All Forum Posts by: Kumar Tummalapalli

I feel , getting a brokers license will help for sure . Mark Ferguson had a blog post on this , look him up . 

The only thing to look out is - if you are not comfortable with exams , just plan accordingly . I did quite a bit of research for a friend of mine and found some ways to make the process less painful , PM Me if you would need more info , we can take it offline .

Hi @Brent Coombs I think the tax benefit in this scenario is by getting tax deduction on the interest paid .

@Rene Garcia - Few things that come to mind :

1. When you rent out , the rental income is "new income" which would be taxed ( in CA , I think it might be negative , but check what exactly is taxed)

2. Can you claim deduction on the interest paid on other units as well , I know this might be complex , but if you understand  these deductions are available only for owner occupants , In this scenario , you are technically occupying only one unit .

3. Also i think , it is a better idea to ask you current CPA to explain clearly with an example

4. Another important thing is - dont go with FHA for your first loan , try to use a conventional 5% down loan if this is your first property . You can still use FHA on your next property .

5. Also see if you can purchase a smaller property only on your name and see if you have any advantage - because you can only have one FHA property , so you can put it on your wifes name and get another property . Explore this

6. Now a boring advice : You will get some good advice and some absolutely "no clue" advice and some "wrong" advice here . So its good to take all this info , but cross check everything independently . there is a bigger pockets episode on tax advanatges , listen to that two three times and contact them . They might not be cheap but , you will soon learn the importance of right advice

Finally , in this new task , your biggest challenge will be finding good resources . You will bump in to tens of incompetent real estate agents , before you find the right one . Whether they are through referral , or a website - keep an open mind and assess , if they are adding value . There is every possibility of a scenario where you wont meet that knowledgeable real estate agent , depending on your search strategy . Use data to backup claims . Ideally fnd some one who has the local practical intelligence.

Good luck

Thanks @Steven Foster Wilson got it , Good suggestion

I am currently going through a Homestyle loan in chicago area and would like to see if there is anyone who has recently done that or in the process of doing .

I just want to bounce off some ideas and share some findings . good opportunity to learn from each other before, during and after the loan

you can PM me as well

Thanks Much

@steven wilson   This looks awesome ,Vanity fixtures and tub refresh are cool.

For tile , did you have to remove the existing tile 

The second most expensive thing seems to be those frameless glass doors , They themselves would be 1000 or so ? Are there better ways ?

I heard - if we acquire a property with Hard money , then we cannot refinance with out seasoning . I just want to make sure that i understand correctly , let say - after purchasing the property with HML , may be in a month , i can refinance it ?

also - you termed cash out refinance is 6 month wait - when does this 6 month clock starts , on the day my loan is disbursed?

The numbers look good , why would you avoid a land locked property if they give such returns with no risk , In this scenario you loose 117 $ ??

I know this is a open ended qn but - uncoventional advice always strikes me , in one of the podcasts you mentioned doing a gut rehab ( or rehab with extensive scope ) might be better than a lipstick rehab .

Many of the investors I spoke with suggested to start slow , but in my personal life and professional life , i had success taking up complicated projects so on any project i tend to ask , why should I start slow

Some of the advantages of complex rehabs ( gut/extensive rehabs ):

- lesser competition

- better room for negotiation

- higher value rehab , so better contractors might be interested

- Ability to add more value

- Opportunity to learn more ( I am not experienced )

Disadvantages :

- More risk of finding things one after another which are interlinked. 

- No DIY possibility and aso need skilled contractors

Advanatges of lipstick rehabs :

- Easier to see the scope 

- DIY possible

- Less risk as its more cosmetic

Disadvantages of lipstick rehabs :

- Lots of competition and some times from retail buyers as they just see the price difference and think they are getting a deal and that they could work on it over the weekends

- major value add might not be possible . For ex replacing a good but outdated tile with a new tile . 

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Are there anythings that you would add - that might help investors in similar dilemma .

First of all - I commend you and thank you for posting this , most ( even myself) dont like to post the negative stories . so big thanks

As usual - I see the "you get what you pay for" comments , this is the biggest myth . No matter what you pay , a crooked contractor will be a crooked contractor its just that their scams will be more sophisticated , more polished . In fact a sophisticated scammer will have better protections in terms of contracts so you will be "screwed officially" . 

Remember that most people hiring the contractors might be doing it first time , and the con artists have perfected this as its their job , so there is a huge imbalance in the "knowledge to screw " . 

The key word is "risk mitigation" . Chart out all the worst case scenarios and see how your contract can protect you in those scenarios .

I know talking to Attorneys is not the most pleasant thing when you are paying 400 $/hr , but if the project is large scale or if you intend to do this on a regular basis , get the contract drafted by an attorney well versed in litigation/arbitration/mediation .

I have been doing this exercise since the past 15 days  so if any one is in this phase of hiring a contractor , we could definitely bounce some ideas off

Dont walk , run or even better bolt from there . Please...