All Forum Posts by: Joshua Smith

I assigned a deal and it's closing soon. 

Assignee said he's fine wiring the funds directly to me. 

Should I require that all transactions go through the title company or record? Or would fellow wholesalers here accept a direct assignment fee payment outside of the title company?

Could I own a C-Corp inside of that Roth so that I can avoid UBTI?

I stumbled across what I believe to be a genius way of shielding active real estate income.

One can tie up a property for, let's say $1K. This $1K would come out of a Roth self directed IRA. Deal is assigned and Assignee makes a fee of $10K. All $11K goes back into the IRA tax free and is able to be withdrawn before the age of 59 1/2 with the standard 10% penalty.

What am I missing here? I've heard of others doing this; but this seems too good to be true. 

Hi all - my brother @Aaron Smith and I are about start marketing to mobile home park owners. We intend on procuring phone numbers and emails, then calling them (with a VA or with slybroadcast), texting if they don't respond to calling, and putting them on an email drip. I'd like to get some feedback on our email copy. If anyone with experience has some useful feedback, we'd be very appreciative.

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Email #1 

Hi [mr./ms] [Last name]. I hope this email finds you well.

My twin brother, Aaron, and I are looking to purchase a mobile home park in the next few months. This is a shot in the dark; and we’re not even sure if you are open to selling. But in case you are, please do let us know at your convenience. We work with sellers to get the right price for their properties.

Have a great day.

Thanks,

Josh

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Email #2

Hi again [mr./ms] [Last name]. I hope this email finds you well.

Just following up on my last email here. As I mentioned, my twin brother, Aaron, and I are still interested in purchasing your mobile home park at [address]. We’re not sure if you are open to selling your property. But in case you are, we’d love to connect with you.

Have a great day.

Thanks,

Josh

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Email #3

Hi again [mr./ms] [Last name]. I hope this email finds you well.

Just following up one last time over email. As I mentioned, my twin brother, Aaron, and I are still interested in purchasing your mobile home park at [address]. We’re not sure if you are open to selling your property. But in case you are, we’d love to connect with you.

Have a great day.

Thanks,

Josh

@B Ryans @Kevin DePass @Russell Brazil

-It took 8 months to get plans through DCRA

-It took 13 months of construction (with associated holding costs). Had liquidated damages clause (note: add this clause to ANY contract with a contractor; it will save you tons of money WHEN they go over allotted time).

-Went over budget by about $80K Biggest surprises were sprinkler (~11K for sprinklers + 9K for extra engineering + 3 months holding costs) and water/sewer lines. Usually those lines cost ~$50K in DC. I found a guy that did them for $25K. 

-I decided to convert to condos to get an equity bump. I avoided the 5% condo charge on outsale because i) I haven't sold them ii) If the units are proved to have been vacant for more than 1 year, you don't have to pay the fee. I had proof that ALL units were vacant for well over 1 year. 

-Cost of condo conversion was $7K for legal work, $500 for engineer's report and $2,500 for survey. Nothing close to what @Russell Brazil was saying. Orders of magnitude less that what he was saying. I recommend Tommy at District Title to perform the work.

-I rented the units out and am making ~$3K in cash flow per month and about $50K/year in interest deduction and depreciation. 

-Will rent this guy out for a very long time as I trust where the neighborhood is going. I will prune the equity moving forward with HELOCs or refis to invest elsewhere. 

Always happy to talk about any of the above to those wishing to do similar work.

@Brandon Hall I am about to close on a $100K wholesale deal in DC. I REALLY do not want to have to pay self employment taxes on the money so that I can invest quickly somewhere else and was wondering if creating an S Corp for this activity would be a good strategy for that. I could pay myself a "reasonable salary" (it probably took me 10 full hours to get this deal done) and not have self employment taxes be levied on the rest. Do you have any thoughts on that? 

Also is there anywhere I can find more information about your services? I've filed a tax return extension and am looking for a CPA. Thanks.

Kevin - How do you know they got 10 deals per month? Just a guess? I'm trying to evaluate if I should be putting up bandit signs around Denver to build a buyers list.

@Account Closed 

One effective way of inheriting tenants and then trading up for higher paying tenants in DC is getting a rent control exemption from RAD. In order to qualify, you'll need to own fewer than 5 units and not own the property with an LLC. In other words, you have to be a "natural person" on the deed.

You simply notify the tenants that you're increasing rent and give the at least 30 days before the rent goes up. If you are considering condoizing your property eventually, you'll need to get them to sign an affidavit that they moved out voluntarily. To do this, you should offer cash consideration to them for the "inconvenience" of moving out/the rent increase, and put that into an affidavit. Then you're all set. 

Hi all - I am about to close on a 4 unit in Washington DC. The ARV of this building will be ~$1M; however, if I convert the units to condos, each condo would be worth about $315K ($1.26M). Would be great to get that $260K equity boost obviously, while still living in one of the condos.

The project is a 203K and I understand that it's possible to do a condo conversion if you have an FHA loan:

https://portal.hud.gov/hudportal/documents/huddoc?...

My question to all of you FHA experts is: if my bank has no idea how to help me get approved for a condo conversion, who do I approach? HUD themselves? What does that process look like? Any thoughts/feedback would be incredibly useful.

Thanks!

My brother would like to get a HELOC on his 4 unit property in DC for renovation; however, he lives in Denver and I live in DC. Could I conceivably be put on the title in order to be an owner occupant, live there, and jointly get a HELOC?