All Forum Posts by: Brian Schmelzlen

You would probably get less leads than usual this time of year, but more than if you don’t send out anything. Plus anyone looking to sell this year is probably very motivated.

I would absolutely take advantage of it. Why turn down free money, plus it helps diversify your investments.

I am a CPA and tax attorney, so that is an area where I have some expertise. It is Section 121 of the Internal Revenue Code. If you owned a house for 2 out of the past 5 years, and have not used this provision in the past 2 years, you can exclude up to $250k of capital gain on the sale of the house ($500k if MFJ). I would recommend talking to your CPA though. As to whether this is the best option for you, I don’t know. You would have to run the numbers.

Slow, but steady. Assuming you want to keep all the equity yourself (i.e. no partners or investors- both of which you might want/need a track record for first), you could look for financing that doesn’t require 20% down. From a bank if you can, or seller financing if you can negotiate it. If you do have less equity, keep in mind that means slightly less cash flow since you have higher debt payments. Ultimately, that means less flexibility if things go wrong.

There are 3 things that come to mind right away for me. 1) You can rent out rooms in your house. Might not be the most fun to live with your tenants, but you will get landlording experience and don’t have to invest more money to do it. A variation of this, if it appeals to you, would be to move out completely if you can live elsewhere cheaper, and rent out the entire place. 2) You can pull out some equity from your house through a refi or a HELOC. That may give you enough capital for down payments on investment properties. 3) If you have been living in the house for more than 2 years and owned it that entire time (and do this before the tax reform bill in Congress potentially becomes law), you can exclude up to $250,000 in gain from taxes ($500k if MFJ). You could use your equity (less selling expenses) to purchase investment properties.

Michael, personally I would not count on any appreciation. If it does, that is a bonus, but I would focus on cash flow. When you look at all the expenses, including vacancies, unexpected repairs, etc. will it make you enough that you think it will be a good investment?

Check out the BiggerPockets podcast. I am about 40 episodes in, but they already had several focus on wholesaling. I think it would answer a lot of your questions.

Hi Andrew, I am a CPA. The last time I looked at the issue, the 30% federal solar tax credit was only available for personal residences (not investments/rentals). I am sure plenty of people have taken it on rentals, but... Check with your CPA because I haven’t looked at it for a while, and when I did I was looking at a unique situation. You will want to be very sure before counting on getting the tax credit.

I would pay the variable rate debt first. The Federal Reserve has made it clear they are going to raise rates, and that will (eventually) cause your variable rates to rise. Next, I would evaluate what the cash on cash return rate would be on any investment. If it’s lower than the fixed rate debt, that is an argument to pay it off first. If the investment returns are higher, invest (and consider using that cash flow to pay down the debt).

20k+ plus a month is quite a goal. I would consider looking at small apartment complexes. Seems to me that you would be able to start generating cash flow faster that way since you would have more doors.