All Forum Posts by: Albert W.

Good Morning BP,

I'm in need of a good listing agent as I'm about to fire my current one. The property is a condo in Albany Park, list price would be $129,000. We signed contract with our current agent just about 4 weeks ago and nothing has happened, the listing is not on MLS. We discussed staging the condo and during the past 3 weeks we've had a few emails from him with some quotes on stagers, but otherwise no activity. I email or leave a voicemessage and don't get a response for 2 days minimum. To say the least, communication is dismal. This guys is a top listing agent with a team -- our mistake. With that said, any recommendations are appreciated! (Also, any recommendations for stagers would be handy too). Thanks in advance!

on my last post:

It's not to say that my mortgage underwriters didn't have questions for me, they just asked up front and got through everything, finished processing the loan in about 1 week.  

1) Was genuinely specialized in 203k, FHA, HomeStyle loans.

2) Was hesitant to give me quick run-of-the-mill loan estimates b/c he didn't want to give me a quote that would simply change the second i gave him additional info.  So...just be aware that he's looking out for your interest.  When he asks you for additional info, it's not be slow or needy, but he'll give you a very detailed and specific loan estimate.  He'll give you everything down to the cent on what you'll be paying, the rate, etc., with very little likelihood that it will change.  In previous purchases I've done, something always changes... and the costs always go up.  

3) He and his underwriters finished processing my loan literally 2.5 weeks prior to the closing date -- no extra questions, no extra background checks, no having to pull up bank records while sitting at the closing table, no nothing.  It's unheard of.  I literally went to the closing, and signed papers. This is the biggest selling point I can make for him. They actually do their job!  And they do it with conviction!  not at the last minute....

Send me a private message and i'll give you his contact info...i feel weird posting people's info on an open forum.  

Thanks,

Albert

@Josh MItchell , Thank you!  I appreciate the concise response.  

Good morning BP. I'm coming to you for help to fully understand Cash Out refinancing. I know there are other posts on the topic, but for some reason my brain just can't wrap itself around the topic. I think i'm getting confused about paying off the original mortgage. In any case -- here's my dumbed-down scenario.

Let's say I have a 2 Unit building that I rehabbed, live in one unit, and am renting the second unit. I used my own cash as downpayment, and for renovations. I am weighing the options of:

1. A) selling the building
2. B) holding the building, renting both units, and cash-out refinancing to recapture my renovation funds and down payment.

The goal is to be able to move on to another project, but the problem is my cash is tied up in the building mentioned here. Option A is straight forward. I have questions about option B. I understand that banks will only refi out 75% of the ARV. Let's put some hypothetical numbers to it:

• Building purchase price of $300,000
• I used an FHA loan so i only put down $10,000 (Approximated -- just trying to keep numbers whole)
• Renovation costs were $90,000
• ARV is estimated at $500,000
• 75% ARV = $375,000

Here's my understanding of what happens next in Option B -- Please correct me if I'm wrong! Let's say the ARV is correct and the bank gives me $375k. My understanding is that this $375,000 is in ADDITION to the original mortgage, correct? One option I have is to use the $375,000 to pay off the original mortgage. Lets say the remainder of the mortgage amortized is $285,000 after having lived in it for one year. That leaves me with $375,000 - $285,000 = $90,000 Cash in hand. Now, although I haven't recaptured 100% of my cash that I originally started off with, I do still have equity in the property, and I have cash to use use on the next project, and I have positive cash-flow from the rentals.

Is this a correct understanding of an albeit dumbed down scenario?  Thank you in advance!

Thanks everyone!

@Colin L. -- I was lucky enough to have help from family to purchase a home that I had lived in in Boston at an earlier stage in my life. As you might know the market there is ridiculous and I made quite a bit of money when I sold it 2 years ago (originally bought it in 2005). I rolled that money into buying a HomePath condo here. I was also able to lower my downpayment to 5% which allowed me to use cash for the rehab. For the 2-flat, I used an FHA loan (i'll be owner occupying it for the first year). I'll refinance out once the renovation is complete, and after the year (for tax purposes) I'll have either the option to sell the whole building, or hold it and rent both units. I actually moved to Chicago from San Diego where I received my masters degree -- I guess you can say that the Jonathan Segal influence has stuck with me! An FYI too about the Jonathan Segal method--he advocates using a 203K loan for the first project. I almost went this route and I think it's a fantastic way to get financing for someone who doesn't have the cash up front. Yes, you have to live in the building for 1 year, but that's not that big of a deal in my opinion. (You would've had to live somewhere and paid for it anyway, right?) At least in Chicago, there are a ton of 203k specialists, consultants, contractors, inspectors, etc who are all very competent and able. I do however know of someone in Atlanta who tried to go this route but had difficulties finding knowledgable help with 203k's. In any case, good luck in San Diego!

*Full disclosure since someone has already asked me -- I'm currently in the process of getting my license for Architecture.  So no, i'm not a full blown Architect yet. 

Excited to have found this forum! I’m an architect in Chicago looking to get on my feet on the development/ownership side of the industry. Ultimately my goal is to work as an “Architect-as-Developer”. It’s frustrating being an architect in an industry where the client holds the deck of cards. Being on the owner’s end will give me more freedom to design the projects that I want, be in charge of my own product as well as my financial success.

That has brought me here and one of the tools I’m using to achieving my goal is to both flip, and hold property (as well as any number of combinations of the two).

I recently fixed up a foreclosed condo in Albany Park, and just purchased a 2-flat in Avondale where renovation construction will begin in June. It’s a slow start but I’m excited to have jumped in the water! I look forward to sharing what I’ve learned and learning from all of your experiences! 

Hi All,

I'm just starting out here and am looking for my first property to buy-fix-flip.  I do have a day job however so this is really on the side.  My question regards taxes.  From what I can gather, If I flip a house within 1 year under my own name (not under an entity), I will have to pay short term capital gains taxes.  I'm confused as to whether or not I'll have to pay employment taxes too.  And if my intent is to flip, am I autmatically considered a "dealer?"  I have also read about the benefits of forming an S Corporation.  Let's say hypothetically I net $10,000 in the year from the flip -- under and S Corp what would my "income" be vs capital gain?  

Any help is appreciated!  

I purchased a homepath condo for myself as a primary residence and am about to purchase one as an investor with the renovation mortgage. I like the deals in a large part because, as someone before me on this thread said--there's a lot of red tape. It keeps the riff raff away, in my opinion. I'm also an architect -- my primary job and we specialize in affordable homes and 90% of our clients do business that involves govt. tax credits, HUD red tape etc. It's really not that difficult. Yes every now and then you get a headache but if the deal is right there's so much benefit in these. Look -- if you've lived through getting a conventional mortgage with annoying underwriters asking you for your dna to prove you're you, you can manage these deals. And...at least in my area, the home path deals seem to be the best deals on the market aside from the $10k tear downs in the slums.

Like other people have said, there are some restrictions though such as all work has to be done by a licensed contractor.  Or the 3% down only applies to primary residences.  Otherwise it's 20% down.  Just be organized and diligent.