All Forum Posts by: Rumen Mladenov

On the flip side, if you do find a good deal for a rental, finding a tenant should be easy - rental demand is very strong in NCC. Has been for years. 

Hey @James Weaver, welcome to BP. Market is pretty bad right now for buy and hold investments... Anything on MLS either gets multiple offers, or is sold before it is even visible to others on the MLS. Wholesaler showings also attract multiple offers and go way above asking price lately. Even the sheriff sale properties got bit up like crazy - that is, until they stopped doing sheriff sales altogether due to the COVID! I used to buy 2-3 properties a year, but lately I have only purchased one in the last 2 years, and that one came with a 42-year old lien that was never recorded as cleared. Now I am just focused on paying down the HELOCs I have, so that when the market crashes, I will be ready to jump in and buy. 2010-2012 was a great time to be a buyer, I anticipate another such period in the not so distant future.

Sorry, wish I had better news. Good luck!

@Daniel Blake Have you looked into BRRR? If you buy a distressed property and rehab it, and then it appraises high enough that a 75% cash out refi gives you all your money back, you get cash flow at essentially 0 net investment, which gives you infinite ROI. I make it work in north Delaware where according to @Ali Boone there is hardly any cash flow, so it is definitely possible :)

Disclaimer: I manage the rehabs and properties myself, so no PM fees and no GC cost. 

Pizza delivery was my side hustle for quite a few years when I was starting up. I worked 2-3 evenings a week

Is there a real estate investors association nearby? It may be helpful for you to attend some of their meetings to make some connections and learn a few things. If you can do painting and drywall, that will be helpful when you are able to purchase a fixer upper that needs cosmetic work. When you say you have not been smart with money until recently, does that mean your credit is bad?

Thanks Kory. I did qualify for the QBI deduction on the rental income last year, will keep in mind for next year to check about the lending portion as well. Appreciate your input!

Thanks for your replies guys. How is it determined if one is in the business of lending or not? Let's say a buy and hold investor with a couple dozen properties on his Schedule E does a hard money loan once or twice a year, would that person be considered in the business of lending?

Let's say someone takes money out of a HELOC at 8% and lends it out as a hard money loan at 12%. After the loan is paid off, a 1099 is sent to the hard money borrower and the IRS showing the interest received. How can this be addressed at tax time so that only the actual income is taxed (12%-8%), not the whole 12%?

Hey Mario. Let me add one more major benefit of Delaware over NJ - our property taxes are much more reasonable! That's beginning to change a bit with all the school district referendums that passed lately, but we're still far better than NJ. 

The rental demand in Newark is pretty strong. Renting by the room is a feasible strategy if your property is close to UD. I personally prefer to rent to families, some of  my tenants have been with me for over 5 years. You don't get that kind of stability renting by the room. But if you're single, house hacking is a great way to start - that is how I started myself :)

@Niyi Odumosu Correct, I used that first HELOC multiple times - max it out to purchase the next project, and then pay it off after it was refinanced. Until the draw period ended, I maxed it out just before that and then paid the $100 fee to get the rate fixed. I opened a few more HELOCs though, and was pleasantly surprised that sometimes the ones I paid off would send me promotional offers with lower rate for X months if I do a minimum draw of $10,000 or so. Taking advantage of such offers to move the debt around saved me a bunch.

As for the LLCs, there are many debates on the BP forums. I like simplicity, and consider liability insurance as sufficient protection against a lawsuit.