All Forum Posts by: Guy Yoes

I own two properties where I live. I may have to move to another state where I have a property there.

Do I have to do a 1031 exchange to not pay taxes or can I just sell and buy within the required time frame?

Both properties on in 1 LLC.

Also, would I need to use a 1031 broker (?) or can I do this myself?

If cash is an issue, there are ways to handle that legally. If not an issue, pay with cash. It might be prudent, however,to meet with a real-estate attorney to review the contract(s). Small expense to make sure you are getting what the verbal agreement stated.  

Personally, I like cash. ;-} It might be a problem for the "Friends" company as well. IF you have time, you can split the deposits into 2 different accounts (checking and Savings) at 3 different banks. Make deposits of $5k over several weeks then move them over to 1 account. Then you can write a check for the house (easier for both parties) Should not have any issues (red flags). My other business does 95% cash (no, it's not drugs)  and by using different banks, I have a great relationship with several different bankers.

Another option is the put down 10% and finance (about $1300K) Use the cash to pay the company for rehab and make your payments. When you are done with the rehab, you can REFI and pull the equity back out. Now you can look for another property.  Good Luck!

This is a very interesting scenario.

They are selling you the property for 60K and then you are getting a HELOC (how much?) and they are going to do the repairs for you. Is that correct?

Are you going to live in the property or rent or flip?

Have they told how much the repairs will cost?

Is there anything in writing at this time?

How well do you know them?  

As the buyer, you should write the contract (offer) and make sure you have a professional on you side.

Thank you, that was the answer I needed.

Looking at finding /  buying a duplex or quad. Would they be conserved multi-family as far as the type of loan I would need?

I have 3 SFRs paid for and would use that equity to finance the purchase. I'll run the numbers if and when I find one I like, but don't want to look like a novice (yes, I am) when I go to the bank.

Has anyone worked with Safeguard Capitol Partners?

I am looking to use them lend hard money and would like feed back from someone who has dealt with them.

thank you,

I use a HELOC to buy all my properties. It allows me to make a cash offer and saves a lot of money on closing. It also makes the sale go through faster. I have never used for a down payment so that might cost you more in the long run as HELOC loans have a higher interest rate. I suggest finding a property you can use the HELOC for and pay cash. If you need to rehab, take out a 6 month loan with hard money and pay it first. Good luck!

I think its a good idea to get some thoughts on here. However, whatever decision you make, do your homework and look at all possible outcomes. 

I am pretty conservative so you may not like my thoughts, but I have known a few people who started where you are now. Randy ( a friend's son) had problems finding a job after college and needed a way to support himself. A frat brother of his was flipping houses. Randy went to work for him and was able to live in the house they were flipping. He got free rent and learned about maintenance and repair.  He was paid cash hourly and worked long days to save money. After a year and a half he had enough to put down on a foreclosed house. He had to still work for his friend during day (60 hour weeks) and then use his income to buy materials for his house and work on it nights and weekends. It took him almost two years to rehab the house but he did a nice job and decided to live in it. He continued to work with his friend, but started taking evening courses in construction management at a tech school. Soon he bought a duplex to rehab and lived in it while renting his house. He did this over and over for about 8 years. His friends ( they were all in their 30's by then) liked how he remodeled houses and started hiring him to do kitchens and bathrooms for their houses. He is now close to 40 and has his own company and does high end remodels. He keeps his employees busy and working by buying and flipping houses (he has kept about 6 for rentals).  He went to college to be a pastor and has a small church but the discipline he learned early on has allowed him to support his family and provided jobs for crew as well.  It is not quick and it won't be easy. I wish you best of luck.

Matt- Looks like you got quite a bit of advice to your question. I was wondering the same thing. Someone mentioned Dave Ramsey and I have taken his Financial Peace courses. I remarried in 2005. Both my wife and I had been through tough divorces and had little money. But we also had no debt. We bought a 180k house and had to borrow the down payment as well. We had a 15 year mortgage but threw every extra penny we had at it. It was paid off in 7 years. We took a risk in 2012 and borrowed money from our HELOC to pay cash on a 93K house that was turnkey. We put both the rent and our regular house payment toward the loan. It was paid off in 26 months. A few months after paying off the first house, we bought a foreclosure for 78K and did 6k rehab. The bank appraised it as 103k. We decided to use the HELOC again as it saved a lot of money on closing and we didn't need a long term loan. With the two rentals income and the money we used to pay on our house, we had a clear title in 18 months. This summer we bought an acreage with a house on it for 2/3 of appraised value. By reinvesting all the rents it will be paid of by the end of this year. Now that is 4 properties bought and paid for in 12 years. The appraised value of all 4 is 630K and generates about 28k per year. I retired this summer at 56 and can live off my retirement. This allows me to buy properties quickly and pay very little interest with almost no debt. I doubt I will ever be a real estate tycoon and I really don't want to be one. I want to spend time with family , friends and enjoy life. The thought of owing 800k on a million dollars of properties scare the hell out of me. I had too many friends in a lot of trouble the last time the market turned. Some will never recover from it. Advice is great if you can learn from others mistakes. In the end, you must know what you want, what it takes to accomplish it and understand the price of success as well as failure. Best of luck!