All Forum Posts by: Ron Daugherty

I can give some thoughts, did you want to post a copy or are you wanting to keep it private?   You may get more responses if you post it, but I also understand not wanting to post it publicly.

Love Biggerpockets.   Never even considered the idea of moving into the second house after 2 years.  Thanks for the replies.   Always good to get ideas from others.

Question for the Tax Pro's out there.    We are considering the purchase of a home that include two city lots.  Currently a home is on one lot and the lot next door is vacant.  The purchase will be for both lots plus the home.

My question is this,  My wife and I plan to live in the existing house for more than 2 years, after that time we will build a house on the second lot and sell that home separately.   I think any profit on the new construction will be taxable since we are living in the existing home.  Am I correct in my thinking on that?  I think the only capital gain exemption would be the existing home we would live in? 

What about the lot that is currently vacant?  Would I be able to deduct it's value from the price of the new construction and not pay tax  on that portion of the sell since we will have owned it more than 2 years?   Would the value of the lot be considered a capital gain exemption?

Just wondering what some of the tax implications are going in.  I realize all of this can change before the two years, just wondering where I am tax wise before putting my offer together.

If I'm not mistaken, in some states the listing agent isn't allowed to represent both parties in a transaction, you may want to look into that.  If it is legal in your State, I would ask for a discount on the price for his commission on your side of the deal at the very least.  But, having said that I use my own Agent on my deals, even if they offer a discount.

I don't like the idea of a realtor representing both parties in the transaction.  That's just personal preference though. Not saying it's right or wrong, just my own preference.

I guess my approach is the opposite of JD, most of the time I ask for a labor only quotes and then buy my own materials.  The only time I don't do that is on things I don't have a source for.  I guess I like controlling the material cost myself, that way I can pick the quality that goes in depending on whether it's a flip or a rental.

I'm also more hands on the projects also, I'm there on a daily basis and usually do some work myself alongside them.  I can see where that would make a difference to your approach.

I personally think Mold is blown out of proportion in most areas.  I treat it the same as any other surprise found on an inspection, termites, foundation, A/C or heat issues, they all have a price to repair.  Find out what that is, present to the seller and either they take care of it or they don't sell.  

Once they have been notified, they are going to have to make the repairs before they can sell the property anyway, or they open themselves up to liability if they don't disclose.

I wouldn't panic over the inspection, get an idea of what the cost to repair will be and go from there.  Could be an opportunity for you.

Morgan,

You don't say what the numbers are on the rental properties (2 and 3),  what kinds of returns, etc.  If I were you, I would look for properties in the OKC where you are thinking of investing and compare numbers.  If the numbers are favorable to buy in OKC and make up for the losses you will have by selling (taxes, write offs, walk away cash, etc), then go ahead and sell.

But, if the returns on properties you would buy aren't there I wouldn't take the loss.  Keep managing for a far or hire a Property Manager.  I'm assuming your current properties are generating a positive return for you.  If so, maybe house hack a duplex with the proceeds of the sell from #1 and 3, and keep your other two rental properties until the financials make sense to sell.

It is getting harder to find "good" deals on properties in the OKC area. They are still there, but harder to find than in the past and generally you will run into a multiple offer situation, especially if they are on the MLS or public sites. There are still good deals out there, but it does take more legwork to find them now.

Rocky, he said 20 to 30k down,  which is still somewhat possible.  But I agree with you, it is getting more difficult to find decent turnkeys for those numbers in today's OKC market.  Maybe in D or F neighborhoods it's still possible, not sure since I don't look there.

With the current market and demand in OKC, I'm having trouble getting anywhere near the numbers you mention.  I have yet to find anything close to a price of 70k that will bring $1200 a month.  You may be a bit optimistic with that.  The $800 number isn't far off for 70K, but that's only with a fresh remodel.  Which means you are in it closer to 80k or 90k.

Also, the rental market here seems to be softening up a bit.  There are for rent signs everywhere.  Maybe some of the other local investors can chime in with what they are seeing.  

I think people are under the assumption the numbers are the same as they were a few years ago.  I'm not seeing it with the demand the way it is right now.

If you are using RTA cabinets, the best place I have found is www.RTACabinetstore.com.   The downside is you will need to be able to do your own design.