All Forum Posts by: Michael Woodward

Thanks @Will Barnard!

@Peter M..  That's a great strategy.  I think your letter to the seller probably did have an significant impact on your successful offer. There's nothing wrong (certainly not illegal) for you to ask the agent to forward your letter to their seller.  That (almost always) only works when the house is being sold by an individual though.... not when a company or govt agency is involved. 

In my situation, nearly all of the houses that fit my purchase criteria end up being foreclosures (REO) that are being sold by HUD, a bank, or some other third-party processor. There's no way to reach the person handling the file so there's no way for me to build a relationship.

I'm glad your offers worked out for you!

Thanks @Peter M..  Unfortunately there's no way to build a rapport with sellers because everything is at arms length between the listing agent and buyer's agent.  Even though I have a real estate license and I buy houses under that license, I still don't have direct access to the seller. All of the offers are submitted in bulk (paper or electronic) and the seller picks the one they like so there's just no opportunity to explain my situation or try to sway them in any way.  Laws are set up to prevent direct contact between the partys to keep the bidding process honest and above board. 

Thanks @Teri Feeney Styers. Those are all the same questions I have that will unfortunately be unanswerable. 

Thanks @Lisa Thoele.  That's a good idea.  My CPA came up with an unexpected solution that I like but it requires a couple more accounting steps to keep up with.  He said that I can continue buying and selling in my name but I can "hire" my S-Corp to do all of the renovations.  As he described it, that will give me maximum tax benefit while leaving everything else as-is which would remove the need to transfer the deed.  I'm waiting for them to share the details of how it works to make a decision but so far it sounds good.

Thanks @Elizabeth Wilson!  

Thanks @Will Barnard!  I've been operating for a long time (since 1999) as a sole proprietor but have really ramped the business up in the past several years.  I would have saved over $7500 last year if I had been operating as an S-Corp and this year is shaping up to be at least twice that.  That's a lot of money to give away..... but..... if sellers prefer selling to individuals instead of companies (the anti-flipping crowd) then I could miss out on some deals.  Missing just one property during the year would be worse than giving the extra $7500 (or even $14k) to the IRS.  

What makes it nearly impossible to figure out the solution is that I usually don't know why I missed out on a competitive bid because of confidentiality of the buyer.  Usually it's obvious that I was out-bid but not always.  I bought a house last year and was told by the listing agent after we closed that someone else offered $30k more than my offer.... but they still gave it to me!?  That still blows my mind that I got it.... but it happened.... so I'll always wonder why.  Maybe it was because I was buying as an individual but maybe not.  What does your gut tell you about what I'm describing?  

I'm exploring my options to reduce my tax burden and my CPA is recommending that I create an S-Corp to maximize the tax benefits.  That sounds good to me but I'm concerned that when I'm buying properties I might run into some push-back from sellers with the anti-flipping mindset. I've had very good success buying houses as an individual in competitive situations so I want to make sure I'm not making a bad move that will put me at a disadvantage. Anyone have an opinion about which is better?

I agree with J.  If it's your only option you could try it but I would avoid it if at all possible. I recently had someone ask me to do that.  They asked if I would make several changes to my standard finish.  I was entertaining their questions but hadn't committed.  After a few phone calls between us they disappeared.  I'm glad I didn't agree to move forward with it because they might have disappeared at the last minute and left me with something that would be harder to sell.

It's a tough call regarding how much to spend on bullet proofing your house because it will depend on how your specific tenants treat it.  Soft surfaces are fine for good tenants but my philosophy has always been to over-protect everything if it's going to be a rental.  I would put tile on all the floors. They even make tile now that looks like wood so there's lots of good options. Any vinyl flooring you use will be susceptible to scratches, cuts, and even melting if they set something hot on it.  Granite countertops are the best for durability (no Corian) but Formica usually holds up just fine and is inexpensive. I always put plastic liners under all sinks (inside the cabinet) and then put an inexpensive water alarm for added protection.  I've never had good luck with unfinished cabinets.  They just never look as good as factory finished cabinets so that's the route I would go.  

Hope it goes well for you!

Most people like brick houses because they're maintenance free.  If you paint it, you'll create a maintenance exterior that will turn a lot of people off.  The only time I ever considered painting a brick house was one that had pink brick..... yeah... bright shiny pink.... yuck!

You might have thought of this already but you will need to start with finding out what your zoning will allow at that location.  If there are no restrictions, then I think your storage idea is a good one.  I rent a storage building for my staging furniture and they have a large lot full of motor homes, boats, trailers, cars, trucks, etc.

Another idea if you like farming and the land will support it would be to put some kind of livestock on it (cows, goats, etc).  Another option might be to fence it off and board horses.

Just a few thoughts.  Good luck!

@Jeff Dulla  Thanks for your reply!  That pretty much summarizes my thoughts but I wanted to get it from an outside perspective.  The tough thing to figure out now is how to move forward if/when the bank doesn't want to take the next step.  I have a lot of business ideas I want to pursue but I don't want to make my banker nervous.  I guess I'll need to approach it incrementally and make decisions along the way.