All Forum Posts by: Michael J Scanlon

Investment Info:

Single-family residence other investment in University Park.

Purchase price: $1

In progress BRRRR deal

What made you interested in investing in this type of deal?

I was able to negotiate good terms.

How did you find this deal and how did you negotiate it?

Facebook marketplace. Negotiated on the phone with the seller.

How did you finance this deal?

Cash.

How did you add value to the deal?

Will be rehabbing and renting.

What was the outcome?

In progress.

Investment Info:

Single-family residence buy & hold investment in Chicago.

Purchase price: $300,000

Rent by the room house hack. Currently living for free and getting $123 on top of all payments.

What made you interested in investing in this type of deal?

The ability to buy "B class" yet still live for free and cash flow when I move out

How did you find this deal and how did you negotiate it?

MLS deal, negotiated myself since I was the realtor.

How did you finance this deal?

3.5% FHA.

How did you add value to the deal?

Bought right.

What was the outcome?

I have about $27k equity and make money every month.

Lessons learned? Challenges?

Hustle to find tenants, expect the unexpected.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Myself.

Is anyone else having trouble finding portfolio lending to an LLC during Covid?

I have a tremendous deal (beats the 1% rule at about 3.1%), the neighborhood is c class, not d, the place isn’t run down (needs some minor repairs) and is currently rented.

Yet, I’ve had multiple calls today and everyone so far has pointed out issues with the fed rates causing a lot of issues with lenders doing specific types of lending, specifically pertaining to my current needs.

Has anyone else had this issue and what are some of your solutions?

I want to start a self directed 401k with the option to use the money I put in there to buy properties.

However, it’s very difficult to find good information on providers and fees.

What fees should I expect to pay and what are fair amounts for these fees?

@Justin Windham

That confuses me a bit because in the 1st Tax strategy book, it says 25% for 1099 earners.

Did something change since 2016? Because an article from 2016 by US News also states that 1099 workers can contribute 25% or 53,000; whichever is lower.

@Eamonn McElroy

Got it, so the pass through is based on the net after solo k contributions

Thank you

So I’ve been reading the new advanced tax strategies book and according to the book, because I am a 1099 realtor, I can use the pass through deduction to take off 20% of my taxable income.

But according to the first tax strategies book, I can tax shield 25% of my yearly income (up to like 54k) into a self directed 401k.

So, combining those strategies, let’s say I make 100k

I can use the pass through to drop my taxable income to 80k...but can I tax shield 20k based on that 80k or still 25k into a self directed 401k based on the 100k?

Thanks!

@Bob Prisco

There’s a good spread to be made wholesaling it. I think the spread on the wholesale has the potential to be decent enough to where it’s worthwhile without the process of the rehab.

The numbers work great for a flip but not for a BRRRR (too high of property taxes vs rental income).

Wholesale income as a ratio of time invested may be a slightly better payoff even though the flip payoff should be quite sizable but is far more labor/time intensive.

I’m not a seasoned investor (only 3 properties total, 2 of which are currently being rehabbed) so as much as I think the potential is incredible, I’m not completely sure I can handle it right now.

Perhaps I’m not giving myself enough credit for what I am capable of, but I’m working diligently on the two rehabs now and learning as I go (luckily I bought great deals with massive margins of safety on those).

@Bob Prisco

I’ve got two other houses currently being rehabbed and I haven’t built a big enough team to where I feel as though I can take on a 3rd right now.

@Mike Cumbie

He does not want to list. I don’t know what to tell you here.

Why is wholesaling such an issue with you? If wholesaling was against real estate rules as an agent, why would the state of Illinois make it so that you must be licensed to wholesale? If only licensed people can wholesale yet you’re saying licensed individuals shouldn’t wholesale, then nobody can wholesale. But it’s fully legal so I don’t understand what your issue is here?