All Forum Posts by: Mark Cadle

IMHO, you should never pay income / profit taxes in Real Estate with your expenses and depreciation.  Build you life around your business.  i.e.  If you need a laptop, write it off as a business expense if it is indeed for business.  Cell phone, mileage, books, coaching, hotels, food, etc.  I had a -$41,000 income last year.  Also the value of a good accountant.

I am not sure.  Mine is in Tyner / Bonnie Oaks in a low income neighborhood.  It is terrible because one of my tenants was on social security and the sweetest old lady you ever want to meet.  Brought me potato salad and gumbo!

I like J.D. Frost (Jae Smith) for local CPAs.  423 ---- 702 ---- 6322

Hence I am selling my duplex and 1031-ing my equity out of state.  I sent the assessors and city council a piece of my mind but lesson learned my friend it is more common that I thought that places double your taxes if a multifamily is not owner occupied.  It is worth a call to a local CPA.

Don't forget the Chattanooga City Council is nuts and taxes non-owner occupied duplexes at 40%!!!!!!!!!!!!!!!!

Yeah this is hard to say without more details.  

I only have a two bedroom available here.  One downtown and one in Tyner but I think you can only have 2 persons per room unless one is an infant.

Thanks Bob!  It has been a great experience here.  Love the town, the people and the "keep it local" attitude.

Investment Info:

Single-family residence buy & hold investment in Chattanooga.

Purchase price: $250,000
Cash invested: $13,226

Great location walking distance to all the entertainment! Shops & restaurant. Music shows every day of the week in this up and coming area. Wired for The Gig City, watch the sun rise over the Downtown Skyline. Mean Mug for a quick coffee and breakfast. Head to Clydes next door for a great sandwich. Breakfast, Dinner, Lunch, Brunch, Happy Hour, Dog Parks, Music or just a nice stroll to start or end the day. Super dog friendly area. Plenty of non-metered parking!

What made you interested in investing in this type of deal?

As silly as it sounds I kind of followed the leaders here. Marriott has a chain of 7 new "feature" hotels in the world targeting Millennials providing social environments on the main level and tiny hotel rooms. Turns out one is being built in the downtown area off Main St. in Chattanooga. I figured they knew what they were doing as well as the 6, I think, new apartments building built and 1 $400k+ condos going up. Investors abound trying to renovate and rehab this area. I just followed...

How did you find this deal and how did you negotiate it?

I found this deal on Zillow but only because my realtor and I lest out Condos from the listing. I found a few for sale but this was the one of two units with a skyline view. There was no negotiations, as much as I tried. I probably over paid and this could be a loser but I think with the area being developed this is an appreciation play based on Marriotts old saying, Location, Location, Location.

How did you finance this deal?

Conventional.

How did you add value to the deal?

The value added to this deal is the constant updating and renovation going on all around this block. New restaurants, new buildings, demolition older buildings, a walking city for anything you need. Coffee, Music, Alcohol, Festivals, Breakfast, Dinner, Downtown, Banks, Schools.

What was the outcome?

The outcome was me and my dog moved in and my neighbor across the hall was also a real estate investor. It has been great!

Lessons learned? Challenges?

Well not sure I could pass along any tips at this stage. This will be a sort of hind sight is 20-20 thing I think.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

David Shipley

Investment Info:

Single-family residence buy & hold investment in Chattanooga.

Purchase price: $250,000
Cash invested: $13,226

Great location walking distance to all the entertainment South Side and Main St has to offer! All mom and pops shops & restaurant. Music shows every day of the week in this up and coming area. Wired for The Gig City, watch the sun rise over the Downtown Skyline. Walk across the street to Mean Mug for a quick coffee and breakfast. Head to Clydes next door for a great sandwich. Breakfast, Dinner, Lunch, Brunch, Happy Hour, Dog Parks, Music or just a nice stroll to start or end the day. Super dog friendly with trash and dog bags on almost every corner! Easy access walking or driving to downtown. Plenty of non-metered parking!

What made you interested in investing in this type of deal?

As silly as it sounds I kind of followed the leaders here. Marriott has a chain of 7 new "feature" hotels in the world targeting Millennials providing social environments on the main level and tiny hotel rooms. Turns out one is being built in the downtown area off Main St. in Chattanooga. I figured they knew what they were doing as well as the 6, I think, new apartments building built and 1 $400k+ condos going up. Investors abound trying to renovate and rehab this area. I just followed...

How did you find this deal and how did you negotiate it?

I found this deal on Zillow but only because my realtor and I lest out Condos from the listing. I found a few for sale but this was the one of two units with a skyline view. There was no negotiations, as much as I tried. I probably over paid and this could be a loser but I think with the area being developed this is an appreciation play based on Marriotts old saying, Location, Location, Location.

How did you finance this deal?

Conventional.

How did you add value to the deal?

The value added to this deal is the constant updating and renovation going on all around this block. New restaurants, new buildings, demolition older buildings, a walking city for anything you need. Coffee, Music, Alcohol, Festivals, Breakfast, Dinner, Downtown, Banks, Schools.

What was the outcome?

The outcome was me and my dog moved in and my neighbor across the hall was also a real estate investor. It has been great!

Lessons learned? Challenges?

Well not sure I could pass along any tips at this stage. This will be a sort of hind sight is 20-20 thing I think.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

David Shipley

Investment Info:

Single-family residence buy & hold investment in Chattanooga.

Purchase price: $250,000
Cash invested: $13,226

Great location walking distance to all the entertainment South Side and Main St has to offer! All mom and pops shops & restaurant. Music shows every day of the week in this up and coming area. Wired for The Gig City, watch the sun rise over the Downtown Skyline. Walk across the street to Mean Mug for a quick coffee and breakfast. Head to Clydes next door for a great sandwich. Breakfast, Dinner, Lunch, Brunch, Happy Hour, Dog Parks, Music or just a nice stroll to start or end the day. Super dog friendly with trash and dog bags on almost every corner! Easy access walking or driving to downtown. Plenty of non-metered parking!

What made you interested in investing in this type of deal?

As silly as it sounds I kind of followed the leaders here. Marriott has a chain of 7 new "feature" hotels in the world targeting Millennials providing social environments on the main level and tiny hotel rooms. Turns out one is being built in the downtown area off Main St. in Chattanooga. I figured they knew what they were doing as well as the 6, I think, new apartments building built and 1 $400k+ condos going up. Investors abound trying to renovate and rehab this area. I just followed...

How did you find this deal and how did you negotiate it?

I found this deal on Zillow but only because my realtor and I lest out Condos from the listing. I found a few for sale but this was the one of two units with a skyline view. There was no negotiations, as much as I tried. I probably over paid and this could be a loser but I think with the area being developed this is an appreciation play based on Marriotts old saying, Location, Location, Location.

How did you finance this deal?

Conventional.

How did you add value to the deal?

The value added to this deal is the constant updating and renovation going on all around this block. New restaurants, new buildings, demolition older buildings, a walking city for anything you need. Coffee, Music, Alcohol, Festivals, Breakfast, Dinner, Downtown, Banks, Schools.

What was the outcome?

The outcome was me and my dog moved in and my neighbor across the hall was also a real estate investor. It has been great!

Lessons learned? Challenges?

Well not sure I could pass along any tips at this stage. This will be a sort of hind sight is 20-20 thing I think.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

David Shipley

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $120,000
Cash invested: $33,349

This duplex is located right around the corner from an Amazon distribution plant as well as an expanding Volkswagen plant. Great location, great price, great cash flow!

What made you interested in investing in this type of deal?

The location of this property is amazing. It was brought to me by two realtors that I trust to find and manage great investment properties. I heard Volkswagen was expanding it's plant there and it was near an Amazon distribution center as well. The money made sense.

How did you find this deal and how did you negotiate it?

Broker. Won a bid war. Located near an expanding Volkswagen and Amazon plant. Negotiated down in lieu of repairs. Appraisal came in low and the seller lowered price. Closed $16,000 under original contracted / offer price. Without a sure closing on the loan, I built an amazing team in Chattanooga while it was under contract with a list of things to be done after closing. Now I can enjoy my 3 week Christmas vacation in the mountains with my lovely girlfriend while the team executes the plan

How did you finance this deal?

Originally I was going to use a Portfolio / Investor loan but at the rate of nearly 9% they were asking I felt it put us both at risk. Not enough cash flow to me with a lot of repairs needed. I ended up with a normal Fannie Mae investment property loan @ 6.125%

How did you add value to the deal?

I added value to the deal on my end by being patient, not my strong point, and letting the deal work through. This was a roller coaster off and on all the time. The loan, my DTI, the repairs, the appraisal, etc. At the end of the day the negotiations and persevering through the process negotiating through the hiccups at every turn was how this deal went from Good to Great!!!

Since only one side had been updated, value added was to update the other side to match.

What was the outcome?

The property was sold to me $16,000 under offer and the rate was low enough to secure 9.25% Cap Rate with value left to be added to the unit. After repairs estimated on the high end it will have a 11.09% Cash on Cash return! Put that in your pipe and smoke it! (teasing all). I am very fortunate to have found and secured this property with the help of a team of professionals.

Lessons learned? Challenges?

Never give up when you hit a small challenge. Investors Solve Problems! The ones that scare other people. Due diligence also helps you sleep better at night. Knowing that you did all you could to mitigate a surprise when buying older properties. Portfolio loans are surprisingly easy to get if the interest rate works for your deal. Don't be afraid to ask and work through one.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

David Shipley was my realtor
Matt Hensley is doing the repairs
Kim and Joni at Grey Haven Realty