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All Forum Posts by: Brandon Powell

Brandon Powell has started 5 posts and replied 7 times.

Post: Excel Formula Question for ROI Calculation

Brandon PowellPosted
  • Rehabber
  • Harrisburg, NC
  • Posts 7
  • Votes 0

I have hit a wall trying to build a relatively simple math formula to assist in our fix and flip business. We would like to be able to quickly compare deals based on a target ROI of 40%.

I am attempting to flip a formula around and solve for the Offer Amount given a set ROI Goal of 40%.

ROI = Net Profit / (Offer Amount + Buying Costs + Holding Costs) / (Rehab Months / 12)

**Note:  Offer Amount + Buying Costs + Holding Costs = Total Investment

I was able to get he formula correct as long as the Rehab Months are not included...see below:

Offer Amount = (Net Profit / 0.4) - (Buying Costs + Holding Costs)

I just can't seem to figure out how the formula changes to account for the Rehab Months. 

Anybody out there good with flipping formulas around???

@Dmitriy Fomichenko 

Thanks for the info. Sounds like I may be looking for something that may not be possible.

@Jon Holdman 

I am aware of the UBIT tax and would like to avoid it if possible.  The rehab would be fixing up a home to rent long term (hold for over a year) which would take UBIT off the table.

Sounds like there may not be a way to set up those efficiencies at a home improvement store under a retirement plan account. 

Anyone else have any ideas to make the ordering process more efficient for a rehab in a retirement account?

I need advise from investors who have had their SD Retirement accounts set up for a while.  I have one major hurdle that I can't seem to get past.

In our Fix and Flip business (in a non retirement owned LLC) we utilize a big box home improvement store accounts receivable credit account (LAR Account) to order and conduct business. It works awesome for our business (ordering, delivering, etc) and is super efficient.

How can I use this process with my SD Retirement Accounts?

I am worried that by opening up a credit account at that same home improvement store in the name of the solo401k Plan or IRA LLC it would trigger a prohibited transaction. I am right??

I believe I have found my way around this issue for general use credit cards (by simply ordering a debit card linked to the retirement account and using that over the phone etc), but I can't seem to figure the home improvement store issue.

One idea I had is have my brother (and business partner) open up the LAR account at the home improvement store in his name and have the retirement plan pay those invoices when they come?...but that sounds and feels odd even if it would qualify. 

Any comments would be appreciated.  Thanks!

Post: Solo401k Prohibited Transaction Question

Brandon PowellPosted
  • Rehabber
  • Harrisburg, NC
  • Posts 7
  • Votes 0

Thanks for weighing in everyone. 

@Will Bernard

Actually the property is currently held in the LLC of which I own 25% and my wife owns 25% (ie 50% owned by disqualified persons). The other 50% is owned by my brother and his wife.

So my understanding is it would be considered self-dealing and I should steer clear, however if I were to have ownership with the 401k plan then holding a note with the same Plan could be a tool in the tool belt.

@Brian Eastman

Yes I actually have an appointment Thursday with the attorney that set up our Self Directed plan to discuss a few of my questions.  I just wanted to get other opinions prior.

Bigger Pockets forums are awesome!  Thanks everyone for jumping in to answer my question.

I think I will now ask another question regarding Solo 401k Plan issues I am currently trying to figure out in a new thread.

Post: Solo401k Prohibited Transaction Question

Brandon PowellPosted
  • Rehabber
  • Harrisburg, NC
  • Posts 7
  • Votes 0

Anyone have an opinion on the following?

I own a property held in a non retirement LLC of which I own 25% and my wife also owns 25% of the LLC. Can I sell this property (owned by the LLC) to a non related buyer and hold a note in my solo401k?

Post: Self Directed IRA working with a Owned Partnership

Brandon PowellPosted
  • Rehabber
  • Harrisburg, NC
  • Posts 7
  • Votes 0
I am getting ready to roll over a sizable 401k into a self directed IRA to invest in real estate. Three questions: 1) What custodian company is the best if I want to do an IRA, LLC structure with checkbook control? Same question regarding a solo 401k for real estate. 2) Can I partner (as a lender) with my business LLC of which I am a 25% owner (the other three 25% owners are my wife brother and sister in law)? Also a factor to consider is we probably will be converting our company LLC to a S Corp by year end (and I will be a 50% owner along with my brother). 3) Can our company open a solo 401k for 2 of the 4 owners for our current LLC (or 2 of 2 owners post S Corp conversion)? My understanding is that a solo 401k is only for single member companies and not for partnership structures. Thanks!

Post: Courthouse Deal involving 2nd Lien

Brandon PowellPosted
  • Rehabber
  • Harrisburg, NC
  • Posts 7
  • Votes 0

I need a little advice around a potential deal. Here are the details:
1st Lien going to FCL sale at the courthouse in two weeks for around $30k (was a 15 Year Note at 114k originally). The 2nd Lien is also going to sale on the same day at the courthouse and hasn't yet priced (2nd Lien was taken out 2 years ago for $137k). The after repair value of the property will be $200k (repairs of $20-30k). The property is located in NC.

The question I have is should I bid on the 2nd Lien (if the opening bid is priced attractively) to ensure I can buy out the 1st lien? If the 2nd Lien was going to sale a month or so before the 1st I would maybe say yes, but since it is going to sale on the same day I'm not sure I would protect my right to buy out the 1st? Is there a way to buy the 2nd and somehow make contact with the 1st Lien holder and pay it off prior to the completion of the foreclosure process (ie in the 10 day upset period allowed in NC)?

Obviously the best case senario is that I buy the 1st for $30k and the 2nd is simply wiped out through the foreclosure process.

Thoughts anyone?