All Forum Posts by: Adam Scheetz

Do any of your Meetups occur in the evening? I'm a full-time Active Duty Coast Guard Officer living and working in N. Staten and can't get away for mid-morning fun & adventure but would LOVE to attend and get connected.

@Anton Bachuk at first glance I notice you vacancy is extremely low. Going solely by the look of the house and inferring it's in a class C type neighborhood, 5% vacancy is unrealistic. I'd go 8-10% for the added buffer.

The insurance looks as though it reflects the as-is condition. I get quotes for the As-is, during rehab, and finished rehab conditions. In New Jersey, I start with $100 a month for insurance. As I get multiple quotes, I adjust accordingly.

You mentioned TLC, then say a Rehab of $15k. In my experience, that's a light rehab. As in carpet and paint and maybe some appliances. Make sure you're realistic and plan for additional expenses. In the Jersey areas I look, $60-$80k and occasionally over $100k is not uncommon for a full rehab. Kitchens $15-40k (depending on finishes and size), Bathrooms ($7-10k), floors will vary but are easy to price out. Unless the house is currently livable but just not 'pretty', I'd up those rehab numbers. Remember, don't change or squeeze the numbers to get them where you want, see where they are naturally and then build in margins of comfort to keep you safe.

You might have a good deal here, just be sure to do your due diligence and research for the SOW and area. Feel free to reach out and I'd be happy to share my process of researching and evaluating deals.

@Basit Siddiqi yes. Scenario 1, The $20k is the return of capital. Initial in is $50k. 

As the title suggests, I need help discovering a current answer to my forth coming tax issues and how to plan accordingly. I found some stuff among the 556 pages in this particular forum thread but it's all older. I have 2 scenarios I am currently facing that I would love your help with and hopefully it helps someones else with similar questions.

Back Ground: Full-Time Military Officer and Occasional RE Investor.

Interests: Fix & Flip and Buy & Hold

Location: Out of State Investor. Looking in North Georgia/ South SC

Story #1: I am currently involved in a single-family fix & flip. I am ONLY involved in this deals as a financier. The arrangement is in exchange for an equity split of the profit upon sale of the property. Again, I am in no way party to the property itself, the rehab process, mortgage, etc. Only a money investment. The Investment amount was secured through a lender (Non- Hard Money). In order to plan accordingly, I need to know will I be taxed on my portion of the total profit split ($70k) OR on my realized profit after the original loan ($50k) is repaid and the amount I NET ($20k) is settled. Thanks in advance!!!

Story #2: I am currently pursuing a Fix & Flip opportunity in which I will either be the sole player via mortgage through a lender or possibly bring in a partner to finance either the rehab or the down payment. In this instance, since I am not full-time and will finance the project (Mortgage or Loan or both), which type of tax implications should I plan on and on what amount should I expect it to be applied. Total Sale Amount, Net proceeds after original loan payoff, etc.

Avoiding Taxes: Can I help my second situation by holding the property after the rehab, putting a tenant in, and selling after 12 months? Flipping as planned and rolling proceeds into a 1031, Opportunity Zone, or Self-Directed IRA?

Recap: 

Story #1. I am providing only money towards the project. That money is a personal loan. How will I be taxed and on what amount?

Story #2. I am purchasing a property. Using a renovation loan or mortgage. What tax will I be held to and what amount will be taxed?

You all are awesome and I hope these two instances help others who might be wondering. Thanks So Much!

@Minna Reid Thanks for that clarification. What I'm gathering is that the length of the short sale period is dependent a good amount on the agent and not solely on the lender acting? 

I was approaching the concept of short sales more so from a 'Helping the Home Owner' perspective. Perhaps I was wrong or naive in thinking that if someone is in danger of losing their home due to non-payment and are not yet in foreclosure, they'd be open to working with and investor and their lender in an effort to at least continue living in the same location with a lower monthly rent payment. The benefits of the 'deal' would start with whether or not you'd be solving someones immediate problem-losing their home.

Thanks for the response.

@Matt M. I agree. In the hypothetical example I provided, the flip profit was meant to illustrate options and possible consequences should it not come through. Minna Reid mentioned the loss of deposit, reputation, and likelihood of it not happening to begin with because a good agent would course correct the deal before it progresses. Thanks for you feedback!

@Caleb Heimsoth I think it was from early 2018. I'm not particularly interested in carrying out this strategy 1) because the areas I look I don't necessarily see a ton of them, occasionally some will pop up, and 2) I'm not really familiar with the ins and outs of the short sale game- hence the topic of discussion. Thanks as always for your feedback.

@Caleb Heimsoth No. No particular short sale. I was listening to a Podcast where someone mentioned putting in offers on Short Sales and totally forgetting about them, then 7 months later hearing back that multiple were accepted and they didn't remember even doing it because they had some much non-short sale volume. He mentioned how it was like buying in a time machine because the offers they placed were respective to the current market and level of upgrades needed. So when they heard back that the offers were accepted, they chose the best one and went with it. That's what sparked me thinking about it and wanting other peoples thoughts.

@Minna Reid No need to be presumptuous or snarky. That's why I prompted a HYPOTHETICAL situation to generate a discussion. And how time sensitive is it if it takes half a year to even get a response or a counter offer back?

I asked what you meant by proof of funds? If you could clarify that that'd be great. You also mentioned deposit funds. How do those typically compare to a typical earnest deposit for, lets say a single-family home found on the MLS?

@Jason D. I understand that I'm not getting a 'Deal' in the typical since of the word, but the condition that you find yourself hypothetically in is what opens the option for someone to come in, help you out by letting you stay in your home only as a renter, and negotiating with the bank for a predetermined amount. As long as that amount is less than [even if slightly] market value, and it cash flows, how is this a bad idea? You got a cash flowing property, occupied with hopefully a grateful tenant, and for less than what the former owner paid, and appreciation to be gained assuming you purposefully sought a SS in an appreciating area.

Like I mentioned in response to Caleb, it's not necessarily about the details of a hypothetical situation as much as it is about whether or not putting in an offer on a short sale now and planning on executing it later is a good or bad idea. If the flip doesn't go as planned or their is another reason why the short sale deal can't be done, so what? All I've done is make an offer right? What am I missing here. What obligations are there when pursuing a short sale?