All Forum Posts by: Joan Saylor

My spouse stays at home with the kids while I am still working a W2 job. Since we are a single income household, this would be an easy route for DH to qualify for Real Estate Professional Status when we file taxes. 

From my limited understanding REP Status, all of our Passive Losses can be claimed against our active (W2) income. 

Don't forget if kids help out with mowing lawn or other tasks to contribute to the business, they can be a big tax break too. Can use them (or your spouse) as paid models on your Social Media accts, etc.? The key is to document the heck out of any such desired deduction and make sure that you CPA is on-board.

I currently have only 1 investment property that is wrapping up renovation. I wanted to form the correct business structure/ entity to have ready when I refinance the property to put it under the name of the LLC at that time.

I plan to purchase several more properties over the next few years, so would it be advisable to use a TX Series LLC with each property in a different series, and an Operating Company that handles purchasing, management, etc., in a separate LLC all together?

Can I just start with the standard LLC and upgrade it to a Series at a later date?

If there are any Pro's here on BP that could give me a hand doing things right the 1st time around, that would be great too. 

BTW I am a Disabled Vet, so I know there is a discount for TX State franchise fee, maybe others too?

Quote from @Jaron Walling:

@Joan Saylor How or why go from a distressed tri-plex remodel into a turn-key property? Turn is dead right now (for the most part). The numbers are paper thin on turn-key rentals. If other investors struggle to find low distressed opportunities what makes you think you can buy them remodeled at a price that cash-flows?

The distressed property you own has greater upside than buying another property. I'd get a handyman in there to help you swing some hammers. Time is against you. That's just my 2 cents.

@Jaron Walling there are quite a few investors who have poured in since COVID snapping up fix-n-flips in our rougher neighborhoods. Quite a few low-cost sfh to be found but I assume the investors snapping them up all have their own crews to keep the rehab cost down. After running the numbers through my spreadsheet, using all the BP metrics, there is still meat-on-the bone for a long-term rental after some of these are rehabbed.

Basically, I'm stuck eating the carrying costs DIY'ing as funds become available till I finish... eventually. Bringing in help will eat up scarce funds that could otherwise go towards materials.

If I unload this property; there are a couple properties I am eyeing that are freshly rehabbed that will cashflow right out of the gate.

Quote from @Jaron Walling:

@Joan Saylor Condition of the property? Good or bad location? What's the motivation to work with a wholesaler? 

It was listed as a 1948, 3/1, 1331 sf, single family residence. Bought it as a Bank Owned Property which was vacant at least 4 years. Paid in full using cash from a HELOC. I knew from the beginning it needed extensive work: roof, foundation, electrical, and plumbing. The value I saw was that the square footage was under-reported since the previous owner had enclosed the breezeway and attached garage, turning it into a 1/1 apartment and the large detached 2 car garage also has an efficiency built in the rear portion. If listed as a sfh, it is a 4/2 at 1996 sf, with an additional 350 sf ADU.

I cannot get it rezoned as a multi-family; however, I have got written approval from the local public housing authority to rent it out through Sec-8 as a triplex. It is a rough neighborhood but there has been a lot of new businesses coming in and a lot of these older homes are being invested in, renovated, flipped, or rented.

With the constant rate hikes, sky-rocketing cost of materials, and the severely underestimating the cost to re-wire, my budget is shot! I am finishing out the interior myself (DIY): Insulation, Drywall, paint, cabinetry, and tub, buying material bit-by-bit every payday to get the main unit habitable, rent it out, then refinance. Even at today's crazy interest rates, a 30 yr fixed mortgage will get me to break even with the tenant basically covering my debt burden. I can then finish off the other 2 units, sparingly redeploying the HELOC funds.

Various private investors are willing to finance me; however, I just need to finish out the main unit.

The random offer of $140K would pay off all my debt, allowing me to immediately redeploy the funds for down payment on turn-key units. 

The other day I had a call from a local wholesaler who was interested in buying my property. After a tour and some negotiating, he offered 140K, which would payoff all my debt-load with a little left over. I'd be breaking even but able to redeploy the funds to purchase another property or two with a mortgage, rather than all-cash purchase like this one was.

We have maintained open communication; however, he is awaiting feedback from his finance guy. How do I get some degree of commitment so I don't risk loosing the deal or risk him getting cold-feet? Earnest money? We don't have a contract yet. What should I do to keep an offer from slipping away?

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