All Forum Posts by: Michael O'Byrne

Hi All,

We just started a c-corp to take advantage of ROBS capability, and I'm doing some basic research on cash vs. accrual method for accounting. For a rehabbing business it may not make much difference due to relatively quick turnover, but I am curious as to what other business owners/investors are doing.

I am also wondering about the tax implications of rehabs in terms of "repairs" vs "improvements", or if it even matters. Do you have to capitalize all construction (labor and material) expenses associated with a rehab until it is sold or can you deduct them right away as they are paid? Maybe this question only applies to your principal place of business and not homes that you buy and sell? Thanks for any advice!

@Chris Adams , thanks, that is an excellent forum site to get inside info on the inspection picture.

@George Foster , I'd like to get your insights, will send you a PM. Thanks much!

@Bryan L.

I am toying with the idea of becoming a licensed home inspector at some point as a way to supplement/enhance my primary interest in fix and flipping. Is anyone doing this, and if so, has it been worth it? Any potential conflict of interest pitfalls? At the very least I may take a few hours of home inspector courses just to educate myself to get better at rehab cost estimates without having to call in an expert. My wife and investment partner is planning to get her real estate license, maybe if I get the inspector license, it could be a powerful combo - any insights are appreciated.

On the downside, it appears Texas requires a pretty rigid apprenticeship program, need to be sponsored by a professional inspector and perform a lot of inspections under direct supervision. Sounds like a lot of time invested, and I'm not sure how these sponsorships actually work -

Thanks all!

@Deidra Hubenak@Deidra Hubenak

Thanks very much. Still looking - I live in Crosby NE of Houston, so getting to downtown or W. Houston where all the attorneys are will be a challenge. I am currently checking some out in the Kingwood area about 30 min from my house.

Hi All,

I am looking for recommendations for a good lawyer or firm to work with in the Houston area that is well-versed in residential real estate, and is small investor-friendly. My wife and I are just starting out a fix and flip business and would really value any guidance from local BP'ers on who you would recommend and why. We need help with basic stuff like reviewing and translating various contracts/documents before signing, helping us draft needed contracts, provide some boiler-plate stuff, etc. We also need help on how to structure our business to take full advantage of tax breaks and deferments and to protect our personal assets. Plus I'm thinking we are going to need a lot of general counsel as we work through our first flips.

I spent a good deal of time trying to vet candidates on the internet, and came across a very interesting site, "lonestarlandlaw.com" where a lot of the basic stuff like contract reviews are done over email and/or phone calls. It looks very convenient, and pretty legit. Has anyone used this firm?

Thanks!

I am going the ROBS route right now, quitting my day job, starting a C-corp, creating a new 401K for the roll-over, etc. I have been consulting with prospective providers, I'll be happy to share the experience as we work through it. I would be taking a huge hit without this option as all my funds are tax-deferred and I'm under 59 1/2 yrs old, so over 35% in tax and penalties. Based on the consultations I've had so far, there isn't a lot of risk involved as long as you actually use the funds for a legitmate business that stimulates the economy, don't use the money for a new swimming pool or fast cars, and keep the new 401K operating after you convert the funds to operating cash. You also have to pay yourself a salary and contribute at least 1% of your salary to the 401K.
Setting the whole thing up costs about $5K up front, plus $800 per year to manage the 401K and file all the necessary annual paperwork. Another $750 to do an annual share valuation to keep the IRS and DOL off your back.
At this point, I'm still pretty ignorant in these matters, but looking forward to a quick education over the next month or two.

All, thanks for the warm welcome and advice. We're looking forward to the ride!

Hi All,

My wife and I have decided to take the full plunge into real estate investing. After almost 19 years in a challenging and satisfying corporate career, it's time for something new. There are several drivers behind our decision, but suffice it to say that we are highly excited at the prospect of building something together, getting more into our local community, and meeting some great people along the way.

There is a LOT to learn and we know next to nothing at this point, but Bigger Pockets has been an amazing resource in the research we have done so far. Thanks to all who are making this happen and all the contributors.

We live in the Houston TX area, and there are a lot of options and opportunities here, with a growing economy and a bright future in real estate, albeit challenging. We want to start out with residential flips as a way to learn the ropes, generate cash flow and open more opportunities down the road. Our initial plan is to flip pretty aggressively, at a rate of one deal per month within six months from now.

Our first priority is networking. We need help and good relationships, especially local ones. We are inexperienced and don't know what we don't know, but we are willing to learn and take our lumps, and are highly appreciative of any advice and counsel.

We have been checking out the real estate investment clubs in Houston, and there are several. Would any Houstonians out there give us recommendations on which ones would be the most suitable for us noobs to get involved with? We have way too many questions to post here, but we obviously need a good market strategy to find deals, figure out the cash or financing options, meet some contractors, build realtor networks, etc.

Thanks for all responses, and for this great resource to draw from!