All Forum Posts by: Robert Leonard

It's tough to find investment dollars when you live to the fullest of what your income will allow. I've always lived below my means and that's where I found money to invest for the future. You have to get very creative and become very savvy at using some of the strategies that allow you to invest without very much of your own money. If that was easy, everybody would be doing it, but it is possible when you know how.

I've bought every house I've ever owned from the perspective of an investor seeking to buy below fair market value. That includes each of my personal residences. When you become knowledgeable of your target market, you will be able to make swift decisions to take advantage of opportunities, but as a new investor, you have to learn what that is before you make any rapid decisions and make a bad deal. I think you could be hurt financially if you made such a deal when you have practically no emergency fund. When you get that bonus and refund money, you'll have an emergency fund - keep that for a rainy day.

Keep reading here and listen to all of the podcasts, they are like short courses on a broad variety of investment strategies. Taking risks are necessary to make progress, but you have to know the difference between a calculated risk and a careless risk - take the former when it's prudent, never take the latter.

At what point is the decision of whether or not UBTI is payable? Is it simply a decision by my CPA whether or not I need to prepare a return for my SDIRA owned LLC? As I understand it, I only need to prepare a tax filing if I owe UBTI or UDFI. How does the IRS determine whether or not I owe UBTI?

My CPA is most likely going to do what I tell him as he is not knowledgeable on SDIRA rules. He could not offer me any advice when I told him I was setting my SDIRA up. That's why I need to know what the IRS will expect.

Thanks.

@Account Closed

@Account Closed

@Account Closed

@Account Closed

I have an SDIRA owned property that my SDIRA owns free and clear. My original intent was to hold it as an income producing property, but I need to sell it and I expect to pay UBTI because I only bought it in July. How will it affect the UBTI if I offer seller financing and do not receive the "profit" until later?

Example: Purchase/rehab cost = $60k Sell for $80k Cash vs Same Cost but Sell for $80k Seller Financed ($40k down payment with $40k note)?

I realize this is not the best way to use SDIRA funds, but I'm working to convert what turned into an active investment into a note (passive investment). At this point, I want to minimize the tax penalty for effectively flipping this property if that's possible?

@Stephen Moore Yes, this is my first MF deal. I've done a dozen SF deals prior and I'm diversifying into MF.

Welcome to BP John,

You picked the right place to start. Read, read and read some more. If you spend any time on the road, or just down time while waiting on a vehicle service or something, you can listen to the podcasts which are like short courses on different investment strategies. Brandon and Josh do a good job of making sure things are explained in detail and there's good discussion of the pros and cons of the guests strategies.

I live in Lafayette, but I'm currently working on the rehab of four duplexes in Alexandria. Let me know if there's anything I can do to help or if you want to check out my Alexandria project?

Best of luck!

Robert Leonard

Lafayette, LA

Rodney, You are starting in a very good place right now by joining BP - good move. Now, move your mouse pointer to the word "Learn" on the menu bar at the top of this page. Then click on the second item down "Free Beginner's Guide" and the step by step are there for you.

Take full advantage of the resources available to you. Then when you come across something that doesn't make sense or you need explained, ask your questions. Contributors here will be glad to help you, but you should start by building a basic understanding of investing concepts by doing a little homework. The step by step is there for you already and it would be a duplication of effort to break it down in a reply to your post.

Something else you can do in the meantime is take your list of vacant properties and call the number on a "WE BUY HOUSES" sign in your area and invite them to lunch. Tell them you'll buy them lunch and give them your list if they'll give you some advice on how to start investing or let you work with them some other way? This is a relationship business. Call a few of them if you don't get a good response from the first call or two. Once you do that, you'll be getting to know other investors in your area. Some investors actually pay for people to do what you've done already, find vacant houses - just a thought.

Wow, the first thing I have to say is what an incredible property! This is the kind of property I think about owning when the lotto gets up in the 9 figure range!

This is way out of my class of properties that I've invested in, but as a buy and hold investor, I'll offer a few basic considerations. Is the property producing a positive cash flow? What is your long term exit strategy for the property if it's not cash flowing? You don't mention whether or not the guest house is included in the current lease. If it were rented, would that give you positive cash flow?

The "options" you mention are all very appealing and romantic sounding, but unless you have someone with some expertise in one of those areas, it can be a challenge to be successful at any of those ventures. Building the barn for those additional options sounds like a pretty significant expense that would be a challenge to pay for itself.

I'm sure it's awesome to be able to say you own this property, but in the end it all comes down to a mathematic equation. Is it a better business decision to hold this property or do you stand a chance to make higher returns if you take that equity and invest it elsewhere? I can see that it's one that won't be easy to let go, if that's the best decision - it sure is one nice property! I wish you the best!

Robert

Buyer BEWARE! HUD will not return your Earnest Money Deposit (EMD) when you are buying as an investor and then find a reason not to buy. No matter how legitimate your reason not to buy, you will not get your EMD back. As a new investor, I would highly recommend you use a professional inspector on properties you think you want buy. If the inspector finds a major problem, you will want to be able to renegotiate or use that as a valid reason to back out of the deal. I haven't done it personally, but as I understand it from agent training I've been through, HUD will not renegotiate and they will not refund and investor's EMD.

What's a good price? Your agent should present you with comps that give you a clear understanding of what a good price is for the property. Having a clear grasp of valuation so you can demonstrate with your own evidence of MLS comps what a property's ARV will be, is necessary before you try to buy real estate. One of the most common new investor mistakes is paying too much because they don't fully understand how to determine a property's value for themselves.

Stick to the facts, SOLD comps from the MLS that are less than 90 days old, of like properties within the same neighborhood. Do not accept guestimations from your agent. Get hard facts to make sound decisions about valuations.

About repair costs ... double what you think they are. Then double the time that you think it will take to get the repairs done. If you factor in holding costs (interest, insurance, utilities, etc.) for that time frame and still have 15-20% of ARV as a potential profit, then it might be worthwhile.

Robert

Welcome @Bryant Griffith

@Bryant Griffith

@Bryant Griffith

@Bryant Griffith

@Bryant Griffith

@Bryant Griffith

@Bryant Griffith