All Forum Posts by: Bart H.

Welcome to the site. I found bigger pockets from the podcast as well.

We are still relative newbies ourselves on our 4-5 property deal, and just finished the rehab on our first flip (propert is on the market), but I think I can chip in with a couple of comments.

One find a real estate agent who specializes, or only works with investors. You don't want the pretty blue house you want the ugly house that has no paint and has no dry wall. (If you are flipping). They can help you find and evaluate deals, and likely would have good recommendations for contractors.

We started out house hacking a duplex.  I highly recommend it. It lets you buy a house using a conventional loan.  It lets you learn about hiring contractors and you learn about being a landlord.

as I mentioned we are finishing up our first flip.  Knock on wood, I think it came out nicely. But we had a good working relationship with a real estate agent who specializes in flips and rehabs.

But your first time around with a flip, you will almost certainly spend twice what you expected.  It will take you twice as long to do. And it will take you a huge amount of time even if you sub out all the work. My wife and I probably spent 15-20 hours a week on picking materials, reviewing completed work, answering questions, finding sub contractors etc. Especially if you are working with contractors you don't know. 

Unless you have a good solid savings/ outside earnings and/or have a good background in construction I wouldn't start out with a flip. It's a tough thing to do, and it's really easy to get started and run out of money to finish.

I would also recommend driving neighborhoods that you want to buy in, pick one or two and follow them closely to get to know the area. Know the value in your two mile square target area,better than the real estate agents.  You could have an agent set up a MLs email or you could set up a search and look at sales prices in Zillow. That way when a deal comes up you know the market and can act decisively. 

We have a house under contract right now in a a great part of dallas. It's a neighborhood my wife and I first started following 5 years ago. We caught some out of town investors who bought the property planning on doing a tear down. But they didn't know there was a conservation district, and they had a buyer fall thru and needed to get out. We are literally getting the house for the value of the dirt under it. And while it's not in perfect condition, the structure is perfectly fine to live in for now. It could end up in the future as a rehab, or could be a college rental, or could be a tear down in the future. 

My point is we got it under contract about a day after these investors lost their first buyer and they just wanted out, and we ended up under contract about 30-40k under what they paid earlier this year. But because we have researched the market for several years, we were able to act decisively and believe we have gotten a very good deal in a well known part of dallas ('m ' streets).

Good luck to you!!

Welcome.  I wouldn't call myself s guru, but one thing that helped my wife and I was house hacking. Our first investment property was a duplex, that lets you establish a track record with being a landlord on your tax returns so that your rental income can be used against your loan which should help you buy the next property (assuming buy and hold). 

One thing we have found, expect when you buy a house that you will need to put money into it the first year or two. It seems like a lot of houses have deferred maintenance that will eat up much of your cash flow in the first couple of years.

Good luck to you!!!

@Hadar Orkibi thanks for taking the time to give me feedback.  Its a good point that I don't have to be in the same location. If I found someone remotely that I liked,  I would work with a remote cpa. There are some advantages of someone who is local.  For one it increases our local network. 

I may have come across as sounding cheap when I mentioned cost. I was more pointing out I didn't want to use a massive firm like a Deloitte. Just want to find someone who specializes in real estate and can help us thru a couple of our unique situations for this yr.

@Trevor Reed thank you for the feedback, part of my issue is we have sale with a fair amount of capital gains (at least for us) on a rental so there is recapture of depreciation, and we set up the LLC mid year while we were doing a complete rehab, so I don't know the specifics of what is in or out of the LLC.

I think I know what the answer will be, but I don't want to screw them up, and because of the rehab I have 5-10 vendors that I need to issue 1099's.  

You have a good point about doing the 1099's. I may just do them myself, but I have some questions to make sure I don't screw them up. Once again about what is in and out of the LLC.

Does anyone have a good CPA they recommend?

We are looking for one who specializes in real estate, and who is willing/affordable for small investor do their federal income tax returns and help us thru issuing 1099's.

.We just got our LLC set up, although it has been more or less dormant this year other than a couple of expenses. In addition we have a have a couple of purchases/sales in '16.

I actually keep meticulous records in quicken, and have done our taxes in the past.

I think overall we would be fairly easy first time clients.

I see two, actually a couple of potential issues with your plan. Saying this as a non cpa i.e. I am not qualified to give tax Advice.

1) the down payment on the house/ equity that you give your kid could put you over the threshold for a gift tax which is taxable at 50%+

2) I think you would lose the ability to deduct your child on your income taxes which likely would cost a significant amount of money on your income taxes.

3) IF you bought a house then deeded it to your daughter, your mortgage company could invoke the  "due on sale clause" which your loan would almost certainly have.  Ie the mortgage company could require immediate payment of the loan.  My understanding is it rarely if ever happens (from listening to the BP podcasts).  But theoretically they could do it.

4) If you give her title to the house, you would still owe the loan but lose all control of the house.  IF you ended up in a disagreement such an issue could be really bad in terms of losing the ability to force her to maintain the house, or make payments or pick who could live in the house, or even evict her.

My guess is once you factor in the first two points, you might well end up in the negative financially vs just paying out of state tuition.

Remember you have costs to get in an out of the deal.

Realtor fees, home repairs, insurance, taxes, utilities etc while you hold the property.

Also there is risk, as a property manager, I am sure you know this but almost every repair has some sort of unexpected risk that usually costs more money the minute you open up the walls.

Agree with all of these posts, I am not a lawyer, but I would reframe the discussion.

If you let her out of the lease early, you did her a favor.  Remind her of that fact or hold her to the end of the lease.

IF she did damage, document it with photos etc, and withhold what you need for repairs.  I would double check to see what your lease counts as notification of repairs and what your state requires for turnaround time on repairs.  

For instance our lease says that notification must be done in writing, so just a phone call from the tenant does not act as notification that something is broken.

Be firm but fair and document everything in writing.  

 Thanks for the tip, in fact I actually came to the website because I got hooked on the podcasts!!!

I would look at it as though you were planning on flipping it. Take your ARV, take 70% of it, then calculate your estimated repairs and back that out of your offer price. So from your numbers, 105K-70%*105K=$73.5K.

Then take from it repair costs.  So $73.5-$65K (rough numbers that ignore closing costs etc).

So that would get you to around $8.K available for repairs.

You don't want to get into a situation where the repairs plus the purchase price exceed the Arv.

I would be careful about counting the additions as space.  Looks like the garage has been converted and it looks like the sun porch was added.  If those werent permitted you might have to worry about how well they were done if you start doing the rehab.

Its tough to tell, but in the laundry room, do you have mold there near the floor on the left? ie is there a water leak back there?  plumbing can run you a lot of money, especially if you have a pipe that might have previously frozen.

Lastly, is there water damage in the corner of the yellow room, and is there some rot under the left window in the same room?  Those could all be expensive repairs.

In addition how is the roof?  the foundation? the plumbing?  the electrical?  All of those can run you into very high costs very quickly.  It also looks like you will need appliances etc.

One the difficulties in helping with estimating rehab costs, is its tough to know what your scope is, and what you are willing/able to do.