All Forum Posts by: Account Closed

@Steven,

You are getting worked up for no reason. I specifically stated in my post that I do not want to do this. I know it is not worth it and if I really wanted to, I would be asking this question to my CPA and not in a public forum. I was just curious as to how an IRS law that is very clear is being enforced and see if any other investors had seen it being enforced. You did not have anything to answer my question except for 'don't do it'. I appreciate all the advice you give posters here regarding tax matters but your side note was quite unnecessary.

Steven,

That is just it though. How would the IRS even know that the total rehab was for 25K. I could just have the contractor submit an invoice for 10K and pay that from the SDIRA. For this to be discovered, the IRS would have to know the prior condition of the property, the extent of rehab done and what contractor typically charge for these items in that market.

I have been thinking about this for a while. Please keep in mind that I am NOT thinking about doing this but am just curious as to how this is enforced. If I have 100K in my SDIRA, bought a property for 90K, paid 10K out of the SDIRA for the rehab and another 15K from my other LLC's funds, how would they even know that I used non-SDIRA funds for part of the rehab?

I could just add the 15K to the bid from another rehab and pay the contractor, I am sure the contractor does not care which account he gets paid from.

When you believe a certain amount of work has been completed, you ask the lender to send someone to verify the work done and they will release that portion of the rehab escrow. They charge around $150 per visit, so you do not want to do this too many times during the rehab.

David,

Like Will mentioned, hard money is an option worth pursuing. In Texas the typical rates are 10%-14% plus 3 - 4 points. Make sure you find out all the additional fees you will be charged before signing up with a lender. Also, your rehab amount will be in escrow while the work is being done, so you need to make sure you have enough funds to get the contractors started. And some lenders charge interest on the rehab escrow even though they have not paid it yet, so find out about that as well.

Nilkamal,

I don't know the Chicago multi-family market but that is a really bad deal. If you do the math, we are looking at a 5% cap rate. That is ok if it is a class A asset but I do not know when this was built and either way that cap rate would make more sense for a much larger class A asset (100 units+). My advice would be to walk away from it. You can do much better.

Thanks all for your suggestions. I had a bee remover come out. I had two of them - one inside the roof and another in the wall. They are charging me $1100 to remove them and clean everything, replace the studs and close it up. Seems steep but I have to have the rehab completed in two weeks and do not have the time to shop around beehive removers.

I need to have someone come in to remove a beehive from the exterior wall of a house that I am rehabbing. Is there anything specific I need to look out for to make sure the problem is taken care of properly i.e damage to the structure etc.

For the experienced rehabbers out there, what has been your average holding time for the properties you rehab (purchase to closing). How long after a property sits on the market without any offers do you start thinking about drastic price reductions or having a fire sale, getting rid of the property and moving on?

For the rehabbers in the forum, how many flips do you typically have going on at the same time and how involved are you with them i.e. do you spend several hours a day overseeing the work or do you just check on stuff once every couple of days. I understand this will depend on the volume you are doing as well but just interested in knowing how people work their rehabs?