All Forum Posts by: Austin Montgomery

Just called Gouverneur Savings and Loan. Sounds like they had some good investment products. No VA Loans unfortunately. But rates sounded competitive! Thanks for the rec.

 Just called Solvay, they don't lend in Jefferson County (anymore?). Just updating!

Investment Info:

Retail buy & hold investment in Enterprise.

Purchase price: $150,000
Cash invested: $7,000

9-unit Commercial Strip Mall. Got 100% financing including new roof from private mortgage. Renovated Exterior and Currently in process of renting. Current Rent: $4420. Rent at full occupancy: $5720.

What made you interested in investing in this type of deal?

Wasn't really looking at commercial, but a friend found the deal, and the numbers looked promising!

How did you find this deal and how did you negotiate it?

Had a friend find the deal and offered to partner with me. Started off together, but they dropped out prior to closing. Found the financing and did the deal myself!

How did you finance this deal?

Private Mortgage from a local investor I networked with at a BiggerPockets meetup! 100% Financing (including $35k roof) at 8% for 20 year with a 5 year ballon. Value add will allow me to cash our refinance quickly.

How did you add value to the deal?

New roof, painted exterior, seal coated parking lot, marketed it! (Total in about $7000).

What was the outcome?

In process of renting. Rent at purchase: $2260. Current Rent: $4420. Market Rent at full occupancy: $5720. Have already doubled value at same cap rate.

Lessons learned? Challenges?

Much harder to rent commercial. Everything costs more. Easier tenants to deal with because they are responsible for interior maintenance.

I’ve never had a contractor come out for like a full rehab. I do most of the work myself on my rentals. But I have hired people for plumbing/electrical/handyman/paint before and haven’t had too many issues. 

Hey @Denyse Dar Thanks for the comment. I am currently netting 17% in my IRA, but my REI deals have been around 50%. I talked with a self-directed IRA custodian today. SDIRAs allow you invest in real estate through your IRA. You can buy/flip/rent property with the funds and the profits go back into the IRA tax-free. I think I am going to be doing that. If so, I may continue to contribute to it in order to use it to invest and make tax-free returns.

Do you still contribute to your Roth IRA even though you can get better returns on real estate?

I have maxed out my Roth IRA for the last 3 years. This year, I have the money to max it out again, but I don't know if I'd rather keep it liquid for the next real estate deal that may come along. I have 4 SFRs and a strip mall that I've bought in the last 18 months. And I'm getting better returns on real estate than I am in my IRA, but I don't know if getting that 6k in a tax-advantaged account now is a better long-term investment.

I've toyed with the idea of a self-directed IRA, but with only 20k in there, it doesn't really seem worth it yet.

Thoughts?

Hey Peter, I live and invest in Enterprise. (Can't really speak to the Dothan market as much). Are you moving into the area? We have a local investor meetup if you're interested in joining. 

Thanks everyone. I emailed my CPA to set up a meeting this week - I was just hoping to get some quicker answers in a more general sense! 

I am currently working on a commercial deal and will be purchasing the property with a private loan from some local investors. They will hold a mortgage on the property, which will be amortized over 20 years, with a 5 year balloon. Is the interest portion of the monthly payment counted as personal income or capital gains? Is there any way for the private lenders to offset some of this tax liability? Is it filed as a Schedule B? I have found differing information on the internet, so thought I would ask here! Thanks!