All Forum Posts by: James Valice

There are literally thousands of reasons why a property would not close. If you call the realtor or seller and ask, they will most likely tell you.

@James Valice I’ve seen deals fall through because of financing and then I’ve bought them because the financing wasn’t a problem for my bank.

I’ve bought deals where buyers found a problem with the building inspection and when I knew what the issue was I evaluated the property, got a second opinion, determined it wasn’t an issue, renegotiated the price and got a steal on the property.

It’s sometimes just a matter of being in the right place at the right time and knowing your market and the properties in that market. My contractor has been in my area his whole life and working the trades 40+ years. He knows many things about a lot of the properties in a 20 mile radius or can find out about them. Often when a deal falls through I can find out why and if it’s worth making a lower offer on it.

As you grow your RE team and knowledge you will learn some of these useful skills as well. While you may not always get a great deal, you may find yourself getting some better deals if you look into some of the deals that have fallen through occasionally. I wouldn’t recommend focusing your entire strategy around this but once in a while.

My background is as a CPA at a super large firm.  Swimming with the sharks.  Your question takes me back to learning my craft.

About year 2 to 3 your Light Bulb should turn on.  In baseball the ball slows down.   In soccer you see the play ahead of time.   In basketball you pass without looking.  
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You want to get to that spot as fast as possible in your new career.  Here is how you do it.  You just joined BP.   Look at your posts.   Is there a pattern to them?   Did you miss the important questions or fail to prioritize?      
Remember my background is as an accountant so every answer has a spreadsheet.

Start a spreadsheet. Make broad categories of REI topics. Under them put sun topics. Just like an outline for paper you wrote.
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This outline will help guide your learning, prioritize it, help you keep track of what you haven’t learned and make your career smaller.   Component by component. Otherwise you drown.        

Why did a deal not go through. There are a million reasons. You actually don't want to hear them because you have no way to categorize them. That's what the outline is for. Due diligence, subject to zoning, non permitted ADU, financing, inspection, low appraisal, etc.

As you’re doing the above you want to pick two areas to specialize in.  You’re in Michigan. Let’s say you’re the Lake Property guy. Or you’re the 1031 guy. Or the Section 8 guru. Commercial, flipper, MF out of state contact, etc.  If you do everything you will be bad at all of them.  

Relate this approach back to what you already do great. Fishing, computer games, baseball, mowing lawns. It's the same pattern just a different focus. Pick a REI product that you enjoy.

The first thing I'd like to address is the fact that you think your interest rate will be higher because of your age. That's not true at all! Your rate will be based on things like loan amount, property type, loan type, FICO, down payment, etc. FHA loans generally have lower rates than conventional as well.

FHA loan have more stringent requirements when it comes to the condition of the property, so if it needs heavy rehab, you may be better suited with a 203(k). That's an FHA rehab loan.

Hard to say if or how much you’d cash flow, it’ll vary from property to property and also depends on where you live. I’d imagine you’d have a harder time cash flowing living somewhere like CA vs. the midwest. 

@James Valice Let's face the facts here. REI requires money especially when starting out. The only way to get money is by working a job(s), learning to save, establishing credit, and building relationships with lenders, family, or friends (partners). At 19 years old it's your job to get one or more of these pieces. Without it they become "roadblocks" like you're describing in your post. Some people do it different, have connections, blah blah, but that's not how 90% of investors got started. They built up from the bottom, they saved money, gave up something, networked with successful people, found an opportunity, and jumped into a property. 

Good news. You're smart, young, and asking the right questions. I didn't ask these questions until was nearly 30 years old. That's TIME I can't get back.  Now we (my wife and I) have to hustle harder. Time is on your side and it's on you to spend it wisely. Stay on the gas pedal and keep learning. 

You don't need a reason to save money. These are REI forums but it's also mindset and forming healthy relationships $$$. There are a lot of people that talk, talk, and talk and take no action. There are people racking up CC debt, student loans, auto loans, etc. Some of these debts are the highest they have ever been in history! The majority of consumer spending is a trap. Don't fall into that camp at a young age because it only slows you down and stops you achieving your goals.

Unfortunately, the tax code can be a burden for those who don’t understand it. But the good news is that if you find a great CPA to work with, they can utilize tax optimization strategies that help save you money. Instead of thinking of tax as something that drains your wallet, I like to think of it as a way to increase your cash flow. When you utilize strategies that reduce your taxes, you’re creating immediate cash flow to put back into your business and grow your wealth.

As a real estate owner myself, here are some tax strategies that I’d recommend discussing with your CPA.

• Energy Tax Credits
• Solar Tax Program
• Historic Tax Credits
• 1031 Exchange Program
• Real Estate Depreciation Investing
• Opportunity Zones
• Engineered Charitable Deferred Trust
• Cost Segregation
• Net Income Loss Acquisition
• Low Income Housing Tax Credit
• Employment Tax Credits

These tax strategies offer so many benefits. With solar panels, you can receive a tax credit AND earn income. You can significantly reduce your taxes with a cost segregation study and bonus depreciation by accelerating your depreciation. You can lower your taxes by accelerating charitable giving. You can receive both tax credits and deduction for inputting green, energy friendly appliances, lighting, etc. to your multi-family and commercial properties. These are just some of the ways to reduce your taxes! If you have any questions, as always feel free to reach out.

What are some of your favorite tax strategies?

Not the most common, but I got involved with a local investor meetup and offered to help run the meeting for the host. I'd pick up food, do the sign in sheet, send out email reminders. In turn the host looked out for me and since he naturally knew most if not all investors at the meetup I was able to get a ton of introductions. 

From there, see what your connections are looking for. Does a wholesaler need a list? Pull expired listings off MLS for him. Is investor looking in a certain area? Run some comps for him.