All Forum Posts by: Buddy Holmes

@Charlene Stovin

As a new RE investor showing concern for and asking about appreciation, I see a BIG RED FLAG!

Appreciation is great and I am sure you are seeing the cost of SFR going up in Texas in today's climate but...

A RE  INVESTOR should look first and foremost at the Cash Flow of any investment.  Learn to use the tools here on BP to evaluate any deal before you jump in.  You can make money on a rental property by 1) monthly cash flow, 2) principal pay down by the tenant (assuming you use a mortgage), 3) tax saving via depreciation and 4) what ever appreciation may eventually there may be when you sell or exchange it.   Count on the first three and let the fourth be what it may.

Good Luck.

Cheers,

Buddy

@Oscar J Carrillo

The Self Directed IRA can be used but need to plan carefully and follow the rules. If the IRS says you broke the rules the entire IRA may be disallowed. First You can not borrow from your IRA! You can buy a Rental from your IRA but having a loan to get the property presents problems. A normal loan on a property titled as your Trust Co FBO of Oscar's IRA #xxxx may be a problem to obtain and if you do their is a special Tax on a portion of the income. BTW all income goes back to the IRA not you personally. And You can do no work on the property. All fees, repairs, taxes, insurance, property Management must be paid by the IRA. Too complex for me but...

Best use of your SDIRA, I think, is making loans to others for their RE investments.  Just be careful.

Cheers,

Buddy

@Kevin O'Bryan

I am assuming these are smaller value ~$100k homes. Therefore the mortgage is small to a bank.

I would suggest a local Credit Union or a small local bank.  The closing costs are going to be a high percentage of your cash out so perhaps a portfolio (commercial) loan from a local small bank could combine the two into a single loan.

Good Luck

@Paul Moore

I am a retired Professional Engineer, and used that certification to do 4 Cost Segregation Studies on my SFR's.

I was audited by the IRS for another issue,and the studies were never an issue.

I used a simple MS Word report format, broke the items up systematically with photos and costs for each with referenced source for costs.

ON a new construction if you can get a copy of the bills, should be a simple DIY task.

Might be able to fashion a design with covered porches between rooms to present as a single building of 4 units or two building of 3 units each!   Early Florida houses had two open porches cutting through the home in an X to leave 4 separate rooms on the corners.  This was to deal with the heat before HVAC was invented.

 I have a trip coming up to North Florida and checked AirBnB. Five tiny house offerings in Jacksonville! With prices of $65 to $135 /night!  There is even a filter for Tiny Houses, so it must be fairly popular and desirable.

Put you architect hat on or find a student architect to challenge him.

Spanish style center courtyard, walled exterior? You have a gold mine there!

@Daniel Kiuttu

I have not heard of building a new STR but have seen some "Tiny House" STR's that would seem to be a good option if your zoning laws will allow. Check out NETFLIX or Prime videos on the Tiny House idea. Picture your lot on the river as a park like setting with 3 or 4 Tiny Homes in a Tiny Village!

Cheers,

Buddy

@Matt I.

Matt, from your story the thought hit me that perhaps a win-win might be to set work day to clean up the lot across the street and invite the community to help in the effort. Perhaps you might be alone the first work day, but as you make progress on the clean up and keep inviting others, you might just foster a new community spirit that would solve your STR issues.

Believe it or not, I am NOT a tree-hugger type. More a MAGA man.  But the situation seemed to be an opportunity.

Cheers,

Buddy 

@Sarah Waterman

My Bad. Sarah is absolutely correct. It was a Sr moment thinking your BRRRR was a fix and flip not the fix-hold and refi!

@Martin Yanez Jr.

Your purchase contract must have an agreement that you have the right to assign the purchase contract to another buyer.

Also most likely best to verbally and perhaps disclose in the contract that the assignment may result in a finders fee for you at closing.

Cheers,

Buddy

@Ryan Reid

The cost segregation study is a very good way to increase the depreciation on a property you own.

However, you must understand what the tax code requires when you sell that property. 

Added depreciation is only useful if you hold the property long term, or only plan to use a 1031 exchange of the property.

When you sell the property otherwise you must settle with the IRS on the depreciation recapture.

Your description of doing BRRR's, suggest that this added depreciation method would do nothing for you.

Cheers,

Buddy