All Forum Posts by: Christine Oliphant

I have the phone number and email address of an absentee owner in my area that I would like to call this week to try and buy her house. I am trying to figure out the best way to finance the deal with the cash I have available.

She purchased the home new in 1994 for $125K. With a 7% mortage I believe she would still owe about $70K. Houses in the same neighborhood that have sold in the last 3 months are going for $247-$252K. A home just down the street was purchased 7 months ago for $215K and someone renovated it and sold it 2 months ago for $270K.

The property is definitely going to need some work. I could only see the inside of the house through some partially opened blinds so I can tell she is a bit of a hoarder. There are stacks of boxes and stuff everywhere. The back deck is falling off and at one point the weeds in her backyard stood 2 feet above her fence. The front yard has completely overgrown bushes, tools and bags of mulch that have been there for years.

The neighbors informed me the owner moved out of state about 6 months ago to retire and will figure out how to sell it down the road.

Ideally, I would love to hold on to the property as it is right next to another rental property I own but I only have about $65-70K max to spend. I could also use some peer-to-peer lending for some additional cash but cannot get a loan through the bank due to my income and other mortgages. So, if I cannot buy-and-hold I would like to flip the property. Since my funds are limited, is it possible to do a lease-to-own option where I can pay the owner while I rehab the house and then when I am finished and sell it, I can pay her off and keep the remainder?

Another option I thought of is to see if she would be willing to allow me to rehab the property without paying her anything upfront and then we can split the profits once the house sells.

I'd love to hear from others what you think is the best way to move forward considering that money I have available.

@Chris Attiliis - There are lots of groups in the area. I'm attending one this Wednesday (4/17) in Vienna. It's called the ALFA Real Estate Investors Community. Been a couple times and it's been really informative. Lots of great networking too. You can find out more here: http://www.meetup.com/ALFAre/

There is another one in Reston but I haven't been to this one yet (although I will probably go next month). It's called the CAZA Real Estate Investor Network. You can find it here: http://www.meetup.com/cazainvestornetwork/

Hope this helps!

@Robert Slatkin - I've been going to the ALFA Real Estate Investors Community in Vienna recently and I'll be going again this week. They've had great discussions where I've learned a lot and there is lots of great networking too! They don't charge for the group or sell anything.

A lot of those people also go to the CAZA Real Estate Investing group in Reston. I haven't been yet but they have a couple of upcoming meetings that look really good so I'll probably be checking it out. I think they typically charge a fee to attend.

There is supposed to be another CAZA group in Haymarket starting in another month or two. I found all these groups on Meetup.com

It'd be nice to meet a fellow BPer at one of these groups. Maybe I'll see you there! It'd be great to connect.

Welcome to BP! I'm in Northern Virginia too right down the road from you!

You definitely had the best intro I've read so far. Your current work sounds very interesting. It's impressive you have some time for real estate investing too.

I have a similar model of wanting to buy, fix and rent properties as well as buy, fix and sell. It depends on the property. Northern Virginia can be tough with the prices but I believe there is a lot that can still be done. I was looking at another area as well but decided for now at least that the grass isn't always greener on the other side, so I think I'll stay put for awhile until I build up more experience.

Are you in any of the local real estate groups in the area?

Keep in touch!

Christine

Thank you for everyone's responses. This is obviously a complex topic and it sounds like if you don't have experience it is best to consult with your CPA to make sure things are done correctly.

And as @Peter K. said...flipping can be flipping expensive when it comes to taxes. Seems like that's the short version of it all! :)

I've been learning about SDIRAs and from what I understand when you use the money in your real estate business, the money you earn will be tax free. So as Amanda Han put it in podcast 49, if a wholesaler puts a $1,000 earnest money deposit down and then makes $10K from the deal, those earnings are tax free.

Does this also apply when you fix and flip a property? So if you buy a property for $50K and end up with $30K in profit, those earnings are not taxed?

It doesn't seem like that could be the case since people are doing 1031 exchanges but I'm just trying to figure out the best avenue to save on taxes for fix and flip deals.

Am I understanding this correctly?

@Brock Link Good to hear about Warrenton. I'm considering getting to know that area more as a possible way to invest especially as there isn't so much rush hour traffic and such to worry about.

Have you checked out the CAZA meeting in Reston (from meetup.com)? This week it says they're talking about identifying, qualifying and negotiating with motivated sellers. I haven't been to that one but I've gone to the last couple of ALFA group meetings and they've been really informative. You should check one of those out. Definitely has been a great place to make connections.

Definitely let me know if you find anything out this way! Good luck to you!

That's a great idea. I'm sure they didn't pay for the best carpet cleaner to come out. I'll definitely have someone come out to look at it and of course, paint the deck.

Hardwood would be awesome so I wouldn't have to worry about wear and tear of carpet.

Thanks so much for taking the time to read this and share your thoughts. I definitely feel better prepared going into the final inspection and discussing it with them.

Thanks Bill! This is very helpful. I will go ahead and do the final inspection and give them the list. I will definitely have things fixed just in case.

I am unsure about the carpet since that's not coming out how to charge for that.

My current tenants have moved out as they just bought a home but the lease doesn't expire until April 15th. I haven't done the final inspection yet but have been through the house and noticed a couple of things. I did talk with them and I agreed to let them know if I see anything to give them a chance to fix it (as long as I feel comfortable with that and then I wouldn't have to worry about the work).

I'm not sure what to have them do with what I've found. Here is what I've found.

1. I did notice a few stains on the carpet. The carpet is beige and there are a couple dark spots. Not horrible but still there. As part of the lease they were required to have the carpet professionally cleaned which they did but it did not remove the spots. One of the spots is in the bedroom and looks like an outline of a rectangular box.

I asked them about this and they said they don't see the box stain in the bedroom and that some of the other stains were noted on the move-in inspection checklist. This is true but one larger spot was not there.

2. There are a handful of yellow lines on the deck clearly caused by spray painting. While I don't think they did this intentionally as it looks like they were trying to spray a canvas or something, it did still happen. The deck could have used some painting/stain anyway but I wasn't planning on doing that this year. I don't really know how this could be fixed other than just painting the deck.

When I asked about this they did not respond.

I'm deciding whether I should just ignore the stains since they didn't come out (not sure what else to be done) and whether or not to take the painting of the deck out of the security deposit.

They've been awesome tenants. Always paid on time, only called when there was a real problem, keep the house in good shape and would let me know if there was something that could potentially be a problem just so that I was aware.

I've love to hear some advice from other landlords about what you'd do in this situation.