All Forum Posts by: Mark S.

@Shaye Mora 2% does not exist in the Twin Cities area with the possible exception of the very worst areas. Even 1% is a stretch unless you do a lot of work yourself on a place that you get cheap due to its condition (cheap being relative) But the Twin Cities is an expensive market.

@Todd Powell You can do that but I don’t think it is particularly ethical to offer a price you know you intend to negotiate down after the fact. Finding unknown issues through inspection is one thing, using the process in the way you described is another, if I understood you correctly.

@Joe Splitrock It would be nice if that worked, but at least in Minnesota you will never get anyone to work for you with that approach. Too much work available from people willing to share the risk (as others mentioned) and too many difficult or unreasonable homeowners who decide during the process to change things up.

There is too much focus on things like ‘the 1% rule’ on this website and not enough on the overall financial analysis of an individual situation. Things aren’t that simple!

@Steve K. Flips are taxed as ordinary income which will also include over 15% in SS and Medicare taxes. When I analyze whether to sell or hold a property I have to assume 45% of any gain will disappear if I flip here in MN. So there are times it makes sense to hold for a few years as a rental and then sell, even if cash flow is negligible. By the time you figure tax savings and principal pay down it can make sense, even if you have to spend some money to get the property ready to sell.

@Ben Wilkins Makes sense, Ben. Your original post was a little unclear and I wanted to make sure there wasn’t a misunderstanding about commercial loans. A point of clarification, though - you stated that there is ‘zero’ reason to take a commercial loan until you max out on personal loans. The exception to that statement would be if you are purchasing properties through a business entity, as I think many readers are doing. Unless you are familiar with banks who issue personal loans for properties owned by LLCs - I am not.

@Ben Wilkins That is not exactly true. Commercial loans are also used for SF houses, generally with 20 to 25% down. I have done a number of them.

@Mike B. Well I have never ‘flipped’ a truck but I bought a riding mower a couple years ago that I kept for a year and then sold for a $500 profit!

@Ben M. I would be concerned about what kind of damage is hidden underneath the cabinets, giving that there is some rot already. I’ve had situations where I thought about just repairing and painting but once I pulled cabinets out was glad I did due to uncovering other things that needed attention. Just a thought.

@Chris Laino yea there are quite a few contractors/subs out there who know that the demand is so high they can bid ridiculous amounts and get enough of them to keep them busy. Example - I am having quite a bit of plumbing redone in a house I bought and my reqular plumber just couldn’t fit it in. So I got a few bids from guys I hadn’t used before (always good to have a backup) and one was $7,500 the other $16,500. Both seemed well qualified and were to do the same work. The guy at $16k said I ‘wouldn’t hurt his feelings’ if I said no. Which I did of course. (And by the way, the lower priced guy brought in his whole team, knocked the job off in two days, and the inspector said everything looked great)