All Forum Posts by: Bob Shome

I'm doing a rehab flip right now. I was presented the deal as both the funder and because I've done these before. We are hiring out a lot of the work but are both doing a fair amount as well. We agreed to a hourly rate for the work we each put in. We agreed that my partner would essentially get a finders fee on part of the profits and then we'd split the profits 50/50 after that. In our deal he's getting 70% of the first $100K in profit and 50/50 after that. In hind sight I think that was too generous and should be more like 60/40 or even a set fee. This is an unusually profitable deal though. We stand to make about $275K in total. We will have about $150K into it and it will sell for about $425K. The profit potential was so much I really wanted to make it work so that's why I basically agreed to a $40K finders fee. These folks agreed to finance the property for a year so we are only out a $10K down payment and our $40K rehab costs. We will likely never find another deal like this again. 

In the state of WA if you hire a contractor that either doesn't register as a business or doesn't have WC insurance then you are liable for their WC. Also our WC is thru a state agency.

Also in our state if you purchase, remodel and sell a property within a year you are required to be a licensed general contractor even if you hire a GC and all licensed subs.

This guy should probably sell his rentals!

http://www.kirotv.com/news/news/landlord-strips-down-front-tenant/ncjxG/

If it is vacant unproductive land (i.e. you are getting any money from it) then no you can not currently deduct any expenses. You must file an election to capitalize the expenses and add them to the basis of the land.

Disclosure: seek you own tax advice. I am a CPA but I am not providing you tax advice.

I'm not in Las Vegas but in Washington State and the same thing is happening here. The deals on the MLS aren't there and you have to work harder to find them. I'm thinking about changing to a buy and hold rent strategy in this market.

Houses are selling fast though. My last one last month had a full price offer in six hours. Next one goes on the market this week so we will see that time frame soon.

I'm trying to come up with a way to purchase and rehab a home for myself. I've now done 4 flip rehabs so I have experience with the renovation work. The issue that I am running into is the downpayment requirements (20%) plus rehab costs. Most banks I've found won't base the down payment on the after improved value but on the purchase price plus repair costs. I've thought about HML but most don't like to touch a personal residence.

Perphaps a HML as a rental with a rate/term refi when completed would work. Once all the work is done the LTV would be around 75%.

Thoughts/Ideas? I have the cash to do the improvements just not a 20% down plus improvements.

Wayne, The FDIC certainly does cover loan losses on failed banks. This was one of those banks. The new bank took the 1st 20%, the FDIC 80% of the next 10% and everything after that. So the bank is out 22% but the kicker is that they bought these loans at 70% so they are actually making money by foreclosing.

i've been looking into a REO for sale in my area. The house is large like over 5,000 sq ft large which is uncommon for my area. Its a great house only 3 years old. Problem is its been stripped bare by someone, cabinets, HVAC, appliances, hardwood floors and even the floor trim. They even took the exterior rock wall and trees!

So it basically needs to be completed. I figure its gonna take $300,000 inside and out to do nice. Then you will have a 850k house. Problem is only 8 houses over 600k that aren't on waterfront sold in the past 12 months. So I was planning on moving into this thing till it sells.

I was going to make a low offer because the bank is getting fully reimbursed by the FDIC on their loss. Someone from California now have a pending contract to buy it. The kicker is that they haven't even seen the property. Either these people have a ton of money or they are nuts.

Just had to vent. It's really tough to find anything worth buying and rehabbing right now in my area. Though it can be done. I've got two more under contract that should produce a solid not good profit.

Hopefully next week according to them

In the area I like to work, Pierce County WA, right now their are two HUD homes that I can bid on and zero Fannie Mae properties, and only a handful of bank owned properties. The inventory is very low and its killing me. Spending way too much time trying to find a project. And the prices I'm competing with are crazy and leave little or no profit potential.