All Forum Posts by: Ryan Best

Hi everyone and Happy New Year!

I am new to flipping houses but have my first condo flip listed and am averaging 5 showings a day (20 on the first open house a week ago).  I bought a 2 br/2b 2 level condo for  $360k; a similar next door unit (duplicate floor plan) sold recently for $420k. Agent listed mine at $430k.  Since I have the property for less than a year I will need to pay 25% short term capital gains, although I'm told I can deduct loss of rental income each month I purchased the property (since I "changed my mind" regarding renting vs. selling the condo). Anyway, I have a 5/1 at 2.65%.  Spent about $15k fixing it up and have a 4% commission rate from my agent.  No idea of what I can deduct in terms of depreciation (27.5 years?), expenses, and loss of rental income (??). 

I was told TurboTax would walk me through all of that but...I think I need a tax accountant, preferably one in Studio City. I'd also  like to use funds in my 403k to purchase another home to live in and sell/rent my current home to offset that expense.  Again, I just don't think TurboTax is the right decision when it comes to tax strategies and such... or am I wrong???

Barbara and Wendy,

Thanks for the quick replies.

There were several reasons the property did not sell for the appraised value (which worked out great for me):  it was a probate sale; the listing real estate agent considers himself a pro photographer but his photos were terrible...blurry,  bad lighting, rooms were messy w/food left out, etc., so it was very run down looking; the executor and lien holders wanted the unit sold as quickly as possible and did not care for how much as long as the it was enough to satisfy all the lien holders.  

Wendy -- good point. Maybe I will do some light remodelling and put it up for sale and move on to the next one.

Hi,

I'm Ryan, and live in Studio City, CA.  Just joined BiggerPockets and think it's great.

I have a question for you:

I just purchased a Coldwater Canyon condo for $360k in Studio City (appraised for $395k), and it is in low-average condition. The unit next door is in great shape/move-in ready, and is in escrow for $420k; identical floor plan and space.  In order to bring my unit up to almost the same shape, it will cost about $25k (update kitchen & appliances; flooring, update bathrooms, dual pane windows, scrape ceilings, paint, etc.)

Is it worth $25k investment to upgrade the condominium and then sell (based on the value of the unit in escrow); or should I do the basics (new paint, rugs) and then sell (based on the appraised value)?  

I can certainly "run the numbers" and make a decision based on just that...but would like to hear from some of the members regarding doing the improvements and selling versus not doing the improvements and selling...and if there is something I'm missing in all of this besides just numbers?   

Thanks!