All Forum Posts by: Greg Scott

I presume you are wholesaling this, correct?  As an owner you will usually get your best price when fully marketed.

As a wholesaler, the best way for you to market this would be to already have a buyers list.  If you don't have one, you could partner with someone who does.

You could always post something here and see who bites.  I have friends all over the country looking for a good deal.

Id offer to let your old tenant out of her lease, no penalty.  Otherwise, offer to install a shower mixer valve which will prevent scalding.

You cannot remove the new tenants unless they are violating the lease.

It is best to look at the after-tax consequence of each action.

Flipping can be considered a trader business an you would pay ordinary income taxes plus FICA. 

Rehabbing and renting is taxed as rental property. Often the cashflow can be 100% shielded from tax through depreciation.  Also, depending on your personal situation, depreciation can reduce taxes on other income you receive.

The latest appraisal may be accurate depending on when "a couple of years ago" was exactly. As you know, interest rates have gone up since mid 2022 Cap Rates have gone up a corresponding amount, which means that if NOI has not changed, the valuation has dropped.

Are you having the property appraised for the purpose of a sale or sale of your shares? (With a HUD loan, I would be surprised if you are looking to refi.) If your are just doing it for informational purposes most brokers can give you a BOV that may meet you needs. If you need a true appraisal, there are many firms that can do that. On our latest refi in Indy (not to far away) we used BBG out of Chicago. Their info is attached.

I don't know anyone in real estate that has elected S-corp over Partnership.  There may be some specific use cases where an s-corp is better.  In most real estate cases you simply have forced yourself to pay more taxes by choosing s-corp.

I don't pay myself a salary.  I regularly take distributions.

Your expectations regarding grout may not be reasonable.  The chip on the cabinet is a slightly different issue.

It would be unusual to fix the cabinet now and take it out of the security deposit as you are just reducing your protection.  If you do have the cabinet repaired, just add it to their next month's bill.  I would, of course, communicate this to the resident.

As far as the grout, I don't think I've ever had a resident that "maintained the grout". If it is just a mildew issue, ask them to go buy some Tilex or other mildew cleaner as that will likely clear up the problem.  If they don't clean it by your next inspection, then give them a lease violation notice. If you are asking them to manually clean the grout with a grout brush and then apply a sealer, that is not realistic.

The LLC operating agreement will determine whether you can sell shares and how you go about that. Even if you can sell, since it is a non-liquid asset with no ready market, selling could be a challenge.

You are probably lucky that DCHA is so difficult to work with.  They will also be hard for your resident to reach too. 

Given that its been over 4 years, and now this is coming to light, I have a feeling your resident had a discussion with someone who gave them this idea.  Whether it is a friend or a lawyer from free legal-aid, you don't know.

Based on your numbers, I calculate your potential liability here at about $10K, assuming there are no penalties from having potentially broken the law.  If there are penalties, they could easily double or triple your potential risk.  Isn't it worth a few hundred bucks to get the opinion of an attorney experienced with this program to make sure you are correct?  

If you find you are on solid legal ground, then just proceed with a lease violation notice for late payment.  If you find you are not on solid legal ground, you have the ability to correct this before things potentially get worse.