All Forum Posts by: Ryan Fisher

Really appreciate you guys giving me that advice. Ended up talking to city and what I had originally planed would not work out. 

I am in the process of exploring buying two side by side duplexes in sunny California, of which, both are being sold together. In other total 4 units are being sold. My real estate agent says that we could add a unit to each duplex making properties now two 3-plexes. Meaning there would now be 6 units in total.  

If I were to do that, then go to sell/refinance would the values of the property be valued like a multifamily property or will they still only be valued off of the residential comps?

I am asking because if I can sell them valued as a commercial property then this deal makes sense, if not, turning a profit will be tougher as I am at the whims of residential comps which is always tough?

Will banks treat the two 3-plexes as one 6-unit apartment or 2 separate residential properties?

Any help would be appreciated!

Ryan

Looking to get some clarification in terms of refinancing my second property and that paying taxes part. Still trying to come to terms on maximizing tax benefits. (Not sure if I did properly on my first refinance and sell) 

I'm will use an example so to keep numbers simple but should still illustrate what I'm trying to get at. So with that, I: 

Buy property for $100,000
Down payment = $25,000
Mortgage = $75,000

36 Months Later: Property Has Appreciated
Property value now = $150,000

In which case I...
Refinance $30,000 out of the property
Making New Mortgage = $120,000

I then wait 1 more year to then sell property at $170,000.

So my questions is...When I sell do I pay taxes on the difference between what I originally bought and sold property so on the

$170,000 - $100,000 = $70,000 (What I pay taxes on?) 

Or do I only have to pay the taxes on the difference after that refinanced amount, being:
 $170,000 - $120,000 = $50,000 (What I pay taxes on?)

If it is that 2nd part option then that should beg the question of if I should refinance most of the value out of the property, tax free, before I sell the property so I only pay taxes on the little difference? 

Or is the only way to delay paying those taxes is to 1031 those profits into a larger property?

@Jay Hinrichs @Chris Mason  

Pull the property tax bill...sounds almost to easy.  That will be my homework assignment tomorrow morning.

Thank you for the advice I really appreciate both of you helping me.

The other day I'm driving through a nice part of town (which I have driven hundreds of times) turn right and see this deserted 10-unit apartment which reminds me of all the stories on BiggerPockets of investors finding diamonds in the rough driving though town.

Is this it? 

A real estate investors dream?

I park my car, get out, and knock on the first door (obviously do not know any other better way to find out who owns this), no response.  Knock on the 2nd door, no response.  Takes me getting to the fifth door til somebody finally answers.

We get to talking and he says in the last 5 years only 2/10 units have been rented, and those two units pay only $500 which is drastically below market rent.  He then proceeds to show me his unit which I instantly notice the landlords are slumlords. (I am starting to get real estate excited...not sure if that is a term).

I ask him a few questions and he tells me the previous owners passed away almost a decade ago and the property passed to their heirs in which the property then quickly fell into dis-repair and people started moving out.  This whole time I am thinking of all of the opportunities to improve the property and fill all of the units!!

We exchange information and he gives me the owners name and #.

Fast forward a few weeks, me and real estate agent still can not get a hold of the owner and the reason I am hopping on here is to ask the community how best would you go about contacting the owners to buy this property.  

Code enforcement(disgusting living conditions), the city? Any and all ideas would be appreciated.

@Crystal Ng I have just the agent for you.  Sending you her info now in your messages, and good luck in your search!

If you buy at $60,000, rehab $7,500 (worst case) then your total investment comes out to be $66,500.

Rent it out for $850.

Then, using the 1% rule, which I find very effective in showing me if I will make a profit comes out to  $850/$66,500 = 1.3%.   

If > 1% I buy.

I think it would be a very safe investment based off the numbers and the mortgage being so small. 

What type of down payment will you be putting up?

Best of Luck!

Hey @Rob Pelayo

Send me a direct message and I can connect you with my real estate agent who primarily works with investors in the Central Valley area.  She helped me buy a 4-unit apartment complex for way under market value only a few months ago.  Very knowledgeable and helpful.

@Tristan Cottarel Welcome to BiggerPockets!  And just to echo all of the great advice you are receiving to getting started.  Do not make all the of the mistakes most of us made while we were your age.  Make sure you start saving money from every paycheck you receive, start now, and wake up to the idea that you need to start making your money work for you to build real wealth.  And corporate life sucks the life out of you! haha (At least for me)

Continue to read and learn about as many topics in real estate, business, stock investing as you can to open your mind to see opportunities that most people do not even know exist.  Awareness is huge!  For example most people see a derelict property and think "eyesore", while a flipper sees that same property and thinks $$$$$$$$.  All a matter of them having that awareness from learning.

BTW I live in San Jose and have started my career investing in the Central Valley, and feel for newer investors the farther out areas give you a good place to start learning the ins and outs of investing without having to fork over a million dollars for a box on the side of the road.  Good luck!!

@Chris V. Hahaha You have to admit to at least not having many dull days while investing and living in Stockton! Good to hear you still finding ways to build your portfolio out in my neck of the woods. Are all of your units SFR?