All Forum Posts by: Keegan Schaub

UPDATE: found out 4 beds/4 baths were unpermitted by the county… most likely why the price was low.

I worked with the county and my agent to come to an agreement. I can avoid retroactive permitting by making the property a duplex adding a $10-20k kitchen to second story, after which the property would meet county codes.

Adding in the construction expenses to the deal it still yields 15% COC return, $1,300 cashflow with a 9.4% cap rate (worst case scenario).

UPDATE: worked with the county and my agent to come to an agreement. I can avoid retroactive permitting by making the property a duplex adding a $10-20k kitchen to second story, after which the property would meet county codes.

Adding in the construction expenses to the deal it still yields 15% COC return, $1,300 cashflow with a 9.4% cap rate (worst case scenario).

I recently went under contract for an 8 bed/8bath property with intention to do rent by the room. However after signing the contract I researched and found a recent home renovation that added 4 bed and 4 baths in 2018 was all unpermitted.

the house is located in Kansas City, KS. The property was originally listed at $502k A year ago, and I bought for $375k. It has been on the market for a year. I worried about potential problems since half of the house (4beds/4baths) are unpermitted. But is $375k a good deal to ignore the unpermitted work? 

https://www.redfin.com/KS/Kans...

Mike, thanks for your comment and concerns! Yes, it does seem suspicious it was listed a year ago and quickly decreased in price drastically with another buyer falling out of contract.

My back up plan was to rent out to students if travel nurses were not interested. I was forced to waive inspection in the offer as the buyer had another all cash no inspection offer on the table. I understand that comes with a lot of risk when buying a 100 year old home, however, if comps and appraisal truly are over $500k wouldn’t this still be a deal if I had to make some repairs that were missed on an inspection given the price I bought it at? As far as I know it comes rent ready with no major capex concerns per seller disclosure. There was also an inspection report from 2021 with a few maintenance/electrical things that I would have further inspected and a quote for roof repair for $1200. But given the price and appraisal difference of $137k… does it really matter if repairs are needed if it’s rent ready now?

The buyer was an older gentleman in his 80s wanting to cash out all of his properties, maybe there was motivation? Also my agent mentioned an 8 bed/8 bath does not appeal to most buyers in the area.

 The previous owner used it as a rental for ballet students and traveling healthcare workers. The property has two hot water heaters and I bought it furnished with a bed/cabinet/mini fridge in every room. Each bedroom door has its own keypad lock with the private bathroom in each bedroom.

I am under contract for an 8 bed/8 private bath SFH located in Kansas City, Kansas

Purchase price: $375,000

Appraisal from 2020: $512,000

Downsides: waived inspection on a 100 year old previously renovated property and per zoning, cannot do STR (30+ days only)

My brother will live in it free to help manage and plan will be to rent out to travel healthcare workers with two nearby level 1 trauma hospitals within a mile distance.

I feel like I hit jackpot with this first investment property with $137k potential equity from the 2020 appraisal. COC return between 30-45% depending on avg market rent 700-850/mo for the area, 2-3k cashflow per month. Absolute worst case scenario 600/mo still yields 20% COC return.

With the super hot housing market, did I get lucky finding this deal? What am I missing?

Assuming everything goes as planned, will do a cash out refi in six months to keep scaling with the potential equity.

https://www.redfin.com/KS/Kans...

I am under contract for an 8 bed/8 private bath SFH located in Kansas City, Kansas

Purchase price: $375,000

Appraisal from 2020: $512,000 

Downsides: waived inspection on a 100 year old previously renovated property and per zoning, cannot do STR (30+ days only)

My brother will live in it free to help manage and plan will be to rent out to travel healthcare workers with two nearby level 1 trauma hospitals within a mile distance.

I feel like I hit jackpot with this first investment property with $137k potential equity from the 2020 appraisal. COC return between 30-45% depending on avg market rent 700-850/mo for the area, 2-3k cashflow per month. Absolute worst case scenario 600/mo still yields 20% COC return.

With the super hot housing market, did I get lucky finding this deal? What am I missing?

Assuming everything goes as planned, will do a cash out refi in six months to keep scaling with the potential equity.

https://www.redfin.com/KS/Kans...

I am looking for professional tax strategy help regarding an inherited IRA account, charitable donations, and real estate deductions. Any recommendations or BP members that do this?

Thanks!

Hypothetical situation:

Say someone inherits an IRA - per RMD (Required Minimum Distribution) all of this money must be withdrawn from the account in ten years and is considered taxable AGI.

In order to avoid a pretty large tax bill from the inherited IRA and W2 every year for ten years that person buys real estate property every year in order to offset tax depreciation. Using passive losses or 'paper losses' this person is able to deduct up to 25k every year from their AGI (W2 + IRA withdrawal).

After ten years this person has deducted a total of ~250k and obtained ten properties. 

The alternative is buying no real estate and paying ~24% of AGI every year according to their tax bracket.

Is this a possible scenario?