All Forum Posts by: Clayton Coombs

Hey guys, I've been a full time real estate agent for several years now and up until this year that has always been my primary income. However this year I focused more time flipping properties than selling real estate as a real estate agent. I will net approximately $250k from flips and $50k from real estate sales this year. I do own 3 rental properties (free and clear) however I just picked up 2 of those in the last 6 months... My concern is that I will probably have to pay $80-100k in taxes which never looks appealing. I did meet with my CPA but he wasn't much help. He told me that most people would love to be in my shoes with little debt and good income. Although I understand I am very fortunate that's not the advice I was looking for from my CPA. I am now looking for a new CPA and figured there are lots of professionals flipping properties on Bigger Pockets and felt this would be a great place to get some advice on strategies to lower taxes and find a good CPA & accountant. Taxes to me are like a foreign language... I do track all my expenses but the tax code makes no sense to me... Thanks in advance for any help!

Combs Law Group is a pretty big real estate attorney here in Phoenix and no I'm not related to them lol (602)957-9810

Hey Brian, I am not a CPA but I am a real estate agent in Phoenix. If you have lived in the house for 2 out of the last 5 years you shouldn't have to pay capital gains. Of course confirm with your CPA. 

Hey Cynthia, I have been a full time real estate agent in AZ for 7 years but I have never seen someone purchase a home with a HELOC. Typically they purchase the home with a loan and get a HELOC is secondary position or they purchase the home with cash and then get a HELOC in 1st position. Although I don't have an exact answer to you question I certainly wouldn't pay $2,500. I know a hard money lender in AZ that charges 12% interest with no origination fees and no minimum hold time. You could pay cash for the house, Get a HELOC and pay off the hard money loan? That should still be cheaper than the $2,500 the other company wants to charge you and maybe you can get a deal on a house by paying cash.

Although that doesn't directly answer your questions, I am sure there is someone on here that has the answer you are looking for. Good luck!

Hey William, I would highly suggest becoming a member of AZREIA (Arizona Real Estate Investor Association). They have monthly meetings where hundreds of like minded investors meet plus sub groups that meet throughout the month. Great networking & education, I would highly suggest atleast going to one meeting to see what it's about.  http://azreia.org 

Hey Ryan, There are lots of part time agents and if you go to any of the larger brokerages (Remax, Realty One, Home Smart, Century 21, West USA, My Home Group, Etc) they should allow you to hang your license even though you plan on being a part time agent. Look for a brokerage with low commission splits. A lot of companies now allow the real estate agents to keep 100% of commissions and then have a transaction fee (typically about $200) for each transaction plus a monthly fee of about $25. That's typically a lot cheaper than splitting 20%-30% of your commission with your broker. Good luck! 

Hey Samuel, I live and work as a real estate agent in the North West valley so I am very familiar with the area. On a positive note he has good tenants, I'm assuming it's a newer home since most of the homes in that area were built after 2005 (So low maintenance) and the properties are local so they are easier to manage. You are absolutely correct that you could get better cash flow in other states but with that he would likely hire a property management, Need to find need good tenants and if he purchased an older home it could have it's own list of problems. 

I don't have a crystal ball but I also agree a correction is coming in 1-2 years but not just in Phoenix, it will be nation wide. I would not suggest selling his homes in AZ to invest in another state just for appreciation reasons but it could make sense if the extra cash flow makes it worth it. I would just make sure you are familiar with the other areas you are thinking about investing in. 

I know you mentioned multiple mortgages and current market values but you didn't disclose how much equity he has in the properties and how much the mortgages are for. If he has a lot of equity maybe he can sell one property and pay off the other 2? If he is getting close to retirement he probably wants to play it safe and he doesn't want to be over leveraged when the market does correct it's self. 

My suggestion if he has a lot of equity would be to sell one property to pay off the other 2, that way he no longer making mortgage payments and can increase cash flow well playing it safe. However if he isn't able to do that it could be a better option to sell all 3 properties combine the equity to buy 1-2 properties for cash in a more affordable state that offers higher rents. 

Great to have you back in Phoenix Robert! Wes has a really good point. I didn't have a VA loan but did something very similar with my first home and was able to have my roommates pay my mortgage for me and I got all the benefits of being the homeowner. I also bought at the bottom of the market and when I sold several years later I pocketed $80,000, not a bad deal!

Also a lot of people don't know you can own multiple homes using your VA loan. If you ever have an VA loan questions I know a great lender that was in the military and specializes in VA loans.

Thank you for your service! 

I got a line of credit through Mid-First bank on my rental property. They were ok that it was is my LLC rather than my personal name and game me 70% loan to value. They should be able to help you.

Hey Josh, Great to see you are wanting to invest here in Phoenix! I live here locally and have been investing in single family flips and rentals for about 2 years now and have been a licensed residential real estate agent for 7 years. I have seriously considered multifamily and I'm actively looking for either single family or a multifamily investment this year. However the biggest hurdle for me has been finding a cap rate I'm comfortable with. I have really high expectations but would like a 10%-12% cap rate. With the competitive market we have here it's been nearly impossible to find.  I'm curious what kind of returns some of the other local investors have been getting?