All Forum Posts by: Cory Carlson

Your basis is the value of the property at the time of inheritance. A broker will be able to help you determine the value of the land. 

It would be wise to ask your CPA the capital gains exposure once this strategy is being executed. For example, if the land was inherited with a value of $1,000,000 in 2017 and you split off 12 lots that sold for $200k each. What would the capital gains be on the sale of each lot? Sometimes it makes sense to pay the gains if there are not adequate replacements. Sometimes it makes sense to have a back up plan for a DST. Sometimes the long term capital gains are palatable and it may make sense for you to pay the tax rather than force a bad deal. That is subjective though - I just advise my exchange clients to understand that number and understand their exposure. I find it silly when sellers force their exchange for an underperforming deal just to avoid $25k of taxes.

In my opinion, wholesalers do not become licensed because: 

1. Licensing takes time, effort and money. It is a career choice. 

2. Wholesalers are not regulated by Real Estate Agency, therefore not required to abide by certain laws and disclosures. This is changing in Oregon as @Jay Hinrichs mentions. Look up HB 4058 for anyone who wants to read up on this. 

3. It appears to be a means to an end and the path of least resistance (somewhat related to number 1). Most newer wholesalers I meet are looking to do this just to build their own portfolio, hold on to the properties they want and capitalize on the ones they do not. The reality is this is easier said than done. 

4. The profile of seller who uses a wholesaler is commonly anti-broker. Even if arguably their net could be higher listing it. Transversely, wholesalers do manage to get buildings sold with one single walkthrough and have a deep cash buyers list. 

5. Wholesale assignment fees are higher than commissions even though they could still use a Net listing agreement. A net listing is a type of real estate listing agreement where the seller specifies a minimum price they would like to receive from the sale, and any amount over that price is considered the real estate agent's commission. 

Frankly I have been to dozens of wholesaler walkthroughs where its blatantly obvious the seller has no clue what is going on. They think they have a deal with this wholesaler and its obvious the wholesaler has no intent on buying the deal. Is it wrong they tell the investors if asked to say they are "partners", or "contractors" just bidding the job? I think that is what Oregon is trying to track down on - Sketchy people dodging disclosure. 

Read summaries of SB608 and HB 2001. Then find yourself a wonderful attorney and management company! 

@Emily Gowen These types of questions are precisely the focus of my firm. I think a return on invested equity analysis outlining a few scenarios with my models would answer your questions. 

Holding properties in all cash early in an investment career is missing out of leverage returns. The denominator in the calculation is your capital/equity and with no debt the return on your existing equity is low. Even introducing a moderate amount of debt and purchasing another, OR exchanging out of the existing into a larger higher yielding property type with some debt. Let the math speak for what is best. 

A 1031 exchange is nothing to be afraid of. I have done several multiple property 1031 exchanges throughout the state for my clients who are looking to scale and improve their investment portfolio. 

Welcome Megan and congrats on taking your first step! The house hack is a wonderful strategy to lower the entry barrier into getting some doors. Usually for first timers and low down buyers the underwriting is a little more simplistic than traditional buy/hold investors purely seeking yield. 

I generally categorize my house hack clients into two strategies/considerations. One is strictly investment, where the neighborhood/location is not important just the potential for upside and low cost living. The other side of the line would be someone looking for a nice place to live and just subsidize their housing costs with adjoining unit(s) rents. It's funny that over time usually people fall into the latter; or some combination. After digging through listings and getting feedback for needing a garage for all the toys, a fenced yard for the puppy or in a great location next to work. 

My advise is to just set realistic expectations (I can help with that!) and run a few scenario's then adjust accordingly. The math is fairly straightforward for low down buyers!

Welcome to the forums! There are certainly some opportunities to build a portfolio using the BRRRR strategy. The tough question can be in the exit with where rates are. Yes, you can ultimately own a property with little/nothing out of pocket when you're done - but when you reposition with today's rates even moderately leveraged stabilized assets can be hard to find cashflow with debt service and a realistic operating expense load. I think a conversation about long-term goals is in order!

Welcome to the forums @Alex Johnson

Sold our Bandon Dunes STR far above market value for the real estate because it was a performing STR with years of financials. Financing can be tricky but is possible with DSCR loans. Lenders seem to be opening up their underwriting criteria to STR's.

For an existing STR with good financials, I would say the income-approach can be used to achieve a higher value. That is, it is a well performing building that can be transferred upon sale to a new operator. A broker that specializes in income properties can help you value this. Just watch out, tons of brokers on here claiming to be investment brokers using BP analysis and hopes and dreams to advise their clients.

https://www.tcmconstruction.net/ Can help you out. I know the owner Chad personally. Tell him I sent you! 

*I have no affiliation with TCM construction. 

@Nathan Brock Welcome to the forums. You will find a wealth of information here. I started my career living in Bend, actually my first transaction was a 4-plex in Redmond. Buying a conventional buy/hold property in C.O is difficult. Home prices are high and with moderate/high leverage debt service is a killer. 

I would consider owner occupying a property through your work, and if your life style fits, gets some room mates. This will subsidize your housing costs and start to introduce you to the benefits of housing price reduction, principal pay down and some tax benefits. BP coins this as a "house hack".