All Forum Posts by: Brad S.

Originally posted by @Elan Adivi:

@Brad S. I do not have a hard number on the rehab cost.. somewhere between 75-85k roughly. It is our first project so we are still trying to get the hang of things.. contractor hiring being one of them haha. 

Thanks for the info on the DOM, how would I be able to find out that for myself? 

I was hoping to sell and then do a 1031 for a small multi-unit but it might not be the worst idea to hold onto it for a bit longer.. 

Second factor to consider is there is a second 300-350 sqft. unit on the lot as well which can easily be converted to a studio which would add even more value to the property, if we decide to keep it that is..

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Elan,

That info is available on the MLS. I just logged on and did a map search for any activity in that specific neighborhood for the past 180 days. As you know, in that area it is very important to stay within the specific neighborhood, since the sfr's just outside the neighborhood are in a different submarket with a different demand.

Your rehab costs may be a little high, but not outrageous, and it looks like you did a good job, so congratulations on that! 

Keep in mind, if you were to flip/sell quickly and do a 1031, it may not look too good to the IRS, since 1031's are for property you bought with the "intention" of having it as an investment property (rental). My understanding is, there are no hard and fast rules or timelines in the tax code, specifying a length of time you need to own a property in order to do a 1031, but you do need to have the "intent" of using it as an investment property. So, my suggestion would be to be careful and check with your CPA/s and/or 1031 professionals, etc. There is plenty of info online about 1031's. I personally used Exchange Resources, in San Diego, before, and trust them.

Also, if you sell the house after owning it for a year, your tax liability should reduce to capital gains tax, as opposed to normal income tax. But, check with your CPA or tax professional for actual advice.

The additional studio unit makes it more attractive as a rental, maybe even a short-term rental (airbnb, etc). I don't know the Westlake rules for short-term rentals though. Any ideas how much the units would rent for?

Originally posted by @Elan Adivi:

@Nick G. Thank you. Great to know that your in the area! Yes, the fact that they are so sought after and we managed to get a pretty good deal on it were the reasons we decided to pick it up, however it has been on the market for over a month and no serious bites. Try looking it up by the ID number #SR17137917 it popped up when I did the search, although when I searched it on Zillow for instance, it wasn't showing up as for sale. As far as I understand they pull their info from MLS so it looks like there very well could be an issue. Your assistance would be much appreciate!

It popped right up for me, even without the MLS #, so I think your fine there. Looks like you did a nice hob on the rehab. Do you mind saying how much the rehab cost was? I understand if you'd rather not.

Listings there, for the last 6 months, are selling between 48 & 137 DOM, with an average of 81 DOM, so you aren't too long yet. Are you getting showings?

Based on your previously stated goals, it may make sense to rent it for at least a year, so you can reduce any potential tax liabilities, or 1031 the profits somewhere else. But, that would also depend on your holding costs, potential rent, etc. Not much rental data there.

Originally posted by @Elan Adivi:

Thank @Seth Thompson. Thats what my initial thought was, however this one I have on the market currently is not selling so I am thinking to convert it to a rental.. Thoughts?

 What is it and where is it? More specifics are needed to offer an opinion.  :)

Corey,

What you describe is perfect for the FHA 203k loan program. Except you would have to buy and do the rehab as part of the deal, and you couldn't do it leisurely, as you described. And you would need to have another licensed contractor do it or at least help you with the process though. I doubt they would allow you do plan it under your license - conflict of interest.

But, I would think you would be better off acquiring it and doing the rehab quickly, so you can move in and start renting your current house as soon as possible, rather than having the 1 house sitting there waiting.

Look for a local mortgage broker/lender that has experience with the 203k, there is a specific process and skill involved getting this loan.

Check out this link for more info:

203K Rehab Mortgage Insurance

Good luck!

Hey All!

After recently completing a few long & exhausting flips, I'm looking to get my head back in the general RE game to focus on my next moves. I used to be part of a small local "mastermind" group that would meet periodically, but had disbanded a long while ago. 

Any of you locals interested in getting together and throw ideas around? As a 1 time thing, to start. Pm me.

Originally posted by @Bryan Tasumi:

So do I have to use a mortgage broker in Texas or in California. Which one would be better?

You can use any lender that is licensed in TX, no matter where they are located. I have mortgages with Bank of America and Provident Funding for my TX rentals and i am also in CA. I used to be a mortgage broker years ago and Provident Funding was typically one of the best priced lenders for conventional 30 year fixed with "A" Borrowers. But, I think their best rates are at 75%LTV and lower. Aimloan.com is also another lender with great pricing (internet based lender), but you may want to find a Mortgage Broker who is licensed in TX (no matter where they are) who may be able to find Lenders with good rates for higher LTV's.

Originally posted by @Travis Knight:

Hi Brad,

Do you have a CPA you recommend? I was thinking that I would need one that was based in, or at least knew, CA pretty well.

Austin is a tough market. I've been looking for awhile and found a place around I-35 and HWY 71. Good access to downtown; still expecting some upside from the market moving up. 

Thanks,

Travis

 I've been using mine for decades, but I am not sure if they are necessarily any better than others. I'm happy to refer you if you want, but maybe you want to check with Jeff's recommendation also. Send me a PM if you want my CPA's info, I am not sure she would want me to post it or not, so, I'd rather not. 

With a name like Travis, I guess buying in Travis County makes perfect sense.  :) The area you mentioned is not far from where one of my properties was ( I sold it a couple years ago). I still have a condo just North of there, on the lake. My Realtor has been very helpful, from sourcing properties to assisting in the rehab, let me know if you want his info. He's an investor himself, as well as a contractor. I think he mainly does his own projects, but he is currently helping with a roof issue on another of our rentals there.

Do you mind sharing some of the specifics on your purchase?

Hey Travis, If you live and work in CA, I think you are going to need a CPA that is very familiar with CA tax rules. Even though the property is in TX, you will be taxed in CA.

Also, I hope you are getting a fair deal in Austin, they have really appreciated in the past few years. I still have a rent there. What area is yours in?

I agree with Israel, they should be accountable for both the agreed upon cost and the time it takes to complete the job. And this should be discussed and agreed upon up front prior to any work being started.

Also, after my last project, I will be much more diligent on letting all the workers know, that the jobsite is not their personal "dumpsite." Anything they bring onsite (lunch, drinks, etc,), needs to go home with them (empty bottles, cans, paper cups, lunch /food bags, etc). They don't get final payment until they clean up their mess. This would all be part of the scope of work. Remember, it costs you money to get rid of their trash on your jobsite, whether it is the cost of your time, energy, hiring someone else to cleanup, or the space their trash takes up in the $600+ dumpster rental!

I would not allow them to drink any alcohol on the jobsite, period! I may bring them soft drinks or water sometimes, but I wouldn't set the example of allowing alcohol, before, during, or after.

Hi Louidji,

It sounds like you have already done the hardest part - You've consciously chosen a different path for yourself, despite your experiences. I commend you for that. :) It is not easy to be "real" with ourselves and open up to other possibilities, no matter how distant or unobtainable they may seem. And you have an edge, because you have chosen good. I truly believe it is about changing our mindset, whether it is looking for a RE deal or changing other aspects of our lives.

This is a good place to start surrounding yourself with positive, like-minded people. I will caution you though, about some of the more advertised programs out there. Just be wary of some of them. I don't believe you need to spend thousands of dollars to learn this business. I think that money can be better spent on your first deal. I am sure there are very beneficial programs out there, worth every penny, but be careful. There are also a wealth of resources available for a lot less, including BP. 

I'd suggest (if you haven't already), find some real estate investing groups near you and start attending. That is a great place to start networking. And post anything on here you want some guidance or answers on. Remember, your "mindset/attitude, etc," is your most valuable asset!