All Forum Posts by: Robert Leonard

@Bill Coleman it's a rule of thumb for a starting point before you deduct repairs and other expenses that will usually allow the potential to make a profit on a rehab&resale (flip) of a house. You can use whatever you want to analyze your buy and hold investments that fits your timeline for how long you plan to hold. It's all a matter of does the math (and the market) support your plan to make a profit? If you want to have the option to flip if the right offer came in on the property, you might want to follow that rule of thumb? But then, you have a different set of tax consequences to add to the equation.

There are so many ways of doing things and strategies to follow, these "rules" are written in sand close to the water's edge!

@Seth Cunningham welcome to BP! See you around the site!

Well @Robert Steele, I can't wait to be like you. "What do I do with all of this money?" That's awesome! :-)

It looks to me like you're aware of all of your options, so it comes down to a matter of preference. I think you meant that Hummer part as a joke, but if not, if you really want one and the business can pay for it - get it! We do what we do so we can enjoy life and if your business can provide that for you, I think you've earned it!

As far as spending the income before it can be taxed. I would just make sure that my assets were all well maintained and upgraded as needed to maximize their value in the long term. Nothing unnecessary, but just spend what you really need to, to keep them at their full potential.

I have friends in the oil business and I only know enough to know that it's super high risk. With all of today's technology, its still a crapshoot when they drill. Unless you just want to say I'm in the oil business, you might have more fun with that money in Vegas.

Beyond that, make sure a charity you believe in knows you support them by donating. If it bothers you a whole lot, slow down a little and take more vacations or do whatever it is that you enjoy to slow yourself down on making so much money that it hurts to pay the taxes!

The red flag that immediately comes up for me on this deal is the fact that you're dealing with a person in a nursing home. What is the person's capacity to make this decision? Unless the person is wealthy and has the disposable cash to pay for their care or a long term care policy, the home is usually an asset that has to be liquidated to pay for the long term care. The exception when the person doesn't have those means of paying for their care is when the property was transferred to an heir 3 or more years before the person entered the nursing home.

Dealing with a person in a nursing home is fraught with peril and I would be extremely cautious not to give the appearance of taking advantage of a person with limited capacity to make this type of important financial decision. In my state there are laws that allow the family to come back within a certain time period and take back property sold by an elderly person. Especially when the sale is below 50% of FMV - right in the range you are.

@Anthony Bell Put your mouse pointer over "NETWORK" in the blue bar at the top of this page and click on "FIND MEMBERS" use the "SEARCH FOR LOCAL MEMBERS" by zip code feature to find a wholesaler near you. Tell them you are looking for a wholesaler who will pay you a finder's fee, BUT only if they will allow you to shadow them to see how this is done. You won't maximize your profit, but you will learn from an experienced investor and I think that's a smart approach.

People say you learn from your failures, but they don't have to be your own. Keep using the resources here to learn. For this deal, I think you will learn a lot from an experienced investor to help you connect the dots to understand all of these bits of information. This is a relationship business and you will probably be able to help each other in the future.

@Patrick Baker Before I became licensed, I went through several agents before I found one who consistently returned calls and made appointments. I still work with that agent today, because she is willing to work to earn her commissions and I like being around "go getters." Now, I work at my pace and on my schedule when it comes time to submit offers and get access to properties because I am licensed.

Great post @Al Williamson

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@Kerry Smith

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@Hugo Yu It's a wash tax-wise, because you have an expense that offsets the income if you have to pay closing costs. I would find out through administrative personnel in your office or my own research if it's a matter of broker's policy or external rules. I would avoid being confrontational with my broker about their policies.

@Patrick Baker I recommend you find properties every way you can think of and keep looking for new ways. Finding off market properties through your own marketing is usually the best way to find the absolute best deals. But that takes a lot of know how about targeted marketing, timing and negotiating skills that you may not have time to build if you have a full time job and want to get off to a quick start.

Then finding the right wholesaler(s) to work with will be the next best option, because a good wholesaler does what I just mentioned and after adding something for their profit, passes the deal to another investor like you or me. As far as trusting anybody's numbers on anything, you can't from the start. You have to get a firm grasp, of your own, on valuation of properties and understanding rehab costs. Trusting anyone on those will only come with your own experience and their proven accuracy over time.

In my home market, its very difficult to find a good deal straight off the MLS. But just 20-30 minutes away in smaller (but not rural) markets, you can find great deals on the MLS. Anytime you can find highly profitable deals on the MLS, that's low hanging fruit that's ripe for the picking.

Another thing to do is get on every bank you can think of's email subscription list for their REOs. Some will send you "coming soon" notices before properties hit the market and you can get a little of a head start on your analysis, but they will almost always end up on the MLS where you'll compete on the open market.

The best way to find them is always going to be market specific.