All Forum Posts by: Ben Firstenberg

Hi all, 

Do you guys pay income tax on the rental properties you own in the city of Cleveland? If so, how? On RITA?

I did not live in the city of Cleveland last year, but my rental is located there. So I'm not exactly sure what to do. 

If it matters, my rental is owned by an LLC of which I am the sole owner. Furthermore, I did not show any profit last year after expenses and depreciation, so I don't believe I would owe any income tax, if the city does indeed charge.

For the record, I'm NOT talking about property tax. Income tax. 

Thanks for your help

What do you mean by "can't find a deal"?

You can't find a deal that you like? Or there aren't any multi family properties for sale in my area?

Huron County is definitely out there. I would guess both supply and demand will be low

Do you live in Cleveland or out of state investor?

Hey @Hunter Marshal if you're still looking for someone, I'd be happy to help

Tearing down and rebuilding would be sort of like doubling down on a "bad" investment. If you do a duplex or modular homes... either way it would be pouring a ton of money into a failed project to try and make it a success. 

Philosophically, are you trying to force a strategy to work based on what you want, or are you "taking what's given" so to speak?

Put differently, is this property BEGGING for a tear down and rebuild? Or are you looking for a way to make a square peg fit in a round hole? 

I, personally, would do what I can to break even and walk away as quickly as possible. You're going to miss sometimes, it's just the nature of this business. Don't let it bury you. 

Hope that helps. Best of luck sir

I would also consider what type of commercial you're interested in and if a "good" deal is likely to be available. I put "good" in quotes because a good deal to someone who has 1031 money might not be a good deal to someone else. 

If your goal, for example is to trade your handful of duplexes or SFRs in for a 20 unit, you may have a hard time. Atlanta doesn't have much when it comes to multifamily and especially so called "middle housing" which I define as 5-100 units. They still exist in the city, of course, but they can be hard to find. And if your timeline is 45 days... that makes it tough. 

Hey Erin, welcome! I'd say the biggest thing is not to "over" renovate. Depending on your area and your end buyer, it may not be "worth it" to make things really nice. Take a look at comps in the neighborhood and try to match them in quality. 

It may be "simple" or "obvious" but this is where I see flippers going wrong the most often once they already have the property. Over renovating is tough to come back from, because you've already spent the money and the market is what it is

 Good question. It's kind of just "the way it is". The lender needs to assume the worst case scenario, where you default on your mortgage and they're forced to foreclose on you. In this hypothetical, they now own the property they don't want and they're SUPER lazy so there's no chance they're going to go to the effort to rent each of the rooms. So they calculate a "base case" scenario, where they own this property and are renting it as a standard LTR.

I think the best messaging is "Proof of concept" that is, you talk to an investor and tell them: "We've done this before, it worked, we know the playbook, now we're raising money to go do it again"

As far as meeting investors, it's tough. People want to invest their money with people they know and trust. Your friends and family are a good place to start. It may feel... dishonest to ask them for money, but remember your goal is to MAKE them MORE money. 

I would try to grow your investor list organically. Start with friends and family, ask if they know anyone who might be interested. Try to meet with those people, then ask if THEY know anyone who might be interested. Follow the path wherever it leads. At first, you don't need many investors. Two, three, maybe 5 will do it. Then build the momentum from there

Going to networking events and meetups can work, especially if those people are already looking to invest their money, but it's all about relationships and it's hard to build a great relationship with someone you just met at a meetup. It takes time. 

Hope that helps! Best of luck!

 I cover within about 1 hour of the city in any direction. We've had the most success with Padsplit in College Park and Clayton County, but the model works almost anywhere in the city as long as you're choosing the properties well. 

Feel free to reach out if I can answer any other questions!