All Forum Posts by: BJ Butler

My co-worker is a tax preparer during the tax season. I mentioned to him I am selling my rental & since it's been slightly less than 2yrs since I lived in it, I won't have to pay capital gains taxes. I moved out Sept 30th, 2016. He stated that I will have to pay because it's not my primary residence anymore. My understading of the law is if I lived in the property in the last 2 of 5yrs, then I qualify. Who is correct?

What a great way to start off your real estate investor business!!!

Thank you fellow investors. My business partner told me to NOT lose momentum. He said most people quit after something like this but if I keep going, they will come. So I'm following his advice. 

Lesson learned: Found what appeared to be a duplex by driving around looking for something else. Researched the property and it was for sale. Listed price, $53k. I ran comps for the area. SFH's were selling for $110K & higher in that area. The nearest duplex was too far away but still had a high resale value. The median for rents were about $900-$1000 for a 2bedroom. I estimated $20k in repairs and had a GC who I hoped would give me more of a better estimate since he has a lot more experience than I do. I called up hard money lenders & was told no since I had no experience or they didn't deal w/ duplexes. I wanted to buy & hold this place. I ended up finding a seasoned partner. He examined the place w/ me and determined it would cost about $40k to fix the place (foundation damage & other things) and I was able to get the purchase price down to $48k. He suggested I walk away from it and so I did. The house was selling as-is. Thank God I did have in my contract purchase agreement would be based upon me being approved for a loan and I was not.

Lesson learned: 1) I had an exit strategy. 2) Make sure the GC has experience w/ estimates and not just experience w/ their hourly cost. 3) It benefitted me attending more than one local REIA association. 4) The experience was priceless.

Great advice Loren!!!

@Patti, Thank you for the info about the zoning in Norfolk. I found a duplex, VA foreclosed, that was listed as a multi-family but once inside, it's apparent it was a SF. After my partner & I looked the property over, it wasn't a good deal. Now reading your comments, it may have been a good thing we did not pick it up.

Deanna, that was a good point I had not thought about. I had the option to purchase a duplex last year but they had tenants in them. With the loan I was using, I had to reside on the property and did not want to kick anyone out knowing one of them were month to month.

Deanna, that was a good point I had not thought about. I had the option to purchase a duplex last year but they had tenants in them. With the loan I was using, I had to reside on the property and did not want to kick anyone out knowing one of them were month to month.

Whatever happened with this?

Paul & James, I appreciate the feedback. Essentially, I acted as a hard money lender. I did not expect to lose out by loaning money upfront then paying taxes on the back end for doing so. Now I understand if I am going to loan money, I need to factor in taxes as part of my fees to make it worthwhile or I'm basically going to lose money. I have thought about having them pay me back that would stretch across the tax years but I will contact a CPA to find out what my best options are. Once again, thank you.