All Forum Posts by: Robert Leonard

The way I see it, you have about $100k, (if your value is right) that's not earning anything for you.  $1200-1400/month income on a $200-250k property is not something to hold onto.  

Have you looked into the 1031 exchange?  There are substantial fees and the time restrictions to find your next deal to exchange into.  Those rules make it a challenge to avoid buying something you wouldn't buy if you had more time. The taxes won't be due if you don't 1031 it, until April of next year.  You could do a lot of things between now and then with the full amount of your sale proceeds.  Just be sure you have the funds avaialable for whatever taxes are due.

You caught a nice swing in the market and nobody knows where the top is?  I would take those chips off the table and cash in! No tax advice here, just a few ideas.

If all goes well, you will end up with $2k of your money in a property that is making you more than that annually in gross income.  Sock away every penny of that positive cash flow as cash/maintenance reserves.  I would not recommend this if you weren't beyond the point of no return, but I would stick with it and do the refinance.  When you have the newly renovated property, it should command the high end of what comparable properties rent for in the area.  You just want to do everything you can to stick to your budget and stay on top of the project to get it completed and occupied before the holidays get here.

You could realize some nice tax benefits if you hold it for 3-5 years before you sell it.

Two problems with your slick little trick @cody L.  1. It sounds like a common form of bank fraud when inflating a price and claiming a phantom down payment as a credit from the seller.  2. I guess the seller doesn't mind paying capital gains or whatever type of taxes are due on the added $600k that he's not really getting?

I call BS or just plain bad ideas.

Show them how you already did it with somebody else's money.

Thanks for the mention @Jon Lee.  I've never done a subject-to deal because I'm just too much of a stickler for simplicity. After my own homework on the subject, I would use a bond for deed if I found a situation where something like subject-to made more sense than other options.  The main reason I would do that is because BFD is effectively the same thing as subect-to,  but more familiar to conventional business practitioners like attorney's, title companies and some real estate agents.

We had a guest speaker on the topic of doing subject-to deals at The RING from New Orleans who uses David Birdsong.  He's an attorney who is affiliated with a title company in the New Orleans market.  I have no affiliation with him or his title company.

I use Legacy Title in BR and I would at least call them to see what they recommend for a subject-to type of transaction.

Just for the sake of discussion, what about this seller's particular situation makes it a good one for a subect-to deal?

Nothing is written in stone in this business. It all depends on the numbers. If you have an advantage, like an established working relationship with a foundation repair specialist. That (or any other specialty/trade) can give you an advantage where others won't see past the "normal" cost of that needed repair. That advantage gives you an edge and you can make money if you buy with enough room to make a wholesale profit and sell to another investor. It's not something to try as a new investor, but it's what some investors refer to as wholetail. You do some of what it takes to get it closer to retail, but sell to another investor who finishes it. You do it on purpose - not because you run out of money. Like the rest of this stuff, you have to know your numbers.

No. You missed my emphasis on commercial real estate.  When I mention markets, I'm not referring to a neighborhood, but a city.  Class A or B Office space in Lafayette, LA is not the same as those two distinctions in New York City.  Those are the differences in market I'm referring to, not neighborhood.  Classes do not apply to neighborhoods.

What you described in improvements is exactly what applies in commercial RE.  When you add the features and amenities to match Class A properties, you can then rent or sell that property as a Class A asset/property.

All of the class crap aside, you are correct when you understand that a SFR property's value is tied to the neighborhood. The exact same house will have a different value every time you move it on the map. Because the value is based on comparable sold properties within close proximity of the property. This is very important to understand to be able to estimate values with any measure of accuracy.

It is real in commercial real estate and is based on age, features and amenities for a given market. It is not based on desirability. In single family residential real estate and around BP, it is all made up and applied to houses or neighborhoods. I find it bogus and misleading because, as I said, it's all made up. One persons C or D is another's "bread and butter" house or neighborhood.

@Shaun R. this is a data point that your comparable sales "comps" should tell you.  When you find good comps (for all the reasons that make a good comp) it will include any seller concessions in the listing data.  They are usually stated in even dollar amounts rather than a percentage of the price.  It is another variable that you should rely on SOLD comps to set your expectations as a buyer or seller.  It will vary from one submarket to another within a given market.

@Steven Johnson if you go to civicsource.com [I have no affiliation.] and do some research, they have some basic information about LA tax liens on their website.  Otherwise, keep your eye out for classes from NOREIA on the subject.  You may want to reach out to @Chance Delome to talk directly to a knowlegeable LA tax lien investor.  He's a busy investor, but he has an abundance mentality - so he will help you if he can.