All Forum Posts by: Ryan O.

First I want to thank everybody on this board for all the knowledge shared every day, as it has been a big help thus far. I spend more time lurking on BP than contributing, which is something I plan to change.

I sort of hit it out of the park on this deal, which I mostly contribute to luck and good timing of the local RE market.

Purchased 10/1/11 110K
Purchase Costs ~2K
Rehab and holding costs ~90K
Selling Costs ~20K
Sold 4/30/12 334K

We had a full price offer the first day on the market and closed less than a month later.

The project was bout off the MLS as a REO that was in the "middle" of a dining room and 2nd story addition. I had an equity partner in on the deal so profits were split 50/50, I also "saved" 15K-20K by doing some work myself, which I will try to limit on future deals.

The project took a little longer than anticipated mainly due to my lack of experience dealing with the county and building inspectors. Permits took a month to get after closing, and the fact that I did some work didn't help the timeline either.

Before and after pictures can be seen here:
[url]http://www.flickr.com/photos/ryan_rei/sets/

No it's a public sewer, the sanitary district provided me a sketch of where the disconnect is and it appears to be 12ft off the street in the front yard of the property.

They also told me the $5000 lien includes the cost of reconnecting the sewer. So if a warrant deed is provided that would require the seller to pay off the lien, in effect reconnect the sewer, before the sale could close?

I am considering making an offer on a REO that has about $5000 in sewer liens and the sewer has been capped for non payment. I learned of the sewer problems while talking to the next door neighbor and confirmed it with a FOIA request to the sanitary district.

The sewer lien gets wiped out with a warranty deed correct?

I assume I will still be on the hook for digging up the yard/street and reconnecting to the sanitary sewer, what are your guys thoughts on that.

Tyler, I'm currently looking for deals in Dupage as well as some areas of Will County. I have cash lined up if the deal is right.

I'm in the western burbs of Chicago, when I rehabbed my personal residence 2 yrs ago I paid $37/sqft installed and I had my choice of about 12 different styles. Today they advertise the same styles at $23 installed.

Pat-
Your right rehab deals are tough to come by, though I have been having better luck since I expanded my search into northern Will County. I think I'm going to stick to my original strategy of finding rehab projects, if my strategy changes I will let you know.

Will thanks for the reply. As I stated above our main concern is to make sure I am not held liable for the tax on all the profits from the rehab. I understand that I will only be taxed on the profit, but if I understand you correctly Will I should just write my partner a check for his share of the profits after the property is sold and I would just treat that as an expense like any other (rehab cost, property tax, ect). In essence increasing my basis and decreasing my profit.

BTW, I will be the only one on the title at purchase. The deed of trust, or mortgage is only there to protect my partners interest in the property, it has nothing to do with taxation correct?

Stefen, I am in pretty much the same situation as you, just starting out. I can tell you I was fortunate enough to find a private lender willing to put in 80% or more of the total purchase, holding, and rehab costs for my first deal. Allowing me to start investing with as little as 25K (Property ARV's 145-180).

My buisness plan is to only flip one property at a time, until I am able to find other private investors or convince local banks that I have enough experience to be an attractive candidate for lending.

I am also not quitting my job until I have proven to myself I can be successful at REI over the long haul, plus having steady income will help in securing funding from banks.

I have a partner willing to fund the purchase price and half the rehab/holding costs of a fix and flip. Is a shared appreciation mortgage the best way to protect his interest and make sure I'm not stuck with all the tax liability after the property is rehabbed and sold.

We are more concerned about sharing the tax liability than making sure his investment is secured with the property. With that being said, is a simple written agreement that states how the profit will be split a better/easier way than recording a SAM.

Well I heard back from the seller (Department of Veteran Affairs) today, and as expected they didn't move much on the ask, about 5K. I still need them to come down about 15K. I'm going to come up a bit and see what happens, but it doesn't look good