All Forum Posts by: Steve Dowding

I am a new investor. I currently own one rental property, and I'm looking to purchase another property. However, I'm interested in purchasing a foreclosure in hopes of making a greater profit.

Can anyone share the pros and cons of buying foreclosures? Also, do you have to have only cash to purchase, and can you purchase a foreclosure directly from a bank, or does it have to be at an auction?

@Austin Johnston

I also utilize Remax/Haven for property management and have had a great experience.

Hello Everyone,

Earlier this month, I sold a property that I had been on title for since 2003 via joint tenancy with right of suvivorship. After the death of the other joint tenant last November, I updated the title to reflect myself as the sole owner (not sure if this makes a difference or not in determing my basis for the property). In the sale of the proerty earlier this month, I established a 1031 exchange in order to defer the capital gains from the proceeds. With the sale of the property which was 305k, I was left with 174k in proceeds after the loan on the propety was paid off (the loan was not in my name but only in the deceased joint owner's name).

Based on conversations I have had with the 1031 company, they state I am liable for capital gains for the entire sale amount of the property rather than just the proceeds from the sale. I had already planned on reinvesting the entirety of the proceeds from the sale into replacement properties, but even with doing so, I am looking at being liable for gains on roughly 130k if this information is truly accurate. I have tried to confirm this information by reading up as much I can about 1031 exchanges and capital gains taxes, but have had trouble finding information that provides any definite clarity on my specific situation. 

I have already begun researching possible options in which I can ensure I invest into replacement properties that equal as close to 305k as possible including hard money (as I am not eligible for coventional lending due to a dischared BK 3+ years ago until October). Before I go down the road of taking out a hard money loan (still a much cheaper short term option that the federal and state gains I would incur if the above is true) I just wanted to confirm that I was not given misinformation.  Although I do plan on conferring with a CPA regarding my specifc situation in the coming days, any additional insight into my 1031 exchange/capital gains situation would be greatly appreciated. 

Hello @Frank Hinck. From what I have learned thus far, you have to dig a little deeper than what the intial numbers tell you when using the BP Rental calculator. With that said, this tool has been invaluable with helping me narrow down potential properties, but something I did not consider (as they are not an issue where I live in Southern California) are the point of sale ordidnances that vary greatly depending on what community in Cleveland you are looking at. Same can be said for property taxes. Lastly, be aware of potential future capital expenditures such as roofs, sidings, etc. (all things I never have to worry about in my area) that may come up in the short term rather than years down the line. From my experience watchibng several BP webinars that cover analysis of properties , the presenter usually highlights an estimate of 5% of monthly income from a propety for saving for capital expenditures. Many of the homes that I have seen on the MLS in Cleveland are 60+ years old so just be mindful that a higher savings rate for this expense may be something to think about.

Hello BP family,

I am a new out of state real estate investor who is excited to learn as much as I can about the Cleveland area. Despite the fact that I have read a great deal about the market over the past few months and have already solidified a wonderful agent and property manager there, I am eager to put some boots to the ground and immerse myself into all the city and neighboring communties have to offer. Even though I will be spending some time with my team during my visit, I would love to get some additional suggestions about how to best maximize my three days there (i.e. attend a local REIA, driving/walking neigboorhoods of high interest,etc.). Any suggestions would be greatly appeciated.

 

@Manuel Cintron

Were you able to have any luck securing funding? I am in a similar situation myself and have had troubling securing funding in Ohio due to a Chapter 7 discharge filed 2.5 year ago. 

@Damian Ramirez thank you! That would be great. Sent you a connect request.

@Kim Rose were you able to get your team together? I myself have been researching the Cleveland area as an out of state investor and anticipate buying a few properties in the next few months. Even though I am coming in with roughly 175k liquid, I would also like to connect with some lenders for future deals in the area. If you have made any great connections, would love to get some references from you.