All Forum Posts by: Doolan Wesley

Congrats on your first rehab project. What was your ARV? Did you sell?

Good input Charles. This was my third deal in that neighborhood, I have two other duplexes that cash flow extremely well. I'm familiar with the rents, but the appraisal came back high enough that the cash on cash return isn't going to be good. I'd leave it in the deal until someday down the road I sell and move the money into a better deal.

Hey everyone, I just wanted to poll the audience here quick. 

I purchased a home in the Bay View neighborhood of Milwaukee, WI, one block away from Humboldt Park about a year and a half ago. The purchase was with the intention to BRRRR the property. The single family market in Bay View is so hot at the moment though that the valuation after the appraisal outpaces the potential cash flow. I think rent on the completely remodeled 3 bedroom/2 bath property with a two care garage would be around $2500-2800, but the cash on cash return to keep equity in the deal isn't great.

Option 1: Refinance and keep 25% equity in the deal (currently owned in cash). Then look to 1031 the property in the future into something that offers a better cash on cash return to avoid long term capital gain taxes.

Option 2: List it as for sale by owner and considering the prospects of selling. Take the tax hit, but avoid 4-6% realtor fees.

Any input would be welcome.

That's fair, I understand it's not a one sized fits all scenario, however the scenario that I faced was a Roth IRA rollover and because of the Cares Act I was able to access those funds penalty free. I just wanted to pick some accountant's brains on how often SDIRAs are used.

The accountants that I have used have offered little to no guidance on any deductions outside of the basics (depreciation, mortgage interest, insurance, etc). I feel like I'm constantly reading and trying to understand the tax code and coming to my accountant with deductions that would be appropriate for my scenario.

I think you're right in regards to investing cautiously in a booming market Marcus, however I disagree with the notion that this is a "flaw of the free market." In what free market can you increase the existing money supply by 80% in a 22 month period and then turn around and blame pricing bubbles and shortages on private investors? The government poured way too much fuel on the fire. Quantitative easing for over a decade, poorly run state and local governments, and a massive inflow of cash into the economy have created a perfect storm. 

That being said, you can find opportunity in any market. In the US we have a macro picture and micro picture, I still think valuable deals are to be found in the Midwest compared to the coasts. I expect the aggressive rate hikes to plateau the housing market soon and stunt growth for the short term. Be patient and stick to your numbers. If you find a property that makes sense on both feeling and on paper, take a shot at it.

Hey everyone,

So I'm just finishing "The Book On Tax Strategies for the Savvy Real Estate Investor." It's a good book on real estate tax strategies for investors to implement into their daily lives. Has anyone else read this book?

How many accountants are truly recommending using IRAs to purchase real estate? I used the Cares Act as an excuse to take a large loan out of my Roth IRA to purchase and fund a fix and flip property recently, but this idea seemed kind of foreign to my specialist. How many of your use self directed IRAs to fund your deals?

I'd like to see how common using a self directed IRA is, and hear from CPAs regarding other commonly missed deductions that many of us should be taking annually?

Doolan

Hey all, trying to see if anyone has any experience dealing with the City of Milwaukee. I am in the process of flipping a home in Bay View and the contractor working with me pulled permits and submitted them to the city back in February. We waited 6 weeks for a response from the city inspectors and heard from no one. We did what any reasonable person would have done and moved forward on the interior work.

Today a city of Milwaukee inspector showed up and said that we needed to stop and wait to hear back from the city. I know in Minnesota there's a 60 day time period for the local government to respond to the property owner in regards to permits. What about in Milwaukee? Can the city literally sit on permits for months and not respond? Thanks. 

Doolan

A lot of great content in this thread so far. In the period preceding the Great Depression from 1921-1929, the money supply grew by 68.1%. In the past year alone we've seen the US money supply grow by over 30%. The detriment to our nation of using COVID-19 as an excuse to devalue our currency is going to be major. 

While I agree with you Marcus that this is a supply and demand issue in the short-term, we have to recognize that when the money printing spree slows down and eventually dries up no one knows what comes next. The Buffett indicator prices the stock market at the highest point in modern history. Real estate and bitcoin will continue to be my play, just don't get over-extended in this economy.

Hello,

My name is Doolan Wesley. I'm an investor from Milwaukee, WI. I currently have two duplexes and am under the process of rehabbing a single family home. I plan on selling the single family home upon completion of the project and using a 1031 exchange to enter the short term vacation rental market. I estimate I'll probably have about $400k cash liquid fairly soon.

I would like to reach out to ANYONE for guidance along the way. I am very interested in an intercoastal property in Florida, but know the market has been hot. I also am interested in Costa Rica and Tennessee. Ideally I'd like to focus on states with favorable laws/property taxes. Any help is welcome! Thanks all.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Bay View.

Purchase price: $213,750
Cash invested: $52,643

Interesting deal. The property came with an extra lot of land. I was able to sell the additional lot for $28,000 and use a 1031 exchange to purchase another single family a few weeks after the lot had sold.

What made you interested in investing in this type of deal?

Great location with generally high rents. The rents received from the property were lower than the neighborhood average. People avoided the property because of some foundation wall bowing and because the active tenants had some issues.

How did you find this deal and how did you negotiate it?

I negotiated that I wanted the foundation repaired per the engineer report prior to close. I started with a lower offer because the home had been on the market for about 9 months. The purchase price was great though, especially with the extra lot of land.

How did you finance this deal?

Conventional

How did you add value to the deal?

After the property closed, one tenant immediately stopped paying and had to be evicted. I had her evicted, then went into her unit, made some minor upgrades and purchased new appliances. I then resisted the property for $350 above what the previous tenant was paying.

What was the outcome?

The outcome of the deal has been great. I have a cash flowing property in a great location.

Lessons learned? Challenges?

Existing tenants can be a major barrier to entry for most investors. Just because the current tenants seem like a nightmare and might have to be evicted, it shouldn't change your desire for the property. You might acquire the property for a much better deal as a result. That being said, evictions are definitely something I like to avoid at all costs.