All Forum Posts by: Ray Slack

I think you posted in the wrong forum.. This is the 1031 forum.

Thanks Dave.. That is what I thought.. I do realize about everything that goes into determining basis but was just trying to simply the question..

Thanks again ! !

Example.  I bought a property for 100k and sold it for $500k  so, I have $400k profit.

I 1031 the property  above property and buy 2 properties one for $400k and one for $100k. 

a year later sell the $100k property for $150k

How would my basis in the property  I just sold for $150k be calculated? (Not talking about including expenses and selling costs and stuff)

I'm thinking it would be transferred proportional to the original basis I had in the first property I 1031ed.  So, about $20k basis give or take? 

I hope this makes sense.

IN my opinon Bowie has some of the best value for the money but most of the schools in Bowie are subpar to Anne Arundel county.  (a few elementary Schools are good but none of the middle schools or high schools in Bowie are any good) Crofton is higher priced  than Bowie and has a similar "Vibe" as Columbia.  Crofton also has a new high school that is set to be one of the best in the State driving up demand from Families with kids and therefore prices. 

Oh and I guess I should add that if I was only going to be in the area for a few years I WOULD RENT AND NOT BUY. The market is crazy and IMHO inflated due to Covid. This area of Maryland has some of the highest transfer taxes and costs to buy/sell in the country that you would have to recoup with appreciate to break even for a sale in 2 years.

I'm finding banks have a maximum amount they will loan on a primary home Heloc..  So, I'm thinking it may work to get 2 HELOCs from different banks. 

Say I have a primary residence that is worth about $1,500,000 and it doesn't currently have a mortgage. Can i get 2 Helocs one as a first position HELOC and another as a 2nd position HELOC? I'm thinking like $400k to $500k for each one? This would still put me at around 60% LTV.. I just don't know how banks feel about being in 2nd position behind another Heloc.. Even though it's really the same as being in 2nd behind a regular mortgage.

I would agree unless you are getting an AMAZING deal on this.. I would not take it on..

The way I usually handle something like this is to figure out the value of the building in it's Legal conforming use.. (Probably as a single family) and then add in the cost to bring it back to that use. Changing walls and doors and removing extra kitchens, ect..   If I'm still okay with purchasing the property based on that price then I'd move forward but it rarely works out that way. 

Assume you are going to get caught and have to bring it up to code in the price you are paying.

Ray

I would think a commercial loan on the new multifamily would take the potential rents of the new property as income along with your MASSIVE downpayment I'm sure you would not have an issue getting a loan. 

Thanks Bill.. That is what I thought

I've read property taxes are not considered transactional cost.  So, if when selling a property  that I have $10,000 back taxes on the property that were planning to be paid at closing . Would I need to pay those  taxes prior to the closing?  Pay them in Cash at Closing? or are they allowed to be taken from the proceeds? 

I have been buying property at foreclosure auctions for the last 30 years and find that most investors have the same numbers in mind..  They are also looking for the same general returns.  That is usually around 15% to 20%.   assuming low/average risk/variables. I'm assuming you are asking as a wholesaler and trying to figure out how to determine a profitable deal. 

I would suggest this. 

ARV - Renovation cost-10% for closing costs and carry costs. - profit 20% - renovation cost. = Number to buy at..

For for example

a house that would sell for $500,000 and needs $50,000 renovation.

$500,000 

Subtract (Profit and Costs)  30% of Cash I'm putting in the deal ($450,000) which equals ($135,000)

Subtract - Renovation ($50,000) 

= buy for not more than $315,000  

The biggest issue I have seen with wholesalers is they don't really research the ARV properly.

They pick the highest price any property has sold and use that as the ARV. WHICH IS WRONG. You need properties in the same or similar area. You also need properties that will be similar in renovation when finished. A $50k refresher renovation will not get the same ARV as a high end "Gut" Renovation.