All Forum Posts by: Jackie Dickson

Thanks to @Brandon Turner's 90-day challenge, I FINALLY picked up my first fix-and-flip property on Dec 27th, 2017. I have held rentals, but no flips. The property was found on Hubzu, and I had made a low bid in the past, but lost to another bidder. When the property came back on the market, I was lucky that the bank was hitting year end and lowered their reserve significantly.

In the end, I won by $1000, purchasing 1973 home in a good suburb of Cleveland (at $113k, all in including fees. It appraised during lending for $145k as is, and $180k ARV. I anticipate renovations at $30-35k with contingencies - mostly cosmetic, kitchen, baths but I will definitely replace the Federal Pacific panel and need to replace the driveway in the spring.

I did purchase and finance in an entity (LLC) name.

I'm going to do the bulk of the general work on this property in order to learn the process hands on, but I don't anticipate that I'll continue that in the future. [IMO, some contractors still like to think women are gullible...my grandfather was a GC and a union carpenter, so I know my way around a toolbox. I feel I need to know exactly what should be expected in terms of effort and schedule in order to be comfortable handing over to contractors in the future]

There's a possibility to make a living space in the lower level into a 4th bedroom with en suite as there is appropriate egress, so I'm going to build in a closet and add a door to allow this space to be used in a flexible manner. Comps suggest that the market could bear a price closer to $215k with that option, which would make me VERY happy, and it's super cheap to implement. Fingers crossed.

I thought I'd update post-close. I think I might bring my own title company rather than taking chances with someone else... In hindsight, saving $1500 in title costs was probably not worth the headache. The title company for my transaction was often hard to communicate with, and lack of response delayed the close, in my opinion. In fairness, I changed from cash to finance - rookie first-time-hard-money-user mistake, hard money is not cash. :)

The title company/closing coordinator handled all of the required change documentation, but it was VERY slow - I'm talking 10 days to get a modified PSA, not even including signatures. That delayed my lender, which in turn delayed close.

Other than this, I had little issue with the actual PSA. I don't think it was any worse than any other PSA, but you don't get any contingencies, so you are taking a little bit of a risk. Everything went along fine, I got everything I was entitled to, etc. I was able to take possession the day after close, even though deed recording was delayed another 1.5 weeks due to holidays and backups at the county. (In Cleveland, that means no water at property either, until deed transfer is complete).

Process - at the 10,000 foot level:

1. Get winning bid.

2. Sign PSA and await formal acceptance

3. Wire Earnest (varies, expect 3-4%)

4. Complete intermediate paperwork as it arrives...

5. Sign closing papers (a closing agent will meet you in person)

6. Wire remaining funds and await confirmation of possession.

7. Await title and deed transfer.

I’m in the middle of a close either then right now. Very one-sided - No room to negotiate, so be sure you’re comfortable with their rules. The fees are high too, so be sure to factor that in on your costs. Communication with and getting info from the title company has been hard. In the future, I’d probably use my own title company rather than save by using theirs.

Several years ago, I inherited 50% of my family's home. The other 50% went to a relative. We held this as a rental. It was owned jointly in our names, and the rental activities ran through a partnership LLC. I was not seeing much cash flow at all, so I asked to be bought out. I received a sum of money, signed off, and the deed transfer was recorded with the county (I am in Ohio).

My question is three-fold:

1. What documentation will I need to provide to my CPA for this transaction?

2. I assume this will be considered long-term capital gains. But since this was inherited AND I held 50%, how will my cost basis be determined? Will the entire sum be taxed at the long term rate? The home was built by my family around 1970 and has never been sold.

3. I was bought out mid-2016. Will I need to file a Schedule K with my tax return for 2016?

I guess that's really 4 questions. LOL! I am trying to determine how much I SHOULD have left to move on to other investment activities, and I appreciate any (unofficial) input. I can afford some difference in my calculation, but I can't afford a multi-thousand dollar swing, so I'm trying to educate myself here. The law/CPA firm that handled the transaction was fairly rude to me when I asked for an estimate of the cost basis, saying that they "provide that information for clients"(I guess that several years of business returns and accounting didn't count as being a client). I'm hoping I don't have to go back to get information from them...

Many thanks in advance!!

Just Get Started :) Analyzed a lot of properties, visited half of those, made a few offers. Need to get more aggressive this year!

Hello! I'm new here, from Northeast Ohio. My name is Jackie - I am a born and raised Cleveland sports fan, especially the Cavs... and thank God we finally got a championship trophy. :)

I am new to investing, though I have held a rental property for the last several years. I am interested in fix and flips, for the ability to combine RE with project management - I am a project manager by trade. Mostly software development, but a project is still a project...the steps to complete it are what differ. I plan to stay local. 

I have listened to most of the BP podcasts and decided it was time to start utilizing the expertise of this community for what it is worth...so here I am.