All Forum Posts by: Chris Iley

Me and my son are going 50/50 on our first rental, duplex, section 8 home.  We are paying cash and will put a new roof on and will want to refinance right away.  My question is about how we should initially purchase the house in order to make a refinance the easiest.

my side-- I'm paying with a HELOC on a home i own 100%, 7x the amount I'm using for the purchase, i have no W2 work history for the past 4 years, but in january i closed on a fix and flip and made around 70k, made about 20k in realized gains in the market this year so far, but i don't have consistent income.

my son-- he is 19 and this was his first year actually paying taxes.  he prolly claimed 30-40k last year, but has a business that will make well over 6 figures this year.

So I'm concerned with neither of us having a big employment history refinancing might be an issue. The house is currently rented for a total of 1700$ a month and has several years of history as a rental. Im also concerned about buying the home in my name, and having the potential for something happening and my own personal home at risk. My son doesn't own anything, so maybe his name would be a better option? (he lives with his mom, not at my house) Eventually i want to put the home into the name of an LLC, but i don't want to make refinance difficult or be put in a position where we have to wait an extended amount of time but i need to keep my home protected. Maybe it would just be better to buy it in the LLC, and even if there is a few more hoops to jump through the combination of both our incomes might make it easier in the long run?

Thanks for the vote of confidence! I have "handyman experience". I have perviously worked for a company that remodeled kitchens and bathrooms, that gave me the confidence to do the "work/rehab" . I have a BS degree in industrial design, helps me with the "vision" of what the end result could/should be.  The only thing i didn't do was the flat roof repair and i paid someone to install the sliding glass back door.

Menards has very similar quality to IKEA. However  the cabinet boxes come put together at menards and ikea are flat packed (extra work).  There was also a 2000$ price difference on a 19 cab kitchen i just did, $4500 menards vs 6500 ikea.

Investment Info:

Single family home in metro Detroit

Purchase price: $121,000

Rehab Costs: $45,000

Cash invested out of pocket: $700

This was my very first flip! I did 95% of the rehab and I'm really thankful i took a chance on myself and have the confidence to go through the entire process while getting a first hand education on all the stages from trying to get a HELOC for financing, buying the property and holding costs, the rehab process and dealing with the city, selling and all the fees/taxes associated.

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

The home was the largest by square footage and cheapest home in the region i was looking in.  The home was vacant, neglected, dirty and had several leaks in the basement, water damage in multiple areas inside and a list of code violations from the city.

How did you find this deal and how did you negotiate it?

I saw this on realtor.com as bank owned, it was on the MLS, on a Wednesday and drove by it right away. Asked a friend of mine who is a real estate agent if i could go see it, but during Covid they weren't really letting people tour houses. So we just wrote a full price offer contingent upon inspection. The bank said we could go look at it, rewrite the offer without the contingency and they would accept. Looked at it Friday and Saturday we rewrote the offer and it was accepted.

How did you finance this deal?

I used a HELOC i had just qualified for. I used that to pay cash for the deal and was able to close in under 3 weeks. I paid for all the materials with the same HELOC and i performed all the labor.

How did you add value to the deal?

I updated the entire home.  I installed custom looking kitchen cabinets and granite, installed recessed lighting and multiple custom built in's.  Refinished the hardwood floors, all the electrical and plumbing fixtures are new. The entire house was repainted. A "flat" section of the roof was completely redone. I took the deck apart, re-leveled and installed brand new decking/rails.  I also did significant landscaping improvements.

What was the outcome?

After 6 months listed for $265k, had 23 showings in 2 days. 5 offers, 4 came back with highest and best. Accepted 270k no contingencies. 270-166= 104k gross profit before taxes/fee/commission. I paid less then $700 out of pocket total. Just HELOC interest payments. A grand slam as far as I'm concerned.

Lessons learned? Challenges?

I really learned the flipping process and looking back i made a few costly errors when it comes to efficiency .  Next time i would do all the structural, then all the  plumbing, then all electrical and so on...rather than room by room which was how i tried to do this flip.  I saved every receipt and logged it in a spreadsheet each week, but then i started looking at each receipt as a function of time.  How much time did i spend or waste each trip  i had to go get this or that. In a business where time is money, 100+ trips to Home Depot is a very inefficient way to operate.  I did 95% of everything, so it can be overwhelming and stressful, but figuring out how to overcome obstacles and reaching new milestones was even more rewarding.

@Eamonn McElroy

Thanks for the info. I figured that would be the case. so many loopholes out there...sometimes you don’t know till you ask.

Just finished my first official flip and I accepted an offer on the house in December 2020. We won’t officially close until January of 2021. Is there any way I can claim the income on my 2020 taxes?

This would be my first actual rental property. it has been used as a rental for years. Its in really good shape and could be rented out immediately. long term tenet just moved out.

there are not many rentals available in our area and it is a high demand area

about 23k up front with income of only about $3xx.  then if you factor in the 50% rule its less than 200$.

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i guess I'm really trying to know if building a deck like this would pass code?  Was it at some point acceptable to use this framing method for a deck?  There is defiantly some sagging in a couple places.

This is a flip property. The deck had some very rough looking boards so we decided to just put in new decking and railing. But I have some concerns with the way the beam and posts are connected. I feel like that’s a common mistake but now that I have the decking pulled off am I responsible to fix it? Also, the deck is not attached to the house,is that an issue as well?