All Forum Posts by: Michael Seeker

That is not correct, in fact historical renovation standards will must allow flexibility to conform to current building codes.  Additionally, the restrictions on interior changes are only applicable if you are seeking some form incentive (typically tax credits).  I'm not aware of any historic district that can dictate what can or cannot be done to the interior of a building as long as changes conform to current code.

Thanks for the shout out!  I've since changed my last name which is why it didn't pop up automatically.

As for historic renovations, I've done a lot of these both on single family homes and rental properties.  There is a federal tax credit which is a great tool to use, but was just changed to be spread out over 5 years with the new tax law (lessening the benefit of it).  Some states and local governments also offer credits or grants, but that is something you'd need to research specific to where you want to invest.  With the federal tax credit, you CANNOT flip a house and receive the benefit.  You must own the property for 5+ years after completion or repay a pro-rated amount of the credit if owned for <5 years.  A lot of the time state and local programs will piggyback off the federal program in many ways.  In KY, there is an additional state credit, but the guidelines are the same as the federal guidelines which are quite strict.

Investing in a historic district can be challenging, but it really depends on the neighborhood.  I've seen a wide range of renovations from perfectly historically accurate to atrocious and everything in between.  If you're renovating without credits/incentives, then I'd be shocked if there is any municipality/oversight entity that can mandate guidelines for the interior of a house.  Everything I've dealt with has been related to the exterior and generally they are most concerned about what is visible from the street.  However, if you apply for credits/grants, then you almost surely will have to conform to standards on the interior as well.

I've done a lot of these projects and have never come in close to what was initially budgeted.  That being said, I'm very happy with the results and happy to own the properties long-term.

Hope this helps!  I'm happy to respond to specific questions or connect via PM with anybody interested in this topic.

@Bryan Springhetti - did you and your brother rent on Edgeland Ave back in 2012?

I've got some interested in investing in tax liens in the area.  I won't be able to meet for lunch/coffee, but would love to connect and discuss further.  PM me or shoot me an email if interested.

@Account Closed - we pay water on all of our properties in Louisville and it typically runs right at $25/tenant/month.  If you have 6 couples living in the 1BR's, the bill could end up being about double what it would be for 6 individuals.

@Ramzi Nuseibeh - you can view the statute here.  The first section indicates that the bank account be specific for that purpose, i.e. security deposits.  It does not specify anywhere that you need a separate account per deposit which would be burdensome to say the least.  We keep all of our deposits in one account, which is designated solely for that purpose.  Hope that helps!

Check out NREIG - we use them on our our rentals across two states.  Great service and good response time.  We filed a claim last year and received a check pretty promptly.  Part of the claim is reimbursement and the adjuster actually reached out to us a few months ago to see if we were ready to settle out that part as well.

@Kevin Co - If you have a windows based computer, you most likely have Microsoft OneNote installed on it.  I use this app on my phone and on my computer and love the way it works seamlessly between the two.  You can easily create different notebooks, tabs, etc. to help bucket your different interactions and help keep your timeline straight.

@Arturo Borges, I was recently at a presentation by a good sized local developer here in Memphis and he said they are typically selling homes at 4.5x the land cost (does not take into account custom builds or higher-end homes).  I would think this multiple might be applicable to other markets, but as with everything else in real estate, there are probably a lot more factors to consider.  With that in mind, if a typical house like the one you want to build is going for $450K, then the lot ought to be around $100K.  Hope that helps!

@John Kaspar - I typically reinvest all of my proceeds, however there are numerous ways you can pay yourself.  The best way to do so will depend on your business structure as well as your personal tax position.

If you operate an LLC, then you'll use some combination of a salary and distributions. I do not take any salary from my businesses (typically results in higher taxes) so any payments I receive are via distributions from the LLC.

Here's an example:
I own ABC LLC which has net cashflow of $50K during 2017. ABC LLC has taxable income for 2017 of $15K after taking into account depreciation. Regardless of whether I take a distribution, the $15K of taxable income flows through to my personal return and I have to pay taxes on it. Let's say I'm at a 30% rate, which means I'll owe $4,500 in taxes for 2017 which have to be paid to the IRS regardless of whether or not I get paid from the LLC. Note, the LLC is not paying taxes, they are passing the income tax liability to owners even if cash is not distributed.

From here, I could decide to "pay myself" enough to cover my tax liability...I would then have ABC LLC distribute $4,500 to me. If I also happened to be in the market for a nice used car, I might have ABC LLC distribute $24,500 ($20K for a car and $4,500 to pay taxes).

There are scenarios where you may want to explore a salary, but it's unlikely that would benefit you as you are just getting started.

@Donna Sommers - If tenant pays their rent on 1st of the month, how should I expect it to take to deposit into bank account using Dwolla?