All Forum Posts by: Spence Kal

I think I am just getting attached to making something nice and new but I think your right it should go. It’s kind of my first property and I’ve had contractors do all the work for me so painting and small cleanup stuff is all I’ve done myself. Not much time into it now. Just wondered if there was a problem selling something half renovated, I suppose it’d have to pass some kind of inspections or does that not matter?

Hey everyone! hope y'all are living the dream! I have a question about a flip I've been working on for about 8 months now. It's getting close to being done, needs garage roof and paint, small deck, interior doors and some trim, and kitchen floor, plus some minor touches. The realtor I purchased it from said she had someone looking for a house in the area and is asking if I would sell it as is to them, If it will pass inspections(not sure what inspections involve). I have probably 5-7k left in repairs and was going to list FSBO for 129k. I told her I would drop the price 5-10k if they really wanted it now, and save myself a lot of stress and long weekends finishing it myself. Would this be a good idea? Id love to see It finished because I've put a lot into it, but should I just cut and run here if its an option?

Congrats that’s awesome! So exciting, wish I had started at your age

Being new to this myself I don’t have the same authority to give advice as others do here, but for me I found the cheapest foreclosure that was structurally sound in a DECENT, not bad neighborhood, and budgeted high for anything that could go wrong. Just jumped into it and learned along the way. Learned so much from my mistakes, and can work with contractors much better now that I know what to look for and how renovations work inside and out. Take the advice and use the systems in the books and podcast and forums because if you just wing it you’ll get screwed. Like they say you won’t get rich your first deal, so I figured if I made a small profit, it was a job while in school and hands on experience for a small paycheck was basically free education. Even if I break even on the first deal it’s just the beginning of learning the process. Don’t plan for simply breaking even though.

@Eric Wagner Ahh ok, so there definitely are tax advantages to the flipping industry as apposed to a W-2 job, there are just more for the rental industry.

So in this current flip its definitely wise to keep firm track of expenses and invoices from any contractors? I probably shouldn’t be paying cash for anything so my contractor doesn’t have to count it as income, because then I cannot count it as an expense? Or can I still pay him cash and count it on my expenses, then its up to him to report that cash?  

Here are the numbers on the SFH I have now, In a way I'm scared to rent it because I spent so much time and work renovating it and everything is new. But these numbers do look better than the duplex

So my understanding of what I'm reading about taxes is that I have to pay a 15.3% tax for social security and Medicare plus 9.2% for income between 50-100k for a total of about 25% of my flip money taken by the government. And if I get lucky and sell the SFH for 120k and make 60k I lose $15,000 instantly. Then after the taxes I'd have 45k to put into an investment. This is all rather discouraging, it appears I've bought myself a job rather than an investment. Need to correct that in the near future

@Jason DiClemente ahh ok. my original intent was to rent it out but I’d have to “prove” that by actually renting it out then for I assume a longer period of time like 2 years. Or living in it for 2 years

I wanted to avoid the income tax but also I think if I show that much income this year my grants for college will disappear as well, so I was hoping to avoid that as well. I guess this is why rentals are such a tax benefit

@Jason DiClemente what if it is held for over a year? I bought it almost a year ago and by the end of the renovation it will be over a year, I would still have to turn it into a rental to make a 1031 exchange? If so then this prospective duplex has a lot less appeal now.

Levi how should I get started on that aspect of real estate? Start reading books on notes?

@Levi Rudder ohh ok, so I basically become a bank holding someone’s mortgage? How do you get them paying again, Threaten to foreclose on their house? I’m in northeast Ohio about an hour east of Cleveland, I’d love to know more about this stuff. How does a note become distressed? I guess I better start reading up on notes haha.

My plan when starting out was to renovate and rent single family, but after months of hearing many people say they sold or can't wait to sell their SFR, I've leaned towards flipping SFHs and putting that cash into a multi unit. Of course I'm open to anything now, I love all of this I wish I could do it full time. An art degree isn't exactly mentally challenging so these numbers and business systems and different investment avenues are really exciting