All Forum Posts by: Justin Edgerly

Thank you all for the encouragement.  Going to be an interesting year!

@Zeke Liston Deals exist, but the real magic seems to happen in finding off-market deals. The key seems to bey creating equity in a property.  To give an idea, the house across the street sold for 670k, but only rents for 3100/month...  Insane!

Honestly, when I try to explain the 2% rule to friends here, they can't wrap their head around it.  Buy for 50k and rent for 1000/mo?  Witchcraft!  Slowly turning one friend, who is actually watching podcasts and setting aside money to invest!

Hi everyone! After several years of lurking and reading and calculating and God knows how many podcasts, I am finally taking the first steps. I am in the San Fernando Valley and looking forward to working with many of you and getting into my first deal. I would describe my target as a D+ to B- properties in C+ to B+ areas. I am primarily interested in utilizing the BRRRR method to start my portfolio. Additionally, I am also very interested in acquiring an apartment building with strong upside potential for upgrades and rent increases.

My day job is working in the film industry.  I am very hands on with building things and have done a few remodels and sold a few properties in the past.  I just entered escrow selling 2 properties which are seeding my investment fund.  I have strong family ties in the Salt Lake City and Idaho Falls areas and interested in those markets as well.  I work regularly in Atlanta and am not opposed to investing there as well.  

This is my official transition from studying-and-learning to actively-searching-for-my-first-deal-with-the-means-to-close-it!  Thank you all!

-Justin

Hattie, good points about running each property as a business and planning for the unforeseen!

Bob, Parents are divorced and not involved.  My mother, Grandma's daughter is friendly to any transaction necessary that might require her.  Prop 193 transfer wouldn't work, but Prop 58 would.  One option presented was execute deeds from Grandmother to Mother and Mother to me to maintain prop-13 on both.  Current opinion is such a dual Parent-Child transfer would not be considered a Step Transaction.  Other choice is leave them in the trust as is, but I haven't sat down to figure out the overall tax implications of both situations. Or option 3, sell.

Troy, I do like your first idea and will do my homework on apartment buildings. I have previously only considered SFR. As Bob has pointed out, it is a privilege to be able to invest with the existing properties. She worked hard to accomplish that, so I am trying to minimize any interruption to her existing way of life.

As Nadine has suggested, I guess I really need to sit down and run each scenario to understand the risk, cash flow, tax consequences and suitability to my own goals.

Thank you Jo-Ann and Hattie. I will heed the advice in the future.... 

Market rent for each is about $2500/month, tenant would be responsible for all utilities except the gardener ($50/mo).  I know of a few neighbors renting @ the price within a block, some even the same floor plan of tract home. 

Both homes have newer plumbing, HVAC, paint, and roofs.  Low maintenance in the near future...

@ $225k, monthly responsibility would total ~$1750

My second inclination is stay put, but cash-out 50-75% to leverage into additional rental properties that would cash-flow better and have better cap rates...  

Hi everyone! OK, I have two SFR homes free and clear. I live in one, my grandmother and her caretaker live in the other. We have our eyes on a new home for me that has a guest house that would suit my grandmother perfectly, and she likes the idea. The initial inclination is to keep the properties as rentals, but there are several approaches available to me.... Here are the details:

Both properties are in my grandmother's name, currently in a living trust with me as sole beneficiary. 

Both have a very low tax basis of 50k each. Being in California, they both also have Prop 13, so the property taxes are only $500 a year per house.

Market value of 500k each. 

Grandmother is eligible for a Principal Residence exemption of 250k from capital gains as she has lived in the home continuously for 30+ years. 

Being in California, they both also have Prop 13, so the property taxes are only $500 a year per house. 

Her income is only $1300/month of Social Security.  Mine is ~240k/year gross at a secure job.  I pay for all of her living expenses as well as for her full-time live-in nurse out of pocket ($4500/month)

The Dream: 

Add myself to the titles of both and cash-out refi one or both to purchase the new property (which is an REO, bank wants 50% down on 700k) and remainder of loan against new home. Want to put 100k into hew home, and it will appraise for 900k all day. 225k out of House # 1. 225k out of House # 2. 350k goes towards down on New House, plus 100k toward remodel. Remaining 350k against New House. After a year, refi New House to pull another 350k out and pay off House #1 and pay down #2. ~100k remaining on #2.

Reality:

Nothing ever goes as planned.  I find myself explaining away the negatives....  Can those of you better versed in this help me understand the greater consequences?  

Do I sell both properties and pay cash for the new home?   Sell only the property she is in to claim the Capital Gains exemption of 250k? Keep both as rentals since my property taxes are unnaturally low?  Do the cash out refi, but leverage the money as down payment on more properties?