All Forum Posts by: Carlos Salazar

Welcome to the BP Family! I currently live in Riverdale, MD (minutes away from SS). I'm a relatively new FT RE Investor and love connecting with people in the area. Reach out via DM and we should have coffee sometime. 

@Eamonn McElroy

Is it possible to structure this as a partnership even though we didn't buy it as such? My understanding is that since original purchase was not done as a LLC I can't change it into one later - prior to selling the house.

I appreciate the feedback from both of you guys.

@Basit Siddiqi

I would love to go at it alone but I don't have the capital to do so. I didn't want to let the deal go and that is why I proposed he get involved. I was considering the JV since it can be a short agreement that if it works out we can structure as an LLC for our next deal.

Hey BP!

Now that everyone is leaving the conference and is inspired, i would love to pick your brains on how to deal with a possible conundrum.

I'm currently under contract to buy a buy in Richmond, VA for $85k. Originally my plan was to BRRRR it but after running the numbers on the amount of work that needed to be done, and seeing the selling prices for the houses around it, I have decided to flip it. Fortunately a good friend of mine part-owns a construction company and would like to be part of the deal (as he's never done a flip before) and we have agreed to split the expenses and profit 50/50. Given the I initiated the purchase without him we did not set up an LLC or look into the tax implications. Now that we are playing the waiting to close (on the house) game I started looking into house we are going to recognize the gains, if any, on the property.

The details are:

-I'm financing the entire deal (through a bank)

- We are splitting the rehab  cost 50/50. bids will be placed by the company that he part owns, if his bid wins we use their services, if they are higher we use another. 

- We are splitting the profit 50/50

- I will talking to him about signing a Joint Venture Agreement

- We will be opening a joint bank account where we will deposit money equally as we move through the different phases of the project. 

- I considered opening a Credit Card (with 0% for 12 months) to put other purchases on, and pay off when the house sells. I would be the primary person on the CC and he would be an Authorized user (which i can remove at any time)

I wanted to reach out to everyone on the BP platform since I know that this may take creative thinking. One, I'm I exposing myself too much while he has little to no skin in the game? Two, How do we pay him his profit without being stuck with the entire capital gains liability? Do we pay him like a project manager so that it works agains on basis and we can roll everything over if we decide to 1031?

I would love to get everyones feedback. I know I may be missing some information, but would love to see what people can come up with. 

Carlos Salazar

@Jonathan Luna I'm currently working on my second one in 12 months. The first one that I purchased was pretty much turnkey. I did have to paint the entire interior of the house (the color was not renter friendly) and install a washer, dryer, and refrigerator. Within three weeks of purchasing it we had 38 applicants and 3 exceptional applicants that wanted to give us a deposit. With that luck we decided to start saving to buy our second (before finding BP and BRRRR) and recently put our second place in Richmond, VA under contract.This one will require a bit more work but I'm partnering up with a good friend. After running out numbers we have decided to not let the deal go and flip. The sensitive thing about Richmond is the average rent threshold. If your mortgage won't allow for you to rent it out for $1,110-$1,400 then its not worth keeping (in my super conservative option).

In my opinion Richmond is the perfect rental market. People are not interested in buying unless they are white collar workers, which most people there are not. Also, the scene is very transient and organic. There are always new restaurants, pubs, and hangout spots that people want to work at or live close to and don't really care to commit. Also, having the inside scoop (since my wife works for an international property management company) large companies are making concerted moves to Richmond (billions of dollars). I'm sure that their research is better than mine, so I'll go with it. 

I hope this helps

-Carlos Salazar

Hey! I live in Maryland, just one hour away from baltimore and I will not invest there. In fact, I went to baltimore today to talk to fellow investors and I still don't feel comfortable. As @Ian Barnes said "You have to have amazingly good boots on the ground. If not, your screwed". Instead I have been pouring my money in Richmond, VA and I have been doing really well. I would suggest looking into that market as well. If you have any questions please feel free to reach out (Im headed down to Richmond tomorrow to look a few deals)

@Ian Barnes

@Spencer Harvey Thank you for asking this questions. As a new member and in the same exact situation, i appreciate your openness. I look forward to hearing what you decide to do. 

Thats great news man! Congrats! Personally I would look the same exact think again. Do you think it might have been a one-off?

Investment Info:

Single-family residence buy & hold investment in Riverdale.

Purchase price: $198,000
Cash invested: $12,000

What made you interested in investing in this type of deal?

Father has a history of investing in single families and always wanted to do my own deals.

How did you finance this deal?

First house, so conventional FHA loan (has since been ReFi to remove PMI)

How did you add value to the deal?

Created an open concept, wooden floors, and new siding for insulation and appearance.

What was the outcome?

Great rental property that is going to be between two purple metro line stops.

Lessons learned? Challenges?

Never wait. Act now or forever hold your peace. (as long as its a good deal)

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I did work with an agent, but would not recommend him. I ended up finding the house myself.