All Forum Posts by: Fletcher Clardy

Clarity Equity Group is very goal oriented. We have quarterly and annual goals to ensure we hold ourselves accountable and have a plan of action.

Current Goals and Objectives:

1. Build new website

2. Trade 240 multi-family units out of our portfolio

3. Inputting new systems/procedures for operations

These are just a few. I am curious to know what other professionals are looking forward to in 2020! 

What goals and objectives do you have for yourself as an investor or sponsor?

How do you determine your goals?

What process do you have in place to follow up and check progress of said goals?

Fletcher L. Clardy III 

Deal Desk Captain

Clarity Equity Group 

We work with banks, sponsors, investors, developers, and many others in the real estate field.

When building new relationships and establishing credibility. Our process generally consist of:

1. Viewing the company website (View portfolio and learn about company and team)

2. Follow-up on LinkedIn (Social media platform)

3. Verifying the email (Just to make sure its valid and ensure the information was transferred properly)

We all our constantly establishing and building new relationships day in and day out. When you meet a new real estate professional that has reached out and wants to work with you, how do you determine if they are sharp, sophisticated, and an expert in their field?

What research are you conducting to increase reassurance, and add comfort to the idea of working together? 

I had a video conference call this morning evaluating a judgment pool we received and was considering purchasing.

The pool was not very good but had a few gems that could potentially be recovered. If your unsure of a judgment pool it is a consolidated list of defaulted loans and/or distressed assets that the bank will package and attempt to sell. 

Some of the criteria that made it sub par include; 

1. Loans in 100% homestead states

2. Borrower's over 65 so cant touch their bank account

3. Borrowers dead or in jail.

Does anyone else purchase distressed assets? If so have you made an offer on a judgment pool? What checklist do you use when evaluating the pool and determining the risk involved with the recovery?

Fletcher 

Clarity Equity Group

@Greg Dickerson Thank you, appreciate the help.

Also on average, How long does it take you to complete a tabletop underwriting?

I was working on a tabletop underwriting for a multi-family asset. While searching through the OM (offering Memorandum) for 5 data points (NOI, pro forma NOI, sources/uses, debt, exit strategy) I was only able to identify, NOI, and pro forma NOI. This particular OM had no sources & uses listed, no description of debt used, and had no exit strategy.

I can assume the sources and uses based on the financials, I still would have liked to see more detail on the debt and the planned exit strategy.

I would like to know how the audience performs a tabletop underwriting?

What strategies do you implement when performing a tabletop underwriting? 

What is important to you when identifying sources and uses? 

What key data points and what other information are you expecting to find in an offering memorandum?

Fletcher Clardy III 

Clarity Equity Group 

@Luther Wilson III Thanks for the reply. I would love to connect I will message you to discuss further. 

@Guifre Mora Thanks for your reply.

My favorites from your response would have to be 

#9. Do you prepare a plan of action if we hit a downturn in the market? Keep a few unmortgage properties to dispose of if needed. Also as I acquire RE keep a higher % of back up funds.

#10. Have you ever considered crowdfunding? If so, did it work? Yes, I have done it and it has worked the contract and LLC is the key for it to be successful.

I believe every investor should have a plan for the downturn. The market is cyclical and we have been at the top for a while now. I also diversify my investments among other things non-related to real estate. 

I have mixed emotions about the crowdfunding. I continue to see and learn about more and more platforms. I think it is a great way to get started though.  

Happy Wednesday to all!

I wanted to get some feedback on questions other Real Estate professionals consider before each potential investment. I know for my firm our biggest one is, "LOW BASIS". Is the asset valued under market? This provides room for error and unexpected value-add expenses that may arise.

I listed 10 questions to get the discussion started. Please comment if you consider any of the same questions and talk about your process in doing so. Also feel free to input more questions that are important to you in your decision making process.

#1. Do you consider yourself to be a passive investor or an active investor?

#2. Whats your typical investment timeline? Whats your exit strategy?

#3. Do you consider the tax benefits?

#4. What makes a particular investment attractive to you?

#5. How do you determine your capital stack? More debt or equity?

#6. How did you decide on your asset class?

#7. What due diligence do you conduct to determine market feasibility?

#8. What makes you confident that you will qualify for a loan? 

#9. Do you prepare a plan of action if we hit a downturn in the market?

#10. Have you ever considered crowd funding? If so, did it work?

Fletcher Clardy III, Clarity Equity Group, Kansas City, Missouri

1. Opportunity Zones - Jobs act of 2017 has stimulated growth by offering tax incentives in special zones around the United States

2. Refinancing or Tax-Free borrowing - When you refinance, you are able to borrow against the appreciation and increased equity of a property tax-free

3. 1031 Exchange - A 1031 states that a taxpayer may defer recognition of capital gains and related Federal income tax liability on the exchange of certain types of property, including real estate.

This deduction is valuable to investors because you can roll over capital gains from one investment property to the next and avoid being taxed until you sell your property

4. Depreciation -  The IRS allows you to deduct the cost of business items that have a “shelf life,” like the building itself. Some might consider this the most powerful tax benefit of investing in real estate

Over time, the real estate in which you’ve invested is going to start breaking down. Fortunately, you’re allowed to write off income-producing property based on wear and tear.

5.  No Self-Employment or FICA Taxes Paid on Rental Income - Rental income is not subject to social security and Medicare taxes. 

Depending on whether you’re employed or self-employed, you could be paying 7.65% to 15.3% toward this FICA tax on other income. The tax is in the amount of 15.3% and it is split 50/50 between the employer and the employee. If you are self-employed, however, and have no employer, you are responsible for the full 15.3%, and this is known as self-employment tax

6. Capital Gains Home Exclusion Tax - If you have owned and used a property as your primary residential home for at least two out of the last five years before selling it, you’re eligible for this exclusion.

This exclusion according to the IRS states that “if you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse

7. Short-Term and Long-Term Capital Gains - Depending on the length of time that you hold the investment before selling it, those capital gains can be classified as either short-term (less than a year) or long-term (a year or longer).

Short-term capital gains are taxed as ordinary income, so it depends on whatever tax bracket you’re. For the typical physician, this usually puts us at one of the higher brackets which could be at 35% or 37%

Please share some of your stories of benefiting from any tax incentives through your investments in real estate.

More info on topic: https://passiveincomemd.com/7-great-tax-benefits-of-investing-in-real-estate