in the Ash St. Rental. Also, in some instances, vacancies are more frequent in a multifamily property from what I've been told. I think a nice duplex may not have the turn-over rate compared to a four-plex or larger. I really would like to see cash-flow of $3k/mth.

So, idea #2 is to sell 3rd St. Rental with a profit of ~$160k, pay off the $95k balance of Ash St. Rental and save the remaining funds for a down payment on a new primary. After cap gains tax of guessing 15% of the $160k that would leave us a remaining $42k. We would then transfer our current primary into a rental and cash flow $950/mth and cashflow $1750 off the newly paid off Ash St. Rental home. Total cashflow = $2700/mth. These homes are in great shape and we have fully renovated our primary so we know that house inside and out. The Ash St. Rental is in solid shape but could use a kitchen remodel at some point but all else has been updated and a new roof is scheduled for this summer.

I plan on eventually quitting my J.O.B. and fully getting into real estate investment consisting of long-term rental properties and mixing in some flips to help knock out other debt or to paydown mortgage balances. Ideally, I would like to do this next summer when we relocate to a new primary but may not be able depending on debt and other expenses. I really want to make sure that I am not missing anything with this change in our life.

If anyone sees another great option for us or away to maximize our profits and is willing to share I would appreciate it so much. I feel like we are on the cusp of really being able to make some big changes off the hard work and property that we currently have but I am not able to see a defined path on exactly what to do next that is based on an analytical approach rather than just 'winging it'.

Thanks.

Jonah - Tillamook, Oregon.