All Forum Posts by: Sarah Donatelli

Hello all,

I'm exploring the possibility of Note Investing. My husband and I both have busy careers, and I'm looking for sources of passive income. I've read books (Turning Distress into Success; Performance Anxiety; Seller-Financing & RE Notes in the Dodd-Frank Era), explored the posts in this forum, listened to @Bob Malecki 's BP podcast episode, and now have some (hopefully reasonably intelligent) questions to ask. Thank you in advance for sharing your expertise!

My first set of questions is on the topic of taxes. Are there tax benefits to investing through a self-directed IRAs for high-income earners? I currently do not have a self-directed IRA, and I'm wondering if using cash to do deals would be OK. Are profits taxed at the capital gains rate if you hold the note for > 1 year? If so, would both rental income and income from the note sale (if sold) be taxed at the capital gains rate?

Any thoughts would be greatly appreciated.

Thanks! 

Sarah

Hi All,

My family has a lake house in Devil's Lake, MI that needs some stone work as well as concrete/rebar placement for deck support.

The stone work is for an old, custom, stone and concrete stairway leading from the house down to the water. The deck job is to support a large wooden deck that has shown signs of sagging. My mom has the details on both jobs. I told her I would reach out to the BP community for references because she is having a tough time finding contractors. Any help is greatly appreciated!

Best,

Sarah

Thank you for asking the question @Yeshua Smith, and thank you very much @David Dachtera, @Ned Carey, @John Thedford, and @Brandon Hall for the thoughtful answers! I had the very same question.

@Matthew Schroeder,

Thank you for the info! Is there any reason that you exclude properties in the undesirable neighborhood? Would that not bring property value down, or is it simply not a comparable property?

I will also find out the initial designation of the house and factor that into my analysis. 

Thanks again!

@Brent Coombs,

Thank you for the input! You bring up a great point...one that lead me to this excellent blog post: https://www.biggerpockets.com/renewsblog/2010/08/0...

As I mentioned, I'm new to REI, and I intuitively want to pay off the debt as quickly as possible.

As for your comment on the loan, I haven't secured (or started to look for!) a lender yet. I've got a few contacts from my agent for small community banks and am going to start that process shortly. Stay tuned!

Hello All,

I’m hoping to get some advice on deal analysis for my very first (!!!) potential rental property.

The property is a duplex 2/1 (first floor), 1/1 (2nd floor). Completely updated inside/out with new mechanicals approximately 7-8 years ago. Updates include: roof, windows, kitchen, bath, furnace, water heater. Appliances (stove, microwave, fridge, washer/dryer) are supplied with upstairs unit. Tenants are responsible for supplying downstairs appliances. Lot size is approximately 100’ x 75’, front and back yard unfenced, no driveway or garage, street parking. Both units are currently occupied. Tenants pay all utilities except water.

The eventual possible upgrades that I thought of to increase property value are: addition of garage, driveway, fence, and central air. Additionally, the broker suggests that the rent in the downstairs unit could be increased by $50-100/month if the current tenants leave.

The property is in a decent neighborhood, but is adjacent to a bad neighborhood. (I’m unfamiliar with “alphabetical” neighborhood categorizations.) I will be getting comps later today.

This property is located in Ohio, and I live in Indianapolis. However, my sister (who brought me this deal) is a realtor and her broker is currently managing the property for 10% of the monthly rental fee. I would likely keep this PM.

The asking price is $24,900, combined rental income for both units is $790.00, fixed expenses are $107 monthly, other expenses are $364 monthly (mowing, repairs/maintenance, water). The realtor analysis projected “repairs/maintenance” in the “other expenses” category at $157/month based on $500/yr from actual maintenance for the past 2 years, but I thought this was really low, so I multiplied it by 4. Is that reasonable? For a 5 year conventional mortgage with 20% down, I calculated approximately $415/mo. for the mortgage payment.

My calculation of the monthly free cash flow after expenses is:

($790 x 0.083 vacancy rate) - $415 mortgage @ 5 yr - $471 expenses = -$161.00/mo

Broker calculation of the monthly free cash flow after expenses is:

($790 x 0.05 vacancy rate) - $138 mortgage @ 15 yr - $264 expenses = $350.00/mo

My number is obviously very different than the analysis I received from the broker, mainly because I used a 5 vs. 15 year loan period, increased the “Other Expenses” by 4-fold, and increased the vacancy rate from 5% to 8.3%. By my calculation, this is not a good deal.

My questions for this property are…am I being too stringent with the expenses/vacancy rate? I could potentially do a cash deal; would that be significantly better?

Any help would be greatly appreciated!

Thanks so much in advance!

@Larry Fried, thank you for the advice. If you could send along some provider recommendations, I'd appreciate it! I see that you're from Oregon, so once I'm relocated to Indy (July 2016), I'd be happy to keep in touch and keep you posted on the local beat.

Thanks!

@Ryan Mullin

Ah, I was afraid of that. Perhaps I'll look into some properties around Tampa.

Alright, well I'll definitely reach out once I get into town. Thanks for your help; I'm looking forward to meeting you! 

Sarah

Hello,

@Jennifer Roberts and @Ryan Mullin I read your responses to previous posts in this thread. Very helpful info!

I currently live in Tampa and am moving to Indy this July. I'm very new to the world of real estate investing. I see that there was a lot of excitement about Fountain Square and some downtown areas about a year ago. Are there still hot markets for investment opportunity? I'm interested in buy and hold, turnkey, and partnering. My husband and I both have full-time jobs, so I want to enter the market without an extreme amount of do-it-yourself work! Anyways, I would like to further chat about investment strategies and promising Indy neighborhoods if you have time. When I relocate, I'd love to meet up!

Thanks,

Sarah