All Forum Posts by: Scott Ashworth

Chris, talk to your CPA. They can tell you what can be expensed and what needs to be capitalized.

What I have done in the past is I create a breakdown of all repairs and the cost associated with them and I give it to my CPA. He then tells me "you can expense xyz" or "this needs to be capitalized." 

Your CPA will keep up with the depreciation schedule for the capitalized items: Roof is x years, while HVAC is y years, and hot water heater is z years.

If you don't have a CPA, that is a good first place to start. And find one that also has investment properties. 

Liam, if you are purchasing the property with the intent of it being a primary residence, then that is how you should mortgage it. Life happens, and people have to move all the time. It sounds like you intend for this to be your primary residence. 

I do not believe they have any locations on the West Coast. They are primarily NC/VA.

In my experience, smaller banks (not Wells Fargo, BofA, etc) who are trying to get their foot in the door in a particular market are aggressive with their terms. Call around to the smaller banks in your area, you'll more than likely find someone who meets the terms you are looking for.

Matt, not knowing your specific situation, here is what has worked for me in the past, especially when I do a Flip: I make a note of all the improvements that have been made, along with the retail value of each improvement (I may pay wholesale price for cabinets, but the true value is the retail price). Receipts or work orders for larger items (roof, HVAC) may also prove helpful. In my experience, the appraiser wants to help the Seller get to the contract price, and supporting documentation is helpful.

A portfolio lender can be a commercial lender...it just means they keep the loan on *their* books, rather than selling on the secondary market, or the loan is held in their portfolio.

Call around to various banks. I use a portfolio lender here in NC that has 0 seasoning period and allows for a 80% LTV. Make sure the bank you are working with does LTV (loan to value) and not LTC (loan to cost). Since you are BRRRRing here, you've created value, so the LTV should be higher than the LTC.

Every bank is different, but oftentimes it is the smaller, community banks that offer the most flexible terms.

Scott, I live in NC too (Triangle) -- I agree with Patricia. Either have your Buyer's Agent write it up, or once you've chosen a Closing Attorney, have him/her draft something similar if you decide to go at sans realtor.

The difference in on-market versus off-market deals isn't how the deal is done...it is who you communicate with. Traditionally in an on-market deal, your side (you or your agent) is dealing with the Seller's agent. In an off-market deal, you are dealing with the Seller themselves...unless you find a Seller's Agent who brings you a pocket listing. 

Regardless, my advice is to use NC's standard Offer to Purchase Contract.

Lots of great advice above. I'll state I did not see directly mentioned above: 

For properties I need to turn quickly, I like to order materials that will be needed, sooner than they are to be needed. For properties that have a garage, that acts as a great free storage unit...otherwise, I use one of my company's box trucks to store materials. Worse case scenario, you could also rent a POD to help with storage.

Lastly: in David Greene's BRRRR book, he talks about the importance of having a written contract with the contractor. Include in there the completion date. And make sure there is a bonus/penalty for making/missing the deadline. My father thought I was "throwing away" money by paying 5% bonus for finishing my jobs early/on time...however, his projects typically go beyond the agreed upon timeline.

In short: order materials ahead of time and store them onsite. Create contract in writing with contractor with timeline parameters as well as scope of work

My best BRRRRs this year have been off-market deals. Especially in this current Seller's market.

My most recent BRRRR left just under $10,000 in the deal with ARV of $400,000 and 20% equity. It is not impossible right now, but off-market is almost a must.

It depends. If you are becoming a real estate broker just to invest, that can be a time consuming and expensive way to go about it. Go to a local REA meeting and find an investor that is doing what you hope to do (single family, multi-family, specific town/city). They can guide you just as well as having a license. The license just allows you to receive compensation (money) for brokerage (putting a RE deal together). 

Some things to consider: agents/brokers are held to a higher standard in transactions than non-agent/brokers; Annual RE fees can be costly -- so if you do not do enough deals, you could be spending more money than you make; agent/broker is like anything else: the more you do it, the better you get at it. So if you are not planning to be "all in" on it, it can be a waste of time/money/energy.  

Personally, I got my license for a number of reasons: direct access to MLS, flexibility to view properties, & to help friends invest.

Could I get by without a license and be just as successful? Probably. However, in my specific situation, having a RE license is helpful