All Forum Posts by: Nick Bleser

I have a question for the Wisconsin investors. When doing a flip how are the taxes calculated? I believe I read that the profits are taxed as self employment? or is it capital gains? How much should I plan on paying at the end of the year?

Thanks in advance!

Nick

Is this the event at Fox Heights?

@Joe Villeneuve I sent a note is that the same as a PM?

Thanks @Joe Villeneuve and @Matt P. for the responses. I'd be happy to message with you Joe and would be willing to share.

We hear a lot about creative financing but I'd like to hear more in depth ways buyers and sellers can structure deals. @Brandon Turner and @Joshua Dorkin

@Dave MosherI'm asking myself the same question. To others I assume cash flow is any dollars left over after maintenance, CapEx, vacancies, management and debt service.

Hi @James Mc Ree thanks for the response. You're right I may not be using the correct terms for the interest only loan. The way my numbers work and maybe I'm over complicating this whole idea is if I can get my monthly payment at $700 the property will cash flow really well. I figured I'd be willing to "ask" to buy the property for $100,000 but defer any portion of my monthly payments to go to principal for three years. That adds up to $700x12x3=$25,200 + $10,000 down payment which equals $35,200 going to the seller. After 3 years I still owe the seller $100,000 we could enter a new loan or tie it into a single contract where the terms will be a 5 year loan at 7% amortized at 20 years. At that point I could get a traditional loan and part ways with the seller. The seller would eventually get a total of roughly $140,000 in the end and I get the purchase price I want.

I'd like to add that I have good credit and capital. I'm just playing with this idea and was curious if this is a deal that could be realistically proposed.

Hi @Neal Collins! $149,000 I believe is pretty far off for the area. The city has assessed the property at $86,000 and the area comps are about $100,000. The reason I'm giving this so much thought is the property is very well maintained and the rents are set well which is rare for my area. It does make sense to have a single contract I've just never heard of deferring any portion of the monthly payment to the principal for any length of time.

Thanks again for the responses.

@Caleb Heimsoth They are investors who moved out of state and now want to get out of this property.

I'm curious to know if anyone has ever been able to structure a deal like this and if a seller would be interested?

Thanks @Caleb Heimsoth for the response! It is an off market property and the asking price is $149,000. The idea is for the first 3 years the seller benefits from receiving interest only payments. After which I get the property for the price I want($100,000). I'm in it for the cash flow and want to put very little down($10,000). The second part of the deal is traditional seller financing at 7% interest for 5 years. After that I can get traditional financing or sell it for as little as $100,000 and still be happy getting all my money out.

I recently attended a local REIA meeting and they were talking about investors should try to always think outside the box. So here's my idea that I would love to hear others opinions on.

There is a tri-plex being sold in my area in great condition and I'm trying to think of ways to make both the seller and I happy. The asking price is $149,000 and the rents total $1650/month. My numbers don't come close to this working plus I only want to put $10,000 down.

So let's assume the seller is ok with owner financing. If I offer $100,000 w/ 10% down interest only for 3 years with a 7% interest rate the owner would receive $35,200 after 3 years. Then agree to a new 5 year loan at 7% ammortized at 20 years. That means after five years the seller would get $29,500 in interest and I've paid down the loan to roughly $77,000. I could then find a traditional loan or sell and the seller ends up getting the price they want. This would of course assume the seller agrees to be in a relationship for at least 8 years.

Is this deal juicy enough for a seller? Is it even legal? I also would imagine this would create less of a taxable event for the seller.

Thanks in advance for the feedback!