All Forum Posts by: Daryl Biberston

@Ken Min Brilliant strategy.  I have wanted to see what would happen if I took over a loan but never wanted to deal with the DoS clause.  You inspire me.

As for the topic of this thread.  I recommend you have a two pronged approach.  Determine what your exit strategy is before buying any property.    At what percentage of increased value, when would you sell it?  That answer is your short term ownership option.  You have no guarantee you can sell anything in the short term right?  The market could change on a dime.  So you have to ask what about the long term.  Would this property work as a rental and if so how does it impact your financial position.  Keep in mind, loosing money or negative cash flow is not necessarily a bad thing.  If you can say a property works short term for a flip and long term for a rental then you can pick.  I'm an advocate for own and NEVER sale.  I tell my clients who are W2 employees this, "Is your boss ever going to give you a $100.00 pay raise per month?"  Usually the answer is no.  Rental income puts you in a good financial position.  With lots of properties it makes the w2 jobs less and less needed as the portfolio increases.

As a tax strategy, owning the property as a rental for 12 months or more allows you to be taxed at %15 percent for long-term gains right?  Selling at less than that and you are taxed as earned income.  This might push you unexpectedly into a higher tax bracket and eat your profit.

I personally only want to flip when I am cash hungry to put another 25% down on a four plex.

In conclusion, if I was only flipping / fixing, I'd have money in the bank but, no equity, no regular cash flow and probably not a healthy set of Business line of credit.  On a 1003 at the end of the day when your debts and liabilities and your tax returns all match, banks will be happy to work with you.

Hello BP members.  I have a few rental properties.  Once every six months or so one becomes available.  I re-list on the multiple listing service in my local area and I get dozens and dozens of applicants.  My hard and fast rule is I don't rent to people who have been evicted.  I have plenty of good candidates to choose from and always pick the one who is most qualified.  I have been doing it for years and follow my system to a fault.  I am just wondering if I'm being irrational and following some confirmation bias.

Jared

Donna, I recommend you get legal real estate advice from a licensed professional on this one.  I cannot tell you how many times I read replies that are patently false.  At this point an attorney is your friend.  Specifically a real estate attorney.

Jared

How many comparable sales within 1/4 to 1/2 mile of your home did you find?  Were they at the same price point?  Did you list with a reputable brokerage?  How many commission points are you paying?  Some questions I have to start with.

Jared

Yes it is possible.  Location is key. I help investors all the time.  Real estate investing requires you to bend to the market trends.  The key is flexibility.   Finding a good team of workers is tough.  Fortunately for me I have a few rental properties and manage some for others.  This has put me in touch with reliable contractors.  Don't let anyone or thing discourage you.  You might not be asking the right questions though.  Best of luck Jared.

Edited to add value:Link to a perfect rental

this property at 165,000 with 25% of your 200k down would be a loan amount for 123750.00. 4.5% interest based on your hubbys credit. PITI estimated at 859.40. Rent would be 1,100.00 all day!!!! Cap rate is 8%. More than the bank is paying you on 200k. As yourself this one question. Does it work long term and short term. (two part question i guess) Long term, could I rent for a long time ... Yes. If push came to shove and i had to lower rent to 900.00 I'd still make money and the tax write-offs for your hubbys W2 job would be amazing. Does it work short term. in 12 months (to get 15% capital gains tax, assuming you dont 1031 def) would the property sell for a profit less listing fees? Yes. Yes on both. Easy deal... there you go.. tok me a few minutes.

Jared

You score well.  If this is your first deal like this, come 4/15/2017 you will see just how well you did.

I am in agreement with @Dustin DuFault on this one.  

I have a few recommendations.  Put the pressure on your property manager... who is it (Company) by the way? 
Navigating the court system is very easy if you have the time.  My recommendation would be to pay someone to teach you the ropes of eviction from start to finish.  You can download PDF documents and file court documents pretty easy.  Distance might be a factor for you, so you could rely on this Prop manager since you are likely paying a lot of money each month for no service what so ever.

I have so many people tell me they want to stay away from the rental business because of this situation you are going through or the tenants can trash your property.  In either case, the benefits outweigh the risk hands down.  These issues are very likely avoided when tenant screening is done well.  Which brings me to this though.... who screened this tenant?  How do you know?  Did you see a credit check?  Background check?  Notes from phone calls to past landlords?  Employment verifications?  tax returns?  Hmm..  I'm betting your prop management company didn't supply you with any of this.  I am also betting some wasn't done.

My other advice is use an attorney when in doubt but rely on yourself before a paralegal. 

Get a great team started for being in the rental business.  Have a great contractor, plumber, bug man, handy man, realtor, appraiser, attorney, lender, termite inspector and property inspector.  It takes money to make money so spend some to protect your income.

Best of luck to you on this issue.  Keep us up to date on the outcome.  

Daryl "Jared" Biberston

Broker / Appraiser