All Forum Posts by: CK Hwang

Hi Curtis, I'm a flipper working in the Socal market. It's hard to gauge how much it's going to cost to rehab this property to even come close to the $615K comp, especially without pictures of the $615K comp, but as far as just a middle of the line market goes, I am guessing it would probably cost around $50K to rehab.

Now if the comp is bigger, then adjusted for size and rehab costs, I'd offer somewhere around $350K. But really it's hard to tell without being able to see more.

Thanks for the advice everyone. I did test by running water from the garden hose all over the patio. The water doesn't leak into the house, but because there are some dips in the concrete, there are some pools of the water left behind. I'll call the city inspector since they will need to come out and look at other aspects as this project needs to get permits pulled anyway.

Actually, it's not really the city i am worried about as much as the fact that when I flip it, it might come up as a flaw in the inspection report from the buyers, so I was wondering, as a general principal, do you correct items to prevent them from coming up during a buyer's inspection? I normally try to do so, but some flippers tell me I am probably spending too much on the flip in the process. So I was curious to see what the mindset was when approaching this issue.

Hi Vivian,

I do work with foreign investors quite in a bit...actually, all my investors are foreign to think of it. As far as tax issue go, there really isn't any other than the fact that some deductions aren't available. However, some of your investors might come from countries with free trade agreements that provides certain tax benefits that are specific to the country.

As far as tax filing goes, it's fairly simple, most CPAs can do that for a fairly low fee since they will likely be filing the EZ form if their only source of income is from the rental property. There is the issue of FIRPTA, but as you had mentioned, if the property is held under a LLC, then it does not apply.

Keep in mind though, it is harder to get a loan as an LLC. As a foreigner owning a LLC, it's really really hard to get a loan if not impossible. I'm not sure where you're from, but generally, my investors find it cheaper to borrow money from outside the USA.

If you had more specific questions, I might be able to help answer them based on my experience. Otherwise, just spending a couple of hundred dollars for an hour of an international tax attorney's time is also fairly useful, which is what I did to get going.

Hi everyone, I'm currently in the middle of a flip project and need some advice. The house i am currently working on has a concrete pad in the backyard that extends from the house.

This concrete pad was built up during the 90s and now sits at the same level as the inside of the house. According to several contractors, this is not up to code and the pad needs to be at least 2 inches below the interior of the house to prevent moisture/rain intrusion.

As such, I feel like I am faced with 3 options

1. Do nothing and keep the project within budget

2. Install a perimeter drain between the house and the concrete pad and stay within budget. This should prevent moisture intrusion but is not necessarily up to code.

3. demo the pad and install new one and run over budget by a few thousand dollars.

Anyone has any thoughts? ie not being up to code is not a big deal, or perhaps just give buyer a certain credit at closing to rectify if they wish etc? Your advice is appreciated. Thanks in advance.

Hi Justin, I work routinely with foreign investors and the advice I can give is to get in touch with a tax attorney specializing in foreign tax issues.

Now, the case you have presented, for myself, personally, the way I would handle it is to get a tax attorney to draw up a portfolio loan document. The money will then be wired to your account. Then your investor would take out a lien against the property her money is being used to rehab. Under a portfolio loan, she will likely not have to pay taxes on the interests, but you must must consult a tax attorney to confirm this because how you structure the loan, how you hold the property, etc will affect her tax obligations. Also, you must file the correct paperwork, so make sure that the attorney or your CPA has a handle on this. The correct filing of paperwork is very very important in this situation.

Also, if this is a one time deal, it might be cheaper to just have her pay taxes on the profits than draw up a portfolio loan doc as the legal fees can add up pretty quick.

Yup, market in Orange County going crazy too. My offer 80-100K over asking, all cash, being outbid too. Nowadays if I can snag anything, I consider it a stroke of luck.

Hi Elina, welcome to the forum. I grew up in Singapore, so nice to see another Singaporean on the message board. Let me know if you have any question regarding investing the Southern California real estate market. I'm working with a few investors from Singapore who are investing in the market here.

Hi Raden, personally, the next thing I would do is to start putting together a buyer's list so when you land your first deal, you will know who to sell to.

As far as forms go, they forms you need can easily be purchased here http://store.car.org/

But personally i don't think you will need them as most investors buying from a wholesaler would likely have their legal team in place to handle the transaction.

Hi Jason, my market, Orange county, is super hot right now, apparently one of the hottest markets according to Corelogic. Based on what i'm seeing, of the coastal properties I am bidding on, most of them being heavy fixer uppers (around 80K in repairs), are being transacted at around 85% of ARV. Even if they are listed at 70%, they are bid up to around 85%.

For example, over the weekend, I put in an offer on a fixer upper that needed about $80K in repairs. Asking was $600K, ARV was $840K. I offered $680K, but was outbid, i think it will eventually sell for around $720K. There were 30 offers at the end of the day, 20 of them all cash.

I was recently able to snag one property at 85% of ARV, needed very little repairs, about $5K worth, but I think that came from luck more than anything else. I plan on keeping this as a rental and have multiple exit strategies, so the spread is not as big of an issue to me.

On the upside, prices are moving upwards very very quickly as well. I kick myself for selling a flip too quickly in January. I should have just sat on it and left it empty for about 6 months and I would have come out ahead by about another $40K or so.

Will my market sustain the pace? I think I'm sensing a slight slowdown with inventory sitting just a little longer, ie 2 weeks instead of 1 week, but hard to gauge without data and factoring in seasonal adjustments.

Hi Deborah, I have to agree with Jon, I would personally be skeptical about the ARV (after repair value), especially if there is nothing to be done to the property and they are willing to sell at 70% of market value.

A well priced property, priced at market or just slightly below market in Socal (5%) will likely sell on weekend open house and you can't really go much quicker than that. I just sold my flip in Mission Viejo in 3 days at asking.

Personally having come across such situations in the past, I would recommend the seller sell it on the open market. Sure, it doesn't make business sense for me, but for myself, if there isn't a problem for me solve, and the seller could get more on the open market, I couldn't in good conscience do the deal. But that is just my way of working.

However, if the numbers check out, please feel free to add me to the buyers list. I am in the market for RE.