All Forum Posts by: Dave DeMarinis

@Amber Singleton A deal takes 3 things. If you bring at least one, there is a spot in the deal for you.

1. Finances - either cash or the combination of equity and debt
2. Deal - identified property, strategy for improvement/management and/or exit
3. Execution - the hustle and doing what is required to improve, manage and/or sell/refi

Find a deal, offer to be the hustle for someone or combine financial resources with another partner.

@Shiloh Lundahl do you agree with partnering or was your point even more around getting one's financial house in order first?

I am an investor in California, Huntsville (AL), Ohio and South Carolina. I'm primarily a lender as well as doing heavy value add investing. After looking at the Richmond market, I'm planning to add it as my next focus market. I was planning to go to the 2/17 and 2/18 meetups but it looks like they both were canceled.

Anyone interested to talk about real estate investing and/or walk some properties? Let me know. I’ll be there 2/18 and 2/19 

I am a lender and heavy value add investor in California, Huntsville (AL), Ohio and South Carolina. After looking at the Richmond market, I'm planning to make it my next focus market. I was planning to go to the 2/17 and 2/18 meetups but it looks like they both were canceled.

1. Are there any meetups 2/17 evening or 2/18 or 2/19?

2. I'd be happy to host an informal meetup the evening of 2/17 - who is available?

Anyone interested to meet 2/18 or 2/19 to walk some properties, renovations and/or talk real estate?

@Jeremy Hackenberg I'm a lender and heavy value add investor and Dayton is one of my focus markets. Lets do a quick case study on a $50K duplex in Dayton. I think it will be helpful.

How much are rents? (what is unit configuration)
How will you use your $15K?
What will your PITI be per month?

Most importantly, do you have a lender lined up? Single properties and loans below $50K are very difficult to get decent long term financing on them.

The top 3 reasons for investor failure? 1. Lack of reserves, 2. Lack of reserves, 3. Lack of reserves

The one enabler I would add to @shiloh lundahl advice is if you don't have sufficient reserves - partner with someone who does. Ideally they have experience as well and you can help them, learn yourself and build up sufficient reserves for the next deal.

Anyone looking to gain a little experience want to walk a flip in progress? 
A pretty quick flip, recently started in Hazel Green 
A quick renovation in SE Huntsville 
A MAJOR flip in Lowe Mill area 

@Bryan Weiss glad the deed was finally recorded. Let me know if there is anything I can do to help you grow in Huntsville. I really like the Huntsville market for investment opportunities. I do invest in Northern California but really because I live there. Huntsville, I chose purely for the economic and market opportunity.

@Bryan Weiss I assume the deed recording is for Kentucky property? Is there a lender on the property? If so, they can also help you as they likely have escrow instructions requiring a very quick recording.

I invest in as well as lend in Alabama, mainly Huntsville area. Are you planning to invest there while you are in Monterey or mainly when you return? 

@Stephen Wilson@Patti Robertson There are a few things to keep in mind for Opportunity Zones.

1. You are only deferring the tax on the capital gains. That means in 5 to 7 years, you need liquidity to pay those taxes. You should not count on that coming from the OZ investment. 

2. Depreciation Recapture is not eligible for OZ investment. Unlike a 1031 your depreciation recapture will be due immediately.

3. If you go to an OZ, you forfeit the potential of continuing to step up the cost basis of the exchanged investment at death ...

4. The outlook for tax brackets and capital gains rates is murky at best. That gain will likely push into the highest tax bracket and a large increase there and/or less favorable capital gains treatment could be a big stinger.

5. State income tax is another complication - many possibilities from same treatment as Federal to not eligible in the state to deferring into a state with income tax (where Florida doesn't have it) and all possibilities in between.

Most importantly, get professional advice and I would grill them on specific OZ knowledge and understanding. It is all new code and changing quickly so there are many CPA's that are confused about it and you don't want one of them advising you.

Now for the good news, if you make it through the hoops AND your OZ investment is a home run, you will NEVER have to pay taxes on the new gains of the OZ investment itself.

I do. I have a few properties under renovation. Let me know if you are interested in walking them and taking pictures and let me know what you think. Those rents are a red flag. Below $800 is a challenge. How many bedrooms?

3X income is a normal requirement, that means $1800/mo which is basically $10/hr. Unfortunately, households with a total income of $10/hr tend to be financially unstable with no financial cushion and regularly move jobs. It isn't impossible, but it generally leads to higher turnover, higher vacancy (physical and economic), higher evictions.

Also, 10% of rent for property management is not very many dollars which limits the quality and attention you can get from your PM. Also, the repairs & maintenance, insurance and CAPX exceeds typical % rules of thumb because 10% of a small number isn't enough to pay for a roof, HVAC, etc. and those costs are not cheaper in a cheaper house.

I assume you are planning to self manage, but I would call several PM's and ask them their opinion on market rents at that address and for your configuration. Also, ask them if they will manage it for you. Hopefully, they will give you some good news and forecast higher rents. Either way, the conversations and data will tell you a lot about the outlook.

However, even more important is your comment about delayed renovation because of capital constraints. The Top 3 Reasons investors fail is a lack of reserves (and a lack of reserves, and a lack of reserves ...) trying to fund renovation from property cash flow is a huge risk and VERY hard. Given the likely renter profile and rent levels - you need even more reserves for this property.

If you still really like this deal, I would seriously consider bringing in a partner. They should bring reserves and renovation money at a minimum and hopefully some experience as well. I think you will be very happy with that decision if you go forward with the project.

Best of luck.

@Asa Ifill Craig Paulus at Paulus Title. He can handle and advise on the paperwork and his team and closers are exceptional. I’ve done deals with several title companies there and Paulus is the best by a wide margin. 

Most importantly - congrats on gettin a deal. What are your current rents, market rents for current condoition and projected rents after renovation?