All Forum Posts by: Adam London

@Betty Cruz Yes my loan would support the entire project. The builder is responsible for insuring the house up to a 5 year warranty but said that he guarantees the up to 10 years.   Thats good feedback though.  The builder is subbing out all the building costs. He mentioned that he builds for between "$85-90 a foot but a builder like DR horton builds the same product for $75 a foot because of there volume." 

@Dean 

@Dean Weltman Sharing equal risk you mean taking out a loan together? I guess I see it as he's dong the project management and earning his 50% that way and I'm just providing the money. 

@kris 

@Kris Wong He just did a 4 mont turn around with my friend but maybe I should build in an extra month of cushion. Either way the mortgage would only be about $625 extra for that extra month. 

My Thoughts: I have a salary right now and don't need extra income, I actually need more write-offs/losses. Paying a 40% tax bill on this makes it even less attractive as from what I understand I'd have to take this income as pure income. Does anyone know any different? I think I"ll find a multi unit instead as it may not have the quick cash in my pockets its better long term. 

@Thomas S. The Margin would be $40-55k but the 13-18 would be my 50% split after taxes. 

I was talking about this deal with a friend who mentioned that since I currently have a salary, I should be looking for more tax shelters vs more income. I do agree but while I wait for the market to cool down, I figured I'd take the opportunity to make some more cash for future investment. 

Hello fellow BP Friends. I wanted to run a deal by you and see what your opinions are on the upside as well as one question I have about the taxes. 

Description of the Deal

A friend who just did this same deal introduced me to a builder in San Antonio who is building aprox 2400 Sq/ft 4 bedroom 3 bath houses on the 35 between San Antonio and Austin where a lot of people are moving. 

I buy the lot and get a construction loan. He builds the house in 4 months and at the end we sell the house and split the net profits 50/50

He can build the houses start to finish in 4 months and typically they are sold before they are done being built. Last home sold for $331k before Commissions

Total investment ($50k)

$45k LOT

$5k Origination Fee for $226k Construction Loan (6% construction Loan. Variable after 1 Year)

($2500 interest fees on the loan but this can be covered by the loan)

Risks

Economy takes a $&*#& and I'm stuck with a rental with a variable rate, but could refinance and get a 30 year fixed loan.

Sell the house at cost  - $270k and make $0

Reward

Average Profit between $40-55k

My Profit - $20-27.5K (Minus income tax @35%)

$13k-18k after taxes. 

Questions

What are peoples opinions about this deal?

Is this a good deal?

Any thoughts about tax shelters to protect the tax bill? 

Numbers. (Closing costs are Wrong on the Doc Below. Should be $5,000)

Hi @Simon Stahl,

I'm new to Oakland, but recently purchased condo that I renovated in lake merritt. I've been looking in oakland too and it seems you gotta go east to get good deals. But even then things are going for above asking. There was a good episode on BP this week about how to generate leads. I am half way through it but that may be helpful

 One thing I'm doing is to start networking. I'm going to a meetup on Sunday in Oakland that you should go to if you are free. https://www.meetup.com/REmeetup/events/240590210/?...

I've been looking in Stockton too, just unfamiliar with the market. Also Sac seems to have some good deals. 

I'm in. 

I get back that day from a work trip to Europe. I'll mark it on my calendar and if I'm not too jet lagged i'll make it. Looking forward to coming one of these days. 

Looking forward to it. 

I'm looking for 2-4 units in the east bay or a SFR fixers. Also interested in meeting people who might want to partner on something or wholesalers looking to sell.

@Betty Cruz Congrats. Seems like you are moving fast. They always say on do your homework and then take a leap. What do the numbers look like on the rental (ie purchase price, rehab costs, rents) and sort of returns do you expect to get? Are your goals equity or cashflow? 

I've been looking at the San Antonio Market and am interested in meeting local business partners to buy multi units. If anyone is interested in talking please DM me. 

There's this company in oakland that makes container houses that I've been checking out. Barebones is $19k and fully built is $50k https://boxouse.com/

I will be out of town as well.