All Forum Posts by: Bart H.

 Oh boy, you haven't had a professional scammer/tenant. these people know the rules and can live rent free for a long time. 

Hello, I am new and working on getting my first rental property. Wanted to see what anyone else's thoughts are but let's say I found a broken down house, contacted the owner, and got my offer accepted. 

1) Where do I get a legitimate contract to give to him with inspection and financing contingency. Would it make sense to get a realtor involved even when I initially made contact with the homeowner?

2) How do I know there are no concerns with title or other legal issues...?

3) Are there any other big concerns that I may not have mentioned?

I guess these are some of the things keeping me from pursuing a property outside of a major wholesaler or realtor. It seems to me that the guidance and knowledge of realtors are invaluable especially with pursuing the first property..

 Hi Bart,

Thanks for your feedback and well wishes.  I'm actually starting off by assigning contracts.  I felt more comfortable going that route since I do work a full-time job and want to slowly learn about the other exit strategies.  I've read Anson Young's book and I just order Brandon Turner's "No Money Down" books to start reading as well.  I'm starting my yellow letter campaign this week, so excited about that.  Now I'm getting busy trying to build my buyers list to have some investors to sell these properties to! :)  I see that you are in the Dallas area.  Do you mind if add you as a connection here?  Thanks!

Is wholesaling a viable career ?  Do you enjoy Wholesaling full time ? I work as Software tester right now and I have an awesome opportunity to study and get into web development. Problem is that I do not like sitting in front of a computer all day.  

What has attracted me to wholesaling is the harder you work the more earnings ( In theory). You are essentially creating your own sales job. You are not in an office all day dealing with politics. No matter how hard I work as a web developer I am still an employee and make a certain dollar amount per hour unless I take on freelance gigs. 

I also plan on investing in real estate if I go into wholesaling or not as a by and hold investor. So I was thinking instead spending all that time learning web development I could do spent it growing a wholesale business. I could Wholesale part time until I gain traction and then quite my job. Wholesaling would be great in order to be able to source and cherry pick my rentals as well. I am willing to work my butt off to make it happen. I guess I just have to jump in ..Maybe it is fear but I just want to know that Wholesaling is not a pipe dream. I see people saying that 97% of wholesalers don't make it ( Not sure where they get these numbers ?!) But that is concerning... 

@Bart H. Tax fraud....not mortgage fraud.

(1) You're documenting and treating the property as an investment, while in the back of your mind you know it's going to be a flip.  Deception is involved.

(2) The reason you're doing (1) is for financial gain.

That's classic fraud.  

I'm not trying to be harsh, but there is a difference between tax evasion and tax avoidance.  As a practitioner I can never advocate for the former.

@Bart H. "Why wouldn't you always set your intent to buy and hold and then decide afterwards to sell it? and wouldn't you have more leeway to avoid the self employment tax ?"

Well it's pretty much textbook tax fraud.  Reason number one.

@Jeff Copeland "If one's stated intent is "I'm going to buy this house for investment purposes, hold it (vacant) for two years while I fix it up, then sell it". If that is indeed what happens, why would that not qualify as a long term capital gain? Where does the IRS state that you have to rent it out? And why would they care?"

They care because they would like to argue the income is ordinary income subject to self-employment taxes.  You would like to argue it's long-term capital gains.  Tax treatment is very different.

There's a large body of case law that establish only two things matter.  (1) Original intent and (2) all the taxpayer's facts and circumstances.  You're describing a situation where the original intent, right out of the gate, was to resell the property for a profit, not to hold as a long-term investment.

Can a property that's sold 6 months after acquiring be called a capital gain? Yes.  Can a property that's sold after 2 years of renting be called a flip? Yes.

Document intent for the property on day one.  File it away with your company's docs.

@Dave Toelkes "You need to be very careful with your terminology. If you "buy a flip" then the implied intent is to sell."

Exactly.

Love all that you shared @Joel Owens!

I am definitely considering Austin... and that's where I originally started looking... yet I felt like I couldn't compete. It felt very overwhelming.

The team who sold my home here in Austin recently has a team in St. Louis and there were so many opportunities there that I decided to start there. It somehow felt less intimidating.

I haven't closed on my first deal yet (I have two under contract), but I've already learned a ton that I could have never learned from any book, seminar, etc. I now feel much more prepared. And I imagine by the time I close on these two properties I will feel even more confident. At which point I will be pursing opportunities in Austin. :-)

Thank you for all of the info to consider and for helping me feel encouraged! :-)

Kindly,

Skye

I like to buy and sell houses that a teacher or a cop could buy.  Those properties will always be in demand.  As soon as your go to 1.5x or 2x that type of property, it takes longer to sell and the sales commissions take a bigger portion of your profit on each deal.