All Forum Posts by: Jason Barnett

We all have to start somewhere and $10K is nothing to sneeze at. The name of the game is ROI and that's how you determine if a deal is good or not. I won't go into all the details here, but if you do the rehab as you are currently describing it then you'll earn about 30% annualized ROI. As an investor I prefer to go for 15%+ ROI on my investments.

I've found a house that looks like a good candidate for rehab, but I want to do several inspections of this property before I purchase. My question is: how would you all suggest that I tie up this property to give me the time to do these inspections?

The reason I'm asking this is because this house is old (built before 1900). I've been through it once already and overall it appears to be sound and just in need of cosmetic work. It has a relatively new water heater. Roof looks ok. Foundation looks good and basement is dry. However, there are two potential money pits:

1. Electric system. I checked it out and saw a breaker box so it has been upgraded, but I want to bring in an electrician to be sure the system is up to code.

2. Heating system. Currently the house has baseboard heaters. It has a boiler system in the basement that I will *probably* need to replace / update and I want to get an estimate on running duct work through the house.

I realize that at this point a lot of you would run because of #2... but this house is on the market for $85K and comps for this house run between $125K and $225K. So I figure I might as well get quotes for all the work I need to do and determine if I can make a good profit after that work.

Hello there Kenyatta and welcome to our site. I might suggest that you post a message in our "seeking briddogs, partners" forum as there are likely to be some people looking for deals there. Make sure to let people know what kind of loans you offer (res. / commercial / land, fixed / ARM, terms).

I'm trying to set up my accounting General Ledger (GL) for my rental company (I manage / operate a 4-unit apartment building). Could some other folks here give me some feedback and let me know how you set up your chart of accounts? Mainly I am wondering how you all structure your income / COS / expense accounts.

I've got my income accounts: rent, Section 8 payments, repairs, gain on sale of assets, extraordinary income, finance charges

I've got cost of sales: utilities, HVAC materials, plumbing materials, lumber, contractors, (lots more... stuff to keep the actual apartment running)

I've got my expenses: hazard insurance, PMI, property taxes, cell phone, basically all things that are related to the business, but don't directly keep the apartment running

I've got fixed assets: land, building, computer

I've got current assets: cash, checking account, savings account, inventory (stock of repair materials for building), accounts receivable

I've got current liabilities: accounts payable, notes payable (current portion), taxes payable, tenant deposits

I've got long term liabilities: mortgage

I've got owner's equity: retained earnings, owner's contributions, owner's draws (currently I am just a sole proprietor)

The biggest item missing from my list is depreciation. Do you all consider it a cost of sale?

Grinder, what you're suggesting is a great idea. Sometimes it really is all about "who you know." Just make sure that you can figure in nice profit margins for everyone involved BEFORE you bring the deal to them.

Investors typically have an ROI number in mind so ask them what kind of return they expect. Treat your partner's money like you would a loan; it's a cash outflow, but it gives you the capital you need to make the deal happen. Recalculate your deal, subtract out your partners' profit and see if it still makes a profit for you personally.

Private money lenders can be good friends indeed. :mrgreen:

It allows someone with equity in their house to receive fixed monthly payments for some period of time. In essence a homeowner is selling their home to a bank for fixed monthly payments. It is popular with older people that have low / no income and very little cash savings.

Try your local REIA / Real Estate Investor's Alliance. There are bound to be some hard money lenders there.

Metamucil over the long run? :goofy: Reminds me of a joke.

Q: What does a Mathematician do when there isn't any toilet paper in the bathroom?

A: He works it out with a pencil.

SE tax = Self Employment tax.

If you plan on rehabbing repeatedly then you might want to use 1031 exchanges to defer the taxes. You don't need any special entities to do this.

Sorry, but I don't know of any accountants in Texas. You might try calling the state board of accountancy for Texas; they might be able to refer you to a specialist.

I don't want to / plan to do that because I have a good agent here in OH. Not to mention that if I were to become a licensed realtor here then I would have extra disclosures to make and I would not be able to buy short sale properties that were brought to me. In other words: legal problems. Just the time spent in court alone (regardless of whether I would win my case) is enough to make it worthwhile for me to not be a realtor.