All Forum Posts by: Ed Dunbar

 yep, totally agree. I think your outside perspective sealed the deal. Appraisal it is. 

Thanks for the feedback! I think hearing all that it is a no-brainer to just get the appraisal as insurance against a bad move. I think its going to turn out well but I am cautious with large investments so I really appreciate everyone's input. Something about just typing it out with other people who do this made it more clear. 

Also, this is not our first renovation; just the first one of this particular situation. Ill keep gathering info and plugging along. I see why they say this is work! I enjoy it a lot but its definately not easy when I work 2 other jobs! 

Hello! I generally get good feedback on here and this is a situation that is a bit odd so I figure this is the spot for it. 

Got our first investment house under contract! Did a really low ball offer, had the owners counter and met in a decent starting spot. Considering, per BP Podcast, that being under contract is dating and not marriage here is the situation. 

We went under contract and got an extended closing date for November because the current owners have had the home rented to the same tennant for 30 years with zero rent increases; and the renter leaves in Nov. The current owners are elderly and trying to get rid of the hassle as it needs quite a bit of work. 

Going in, we knew there would be work which we were prepared to do, and figured we would further negotiate the price as needed. The inspection report reveals significant structural damage and the normal odds and ends on a 30+ year old home. Where I would like feedback is on our process. 

I am considering everything we are doing information gathering as I have scheduled 2 contractors to give me estimates on the repairs and what it will take to get this thing in reasonable condition. I am planning to get estimates for the structural issues and ask for that plus overages plus more off for the condition of the home which was not apparent upon first glance or a walkthrough. 

Additionally, I am considering getting a private appraisal because this home is quite hard to value. The realtor we use is also the listing agent so I know his main role is to represent us both; but after getting the inspection report and continuing to research I still feel as if we are a bit high. 

A. What would you do in a similar situation?

B. What am I missing? We did not pay any DD fee so our total out of pocket is just a few hundred for the inspection. Things have been taking a bit longer than anticipated because lining up contractors have been tough and the owners will only allow us on the property for a 2 hour window 1 time per week as the renter works nights. 

My thinking is that we just keep gathering info and that even though this has drug out a few weeks longer than anticipated so far, that that time actually works in our favor as they are going to have this hassle with any other buyer as well?

Anyway thoughts on those questions and if a private appraisal is a good idea or one you have used before? 

 Caveat: I'm 100% rookie in real estate investing. 

New to the investing world but I have learned a lot about the OBX STR market in the last year. The cash flow might not be astronomical but there are deals to be had on both ends of the islands. I am hoping the "be greedy when others are fearful" will pay off as we recently went under contract on another home out here as a primary residence. As far as NC beach properties, what I am understanding (Correct me if I am wrong) is that you are pretty set no matter what happens in the economy to an extent. Tourism seems to increase consistently and if the economy tanks, regional tourism increases.

Hello!

We sold our home after living there for over 5 years. The home had an ADU which we used as a home office. We sold in 2022, and our accountant is saying that we somehow owe taxes on a portion of the proceeds as the tax forms included a 1099 SA form (I have no idea what that means) and that 31% of the proceeds would be taxable. This would be an astronomical tax bill that we have absolutely no way of paying, so I am hoping someone might have a tip or 2 on how to navigate this? We rented it out when we first moved in to a tennant and eventually had him move out and used it as a home office.

Hoping someone has a magical fix for this. 

 Good points and that is exactly why I was posting here. Feedback helps!

I tend to err toward caution so as I am thinking about it the most prudent may be to just stick with a reasonable downpayment with cash, suck it up and pay PMI, do the absolute must renos with cash, and then do the heavier work down the line in a year or so once we get a feel for what we are doing with the rental and what the maintenance and cashflow look like. Then we could probably do it all with cash and avoid catastrophe. We can do most of the reno work ourselves so we can take our time and do it piecemeal.

I also think starting lower is a smart idea. Worst case is they don't respond (unlikely) and we just move on. And yes, plan is to hold long term on both 

Hey thanks for the reply! Re-reading my post it does look a bit stream of consciousness inspired so my apologies. 

My real main question is: If you had the same funds (45k liquid) and 300 ish in equity; what would be the most efficient method of down payment and renovation costs. I want to write off as much as possible. 

I am seeing 3 options and don't know which makes the most sense

1. Downpayment (20%) with HELOC, use cash for renovations. Pay off HELOC with cashflow from rental.
2. Downpayment (10-15%) with cash and use HELOC for renovation. Pay off HELOC with rental cashflow. (downside is PMI)
3. Downpayment (10% cash +10% HELOC) then HELOC for round 1 of renovation, pay off HELOC with cashflow.

Actually 4; Downpayment (20% cash by tapping into emergency funds) and then use HELOC for renovation after rebuilding emergency funds



 

Hello. Hoping to get a bit of info on how/if others might proceed. The moving parts of taxes and finance make my head hurt so I figure I'll ask folks with more experience. 

Home we'd like to buy

Asking: 430k

ARV: 465-490k

Now here is where it gets confusing. We are in our primary residence but want to move out of it to rent it out as we have significant equity and it would cashflow really nicely as a STR through a PM (may self manage eventually but to start it will be nice being hands off).

The home we are looking at would require pretty significant renovation (35-50k). We would like to treat it as a live-in and rehab and eventually (3-5 years) either sell or rent it as a LTR. 

We'd like to go after this house at around 315 as the initial offer. The sellers are aware that 430 is much too high so I would expect a counter. And yes, I am aware that 315 is quite low, but with this home I think its the lowest price we could offer that would fetch a counter offer. The home is currently rented at a ridiculously low rate for the next 6 months which is part of why its still on the market. The owners are older and simply looking to unload the thing. 

Now, my questions. We currently have about 300k equity in our current home, 45k liquid we could invest in a home without touching emergency cash reserves. Primary home rented out will 10-15k/annually; up to 2x that but I'd rather calculate this on the really low end.

Knowing we would do an initial rehab of the major issues (appliances, floors, kitchen, windows, doors) and then move in and do the rest of the rehab over time; how might you proceed to maximize tax advantages and obviously maximize income while minimizing expenses? 

Also to note; this house is only a few miles from our primary residence but in a different zip code so figuring out which home to declare as primary and which to be the investment home is also a confusing part. I've run the options over in my head several times so getting them out here and getting some input would be super helpful.

We are open to a HELOC but figuring out what/how to deploy funds is confusing.