All Forum Posts by: John Carr

@Mike Wood

Thank you for your thoughts and for the info. The property is just outside the boundaries of Old Metairie (regardless of which of the numerous maps/designations you go by), just a couple of blocks northwest of the Causeway Blvd.-Airline Dr. interchange. There is "some" new construction, but not anything on the level of what's going on east of the Causeway.

Your construction figure of $100/ft2: is that for just a basic-level entry home construction? Moderate/higher-end? I can't imagine that a higher-end new construction would be that inexpensive... of course, I've been in Chicago for a few years now so maybe my concept of pricing for just about everything has skewed up.

Good day, all!

I have a question regarding a home I own in Metairie, LA 70001, in Jefferson Parish just outside New Orleans (sorry, just trying to hit everyone's potential keywords!).

This home (2BD, 1BA) is currently rented out for $900 monthly, and tenants are in place until the end of July. The home was built in 1955 and was willed to me by my grandmother so I now own it free & clear. Once the tenants move out there will be a ton of work to get it back to rentability (new HVAC is needed, plus a decent amount of cosmetic rehab - perhaps $10K when factoring in all of this). The money aspect is not really a concern, beyond just making sure that I am making a prudent financial decision overall.

I have talked to my Property Manager & RE Agent in the area, and my concerns are as follows:

- Though we may be able to raise rents for new tenants, the potential $10K upfront cost is a little off-putting for the rental rate. A new yearlong lease would basically be paying myself back for these costs.

- I do not live in the area and have been considering selling the property, which makes putting the money into the property an unattractive proposition since I'd have to hold onto it longer and see out another lease just to break even on these repairs.

- My RE Agent tells me that if I were to just sell the property "As-Is" once the current tenants move out (without installing the HVAC or making other repairs), that the property is likely a tear-down for a potential developer, and that he would put it on the market for $70K-$80K. He also tells me that if I DO make these repairs that we should be able to sell it to someone who will be interested in keeping the existing home (first-time homebuyer, or buy-and-hold investor) in the $105K-$115K range. After doing my own research and due diligence however, I am not convinced that this property is anything more than a tear-down REGARDLESS of what I do to the property, unless we're talking total gut rehab (and even then, I'm not sure the cost of that project would yield beneficial returns).

- If this property is nothing more than a tear-down for a developer, then I'd almost rather do that myself. I have the funds (if not the experience) for a project like this, but would really like to connect with some of my extended BP brethren in the area to hash out some potential options before doing anything rash.

So this is a long-winded way of reaching out to BP members who are familiar with this marketplace and might be able to offer some advice or guidance moving forward. If you are an investor in the area with some new construction experience, or if you know of anyone that you can point me towards that does, it would be greatly appreciated!!!

@Dawn McGarry

Hi Dawn, thank you for the reply! I know Sierra Pacific is a national lender, but I will still add them to my list of contacts - never hurts to compare rates & products!

@Austin Watson

Thanks for the suggestion. I banked with Bank of SC eons ago - I always liked their customer service. I'll definitely be reaching out to each of these...

@Russ Scheider

Thanks again for the input!

@David Hodges

@Jay Hinrichs

@Russ Scheider

Gentlemen, thanks so much for the replies. Getting input from people like you, who I know are plugged in and doing a lot of work in Charleston, makes me feel like I asked a question about the proper form for a jumpshot in a basketball forum and received replies from LeBron James, Steph Curry, and Kevin Durant (I'll let you decide who's who in this scenario)!  Thanks again!

@David Hedges

@Robert Hetsler

@Bill Exeter

Gentlemen, thanks so much for your replies!

I guess a more pertinent question would be in regards to what I WILL owe the government in terms of the recaptured depreciation, as I'm unfamiliar with these tax implications, and whether or not the cost of doing a 1031 exchange would ultimately save me money or not.

Over the past two tax years, I have claimed in the neighborhood of $15,000 in the "Depreciation expense or depletion" box.  So I would only end up paying a percentage of that back to the government upon the sale, correct? If so, what would that percentage be (ballpark)?

Also, what does the typical 1031 exchange cost? My only concern really is making sure I am able to maintain the most investment capital from the sale of my SFH...

Thanks again!

Hi BP folks!

To all of my Charleston & South Carolina people out there - I am looking for a good community bank or credit union that is friendly to the real estate investor. Specifically I am looking for loans to do buy-and-hold deals on smaller multi-families (duplexes, triplexes, fourplexes), and was wondering if anyone has any experience and/or recommendations for places that loan on these. Down payments are not an issue...

Feel free to PM me if you'd like or comment below - but remember, no advertising or solicitation! :-)

Thanks in advance everyone!

Hello everyone! I have a couple questions that I was hoping to get some feedback for, and any help/input from you guys would be much appreciated!

My situation: I own a SFH that was my primary residence from the time I purchased it in 2010 through November of 2013, at which point my wife & I moved and turned it into a rental. My understanding is that because this property was originally my primary residence, and because we lived in it for two years out of the previous five (Dec. 1, 2016 would be the deadline for the two out of five years) I can sell this property and not pay capital gains tax on the appreciation - however, I would owe the IRS recaptured depreciation for those years as a rental... so far, so good? Is my understanding regarding the above correct?

If so, moving on... Now - I understand the general concepts of a 1031 exchange (like-kind, 45-day ID window, 180-day closing window, etc.), but with my situation above would my property then be eligible for a 1031 exchange into another investment property? Would the IRS consider my SFH as an investment property, therefore allowing the "like-kind" exchange, or do I actually have to pass that two-out-of-five year mark before they would consider my current property purely an "investment" property?

(Perhaps) Relevant Info: This SFH has appreciated about $100K since I bought it, there is no mortgage on it, and my plan is to sell the property and take ALL of the money from that sale to put into a larger fourplex - whether I can 1031 it or not. I'm just trying to maintain the most amount of money from the sale as possible, and was hoping that this property is indeed eligible for the 1031 exchange.

ANY help at all would be greatly appreciated, and if anything that I *think* I already understand I am mistaken on, please feel free to point this out too! Thanks folks!!!

Hi Dolores! This thread has a step-by-step with images of how to pull an absentee list with listsource - also podcast #81 with Michael Quarles is a great listen re: direct mail marketing.  Hope this helps!

https://www.biggerpockets.com/forums/93/topics/127125-listsource

Hi Tyler -

A few thoughts I had when reading your post, as I own a home that is very similar to yours in Mount Pleasant - 3BR/2BA, 2-car garage, 1708 sqft, built in 1996. (And just for the sake of clarification, I am NOT a member of the military - so if any BP members more well-versed wish to jump in and add or correct anything that follows, please do so!)

I assume that when you say you'd like to turn the home into a rental "when you leave," that you are referencing a change of station or temporary duty assignment. If that is the case, you will still be able to claim the 4% owner/occupant assessment ratio that is offered to active duty military (regardless of whether you're in Charleston, Berkeley or Dorchester county) - which is absolutely critical: when my wife & I moved from the SFH that I referenced above and turned it into a rental, our property taxes jumped from just under $1200 annually to almost $4000!

There is some fine-print regarding that assessment: having to apply for it each year you are stationed elsewhere, providing paperwork proving your assignment, etc., and there are also rules about getting that owner/occupant assessment ratio if you own another home in South Carolina (specifically, you are only able to receive the 4% assessment for two tax years after you purchase a second property in the state). If for any reason you are ever ineligible for that special assessment, you are going to get absolutely CRUSHED by property taxes and lose any and all cashflow from this property.

That being said, I just ran some estimated numbers based on what I know from my experiences with my Mount Pleasant rental - I don't think these should be too far off...

It's best to be conservative with your rental $ estimate when running these numbers, but for the sake of illustration, let's take the $1350 figure & break it down monthly:

Mortgage = $900 

10% Mgmt fee = $135

Property Tax = $63 (I used a tax bill of $750 annually - you'd know this figure better than me)

Insurance = $67 (This is pure guesstimation. I use USAA, and have rental property insurance - as opposed to Homeowner's Insurance - and my bill is closer to $100 a month. But based on the price you paid for the home three years ago and what the fair market rent would be, I just cut my bill by 2/3 in the hopes of getting close. Definitely best to check with your insurer on what this figure would be.)

So these four expenses equal $1165 monthly which would leave you with $185 per month... BUT!!! BUT!!! BUUUUUTTTT!!!!! That is assuming that the home is rented out from the day you leave with no vacancies ever AND that nothing will ever break or need to be repaired or maintained, etc.  I don't pretend to know your personal financial situation, but that is a crazy thin margin (if there is even any margin at all) when accounting for these unforeseen circumstances. The Charleston market as a whole is really hot, so if you could stomach the potential for short-term loss for a long-term appreciation play, then that is up to you. And depending on the location, rents could rise and make the numbers on the spreadsheet look a little better.  Finally, you should also consider whether you ever plan to return to the Charleston area, and if having this home for your own personal occupancy in the future is a goal of yours (as home prices will continue to rise for the foreseeable future in this market).

Whether you decide to hold or sell, I have a killer property manager/RE agent that I can recommend whose business specifically caters to members of the military. Feel free to reach out to me if/when you'd like her information, or if you have any more questions!