Next big move.. most important pieces to implement??

Question

I had recently posted about our first successful purchase of a duplex, which we have also very quickly found a solid tenant it seems. This has spurred my thinking again immediately on the next step towards purchasing and repeating this over and over. My wife has now got the fever after the thought of our mortgage being covered by someone else which frees us up to possibly invest again very soon.

I am not limited to duplex/triplex situations and I am seriously considering running some quick flips on single family home based on wanting to get quick cash return. What have successful flippers found in central maine helps move a house quick? Time of year factor in? Has anyone accessed or used a home refinance or a home line of credit on a current property to pull out equity for a re-investment situation/How soon can you do that after owning your home? Or can that be done.. or am I wrong in thinking this is an option?

We utilized the 203K loan on the FHA the first time around, but I want to explore other more creative money saving opportunities because the loan has high fee rates and is initially a higher cost out of pocket. Any central Maine friends have private money lending friends or connections that might be interested in getting involved with someone who does Construction Project management for a living? I could seriously see myself looking to acquire 5-10 houses/projects over the next couple years and I am looking for that ever creative way to work together with like minded and driven individuals. My biggest area of weakness at this point is understanding creative financing and Tax situations and advantages.

If I was to invest and begin acquiring properties very quickly, what would be the biggest tax decisions I will be facing and implementations I need to get in place before I make such an investment? I constantly hear how people "throw money away" when not fully taking advantage of the tax code when getting into real estate investing and want to avoid that. How important is the LLC phase of investing and when should I begin? Anyone recommend a good advisor in this area?

I know there is a lot here, but please feel free to discuss any/all of it.. Thank you!

Ed Emmons · Answer

The MLS is only one source of property. One good local realtor on your side will bring you more deals than you can handle on your own. Granted there is some benefit to possibly getting early deals with a license but in my 25 years and where I look, I am not sure if it would have been worth it. There are pros and cons. For 99% of the business I do there would be no advantage. But there are different strategies where it can be useful. I believe you will find it will be like day trading if you are looking for the cream of the crop, you will have to be constantly watching what comes out because the steals will be gone in 15 minutes form the time the hot sheet comes out. It is too much of a lease for me.  It is nice to get off market deals. There are many properties that have great potential not far from you. I can assist you in some ways. If I look, I can find several properties in a week but I am not looking very often. It would think Newport and either direction along 95 would give you a good chance to move properties. Close to Bangor moves quick if priced right.

Joshua Shepherd · Answer

Amy,

Thanks for the reply and a little direction to consider. I will do as much looking in HELOC as I can because it is fairly unfamiliar to me.

I have been considering the Real estate license ever since I thought of investing. It seems to make sense to have access to all properties quicker. I have put together an excel sheet for viewing potential properties and have analyzed many. I am already wanting to explore creative financing so I am not always locked into a government loan, but Private money lending often has intense interest rates.. do you happen to know of any financial roads that would include partners? Have you ever partnered with anyone or do you operate solo?? People often talk of partnering, but no one seems to have experience doing this.. or at least having something to bring to the table other than an interest in investing.

Amy A. · Answer

Hello, I grew up in Albion, so know your area well.  The market is still slow there, so be careful if you decide to borrow hard money because the interest and fees will quickly eat up your profit.   Also, the market is very seasonal, so you could end up holding a house all winter.  Yes, you should use a home equity line of credit if you can get one because of the low interest rate.

My best advice is for you or your wife to get your real estate license so you will have MLS access to make it easier to calculate your ARV.  You will analyze dozens of homes that you won't end up buying and will quickly burn out a realtor, so it's better to just do it yourself.  Because we don't have cookie cutter home communities here, it takes much more effort than in other states.  Expect to pay about $1200 to get licensed and the test is easy.

LLCs have nothing to do with taxes because the income passes through to your own return, but are for asset protection and perhaps privacy.