All Forum Posts by: Forrest Holden

Hello all, I am interested in buying raw land at auction at far below fair market value with intent to "flip" the land at just below fair market value. How long would I want to hold the property before selling it in order to avoid massive tax implications? Could I potentially 1031 this land for other land and defer the taxes? How long after selling the land on a 1031 would I have to put that profit into another piece of land to defer the taxes? Thoughts?

Hania S. I would start by locating the best elementary schools in the area, evaluating properties against each other within the same school district to find the high and low ends of the fair market value spectrum for the type(s) of properties you are interested, for example, a 1200 square foot 3/2 SFR. You really need to feel out the market. You can use Zillow.com to see what properties have sold for in any given time period up to three years back by looking through "recently sold" properties. You may also want to view the properties listed for rent in the area to find out what your competition will be like. Rentometer.com is also a great resource to get a feel for the buy and hold rental property market in your areas of interest. Do exhaustive research before attempting any deals. Use the Bigger Pockets Calculators to start analyzing several deals a day so you can get a feel for the working numbers in your area. Good luck out there, take action with caution.

The simplest answer, if you can find a great deal and pitch it, then you can always find a partner.

I agree, pay the taxes behind his back. Another option is that you could get a lawyer to say that he is not in the right mind set mentally and thus not capable of making decisions to support his own well being. This type of move could destroy a family and is not to be considered except as a last resort for his own benefit etc. Also, there may be another loan on the property or lien that he doesn't want to tell you about and he could be claiming to let it be foreclosed upon to avoid talking about the hard facts. You might be able to get a preliminary title search done if you suspect something is off and find out if he is being completely truthful about all circumstances related to the property. I hate to think of all the worst case scenarios, but when someone is willing to let go of that kind of property, it's best to make sure you know all the facts. Hope this helps...

All your eggs in one basket? I'm not sold. Maybe two baskets, maybe 4. I think the most important thing for you will be establishing a knowledgeable and experienced team. Having a great team to guide you through one deal or four will make all the difference if it's your first go round. Not knowing something won't hurt you if your team knows it. It's what you don't know that you don't know that could really hurt you. Get out there and talk to some brokers, inspectors, appraisers, property managers and lenders etc that deal with apartment buildings. The more people you talk to the more you will get your bearing and sense of direction. After that, you will probably only know half of what you think you know. Learn as much as you can. Good Luck!!

I would sell one with a 1031 like you mentioned, take the money you need out and then purchase a decent property with cash so you maintain some cash flow. OR... If your four plex is making substantial cash flow, you could find a silent partner who is looking for an investment which does not require them to do any of the heavy lifting... Just thoughts...