All Forum Posts by: Account Closed

I suggest you start a fresh thread in the general RE forum where you ask about investing in your area. Also mention that it is a college town. You want to network with others who invest in similar communities.

The math skills will come in handy. Most all of the creative techniques revolve around understanding how to break things down and rework the numbers.

Get in touch with the PM or email buttons if you have specific questions.

John Corey

To have a valid contract you need to know the requirements.

If you are buying an option you must pay consideration for the option to be valid.

For a purchase and sale contract that shows there is earnest money as part of the contract not paying will break the contract.

Not every deal will require cash but you do need to know what you are doing when using standard forms or custom contracts.

You do not want the end buyer being able to go around you because you do not have an enforceable contract.

John Corey

All Cash,

Have you ever purchased off-plan (pre-construction)? If so was it a common activity or more of a one-off?

I agree that you need to understand the market trends. I would not say that there is some specific rate of appreciation that is required. Even if there was this is a forward looking deal so hard to say what the future trends would be.

Like any RE deal future appreciation is only 1 factor. Some will tell you to never bet on future appreciation.

John Corey

Hopefully this is the right forum for a software request.

When I reply to a post I might want to follow the subsequent discussion in the thread. I have the option of having an email notification sent to me. I also can look for threads that have new replies; any and all so not exactly what I am interested in.

On the Motley Fool site (US or UK) they have a facility where you can see all the replies to any posts you have made. Only replies that were directly made to something I post. You can also set a thread to be one you are interested in or set other threads to ignore.

The effect on the MF site is I can focus on threads that I have determined are of interest and I can see if someone is posting a reply to a specific comment I made. That way I do not overlook something people might have been asking me (rude to do so). It also means that when I come back I can optimize my time on the site by not checking threads I already know I have no interest in.

A final item is the ability to ignore individuals and anything they post. On the MF there are some folks with very polarized views of the markets, etc. If you know their position there is no need to continue to read what they post as they do not change their view. You can set them on ignore and if you do then when you check to see what is new since your last visit their posts are not listed. If you want to check individual comments they have made or if they responded directly to one of your posts you can still see what you need.

So, any views on the above? I can not see similar features here on this site. Is there something that I have overlooked? If not would it be reasonable to expect enhancements in the future that might provide a similar set of capabilities?

John Corey

It depends on what you mean.

If you expect to flip before you actually take title you will likely find the seller will not cooperate. Most REO sellers are institutions that do not want to see the buyer changing before the deal closes.

If you are expecting to buy, close escrow and then later sell there is no issues other than short term gains are taxed at a higher rate. I doubt you are concerned about this as all flipping implies short term tax rates.

John Corey

The answer will vary slightly by state as LLCs are not exactly the same in every state.

The LLC has different choices for tax purposes. If you open a sole member LLC the income is reported on your personal tax return. There is no difference for tax purposes. You still have liability protection.

If the LLC has 2 or more members you can elect to be taxed as a corporation or as a pass thru entity like a partnership. In the second case the members of the corporation each report the income on their tax return and there is no tax at the LLC level. The LLC files a K1 for each member (think partner).

For most people the S corp offers no advantages. In some cases a C corp is a good idea. Mostly for short term income and when you have employees, want to set up medical and pension plans, etc.

You can become an expert in all the above of you can hire someone who already is. I do the later and they get to read the tax code and the legal details while I focus on finding deals. I make more money than they do for the time invested.

John Corey

1. There is no real connection between a residential property's value and its ability to produce an income stream as a rental. Many appraisals do not even show an income based valuation.

SFR are valued based on comparable. The largest buyer of SFR are owner occupants so they set the value.

1-4 unit properties can have a loan with an owner occupant resident. Hence they are mostly valued based on the demand (comparable). As you get closer to a 4 unit the income from the rented units do matter to folks who are owner occupants.

2. Generally only commercial properties are valued based on income. Commercial multi-family properties means 5 units of more.

3. In the lower priced areas of a community where few owner occupants want to live many of the investors will only offer to pay based on the income produced. So, if you find a neighborhood that is 'mostly rentals' expect little to no premium for owner occupancy and values pretty closely tied to income.

In parts of the Midwest you will find many such areas. Even on the costs you will find such areas. Some of the time (not all the time) the areas are what might be where slumlords focus. In other places the economy is not very strong so the areas are not bad so not slum as much as areas that have people who earn very little and can not afford to buy.

If SFRs are valued based on comparable expect that there will be large areas where an income investor will never be able to find a deal worth holding long term unless you have very little debt on the property. In that case you are buying future appreciation rather than a good income based yield.

John Corey

What city or metro area are we talking about?

What is the employment picture in the area?

John Corey

Leon,

You have posted a number of messages talking up areas of Boston. Your last message more or less says that some areas that are not that great now will be winners in 3-4 years.

Other than you have something to sell what is the point?

Boston has seen ups and downs over the years. More or less like many other cities. Many locations will be a great deal if you buy now and wait 4 years. Much of FL is likely to fit the profile given how folks from MA and other locations like to move to FL.

Condo conversions can be a good deal or a way to get involved in years of lawsuits. Standard practice in CA is every developer gets sued by the buyers as there is always something they want to complain about. MA has a history of being pretty pro-consumer. What is the climate when it comes to lawsuits against condo conversion developers?

John Corey

Did you mean to say 'market'?

Just clarifying the question. I do not know about the location.

If you are looking to buy off-plan (pre-construction) I can offer a number of comments as to the pitfalls and possible upside in such deals. There are some special conditions to verify.

John Corey