All Forum Posts by: Jason S.

^^^^ Ditto ^^^^^

What were the end results?

The #'s in the original post Buy at $300K, $20K rehab, 10% Cost of Sale, sell at $400K - those numbers are not bad. I apologize.

The problem is that I do not know anyone at these sales getting props at that low a price. Every time I talk to someone who buys at the Courthouse Steps they are in a property for 85%ARV.

You are seeing numbers in LA and OC that are better than this? Care to share any addresses, not yours of course, just ones that we can analyze that other have purchased. I would be interested to see some - I randomly pulled some from Trustees Deeds recently (pulled ones that were 'sold to third party' and then did a value analysis and the prices were way too high for me.

1. Do not fix it so fast.
2. Do not buy it so cheaply.
3. List it for "conventional only" until day 90 and then "all offers".
4. I do have a lender that allows you to lease to the prospective buyer until day 90 and then sell it to them - though I have never tried it.

Sorry that I cannot help more - it seems every fixer I get we take 90 days...... does not say much for me.

With the right lender it has not been too bad for us. But FHA is always a little more hassle than conventional.

What specific issues are you encountering?

It would amaze me if you are a small investor and survive long with the numbers quoted in the original post. These are properties that are more often than not - occupied - and you are buying without inspection.

What happens when you inspect the house and find no carpet, dry rot, mold, leaks, etc?

I know several people at the auctions in OC, LA etc and I just do not know how they do it with such tight margins. Must be because the market has been stable - what happens if it slips again or as I believe makes a major move down again and you are in the middle of an eviction on a home you bought at 85%LTV?

Scary stuff.

I hope some of you tax experts and/or experienced ones can assist me in how to properly fix this problem.

This is a California Property so it also involves the CA Withholding issues...

A friend bought a fixer SFR in his personal name but want to sell it under his newly formed corporation. He said he feels he will be taxed too much given his current personal income bracket.

Purchase Price - $80,000
Re-hab - $20,000 raw cost billable at $40,000 to his licensed contractor company
Re-sale - $145,000.
Owned for 90 days as of today.
Buyer will likely be FHA buyer.

What's the best way to transfer into the corporation?
Is there a way to do it and maintain seasoning in order to not have to justify to FHA the over 20% profit?

Should he transfer it to the corp at the $120K value (80K acquisition + billable re-hab) and then re sell it as the corp for less than the 20% increase per FHA rules?

Please advise - the rule of thumb is that whatever is done must be 100% above board - no pushing the line at all - just a legitimate and reasonable strategy.

Thanks for your input - its needed.

And Jon, listening to it is the only way to go - I read it 1 time but listened to it several. Reading it was laborious.