All Forum Posts by: Tammy Graham

I am in need of some serious direction.  I have several properties I hold as rentals, that have been owned long enough now that they are completely paid for.  I have done many rehab projects over the years but it has been several years since I have done a full house rehab (4 or 5?) I stepped away from my real estate goals years ago when my son was killed in an auto accident, and suffice to say that recently I made the decision to get back in the game doing what I love.  I own a liquor store, and the commercial property it operates in as well.  I have a masters degree in accounting and operate a tax prep and tax resolution (I am an Enrolled Agent) office as well.  I also work for Intuit during tax seasons and am an adjunct accounting instructor for Ivy Tech.  I say this to say I am fairly smart with numbers.  I recently started looking for distressed properties to rehab and lost out on several deals because i just wasnt fast enough.  So when i discovered a distressed property just a few blocks from my house I jumped on it, and purchased it outright for cash from a wholesaler.  There was no sign, and the bushes were so overgrown the house was almost unnoticeable...and it sits on the main road through our small town, just 2 blocks from my commercial building.  I think this is a major part of why it didnt sell quickly.  Now that I own it, i have started looking for money to complete the rehab.  I paid $17500 for the house.  It is a 4 bedroom, 2500 square foot, 1 1/2 bath home one block from the school.  I plan to convert an upstairs large closet into a bathroom, opening it up to the newly created master suite, making it a 2 1/2 bath home.  Originally, my rehab budget was about $63000 which included roof, siding, total redo on the inside, new furnace, air, and duct work (currently has old boiler system and no duct work) 

I had several companies say they wont do loans for less than $75000, so i increased my budget, opting for higher end counters, etc... The next round of companies then said the cost of the house in relation to the cost of the rehab was out of scope for them.  I have about $14000 additional  cash to begin the rehab but that wont get me far as the furnace/air/duct work alone will cost $11000.  I can make choices based on a smaller or larger rehab budget but it seems that neither approach has yielded any luck as I have also approached a few companies with less lofty rehab goals and been told they dont do loans that small.  

At this point I am unsure of what to do. I am starting the rehab with what cash I have, getting the ductwork portion completed, the roof and outside repairs completed, etc. while I continue my quest for additional cash. This house should have an ARV of at least $130000.

What am I missing?  Any advice and direction will be greatly appreciated...

Thank you,

Tammy

If he manages the units shouldn't he be actively participating?

Very nice..i really like the interior choices...especially the bathrooms!

Hi Ken..I agree with you everyone is putting great effort into the project...but you mentioned the GC was Her to g weekly or biweekly payouts so that's why I focused on that.. I am an enrolled agent which means I'm licensed by the IRS to represent people with tax problems. I was just pointing out that the regular payouts might be construed as wages by the IRS.  Good luck to you all...sounds like you have a great team put together!

It seems with that arrangement that paying him wages on top of his ownership share is the fairest way to handle it then.  As an s corp you need to be paying payroll taxes and owners are considered employees for that purpose..just pointing it out because taxes should be withheld from the paychecks and remitted to the state/fed...check with your CPA right away so you don't miss filing deadlines...

How did you arive at his 30% share? Did everyone contribute capital in the beginning and this was his percentage of contribution? If so then I would say his labor is additional to that...as would be the other members..You mentioned you were set up as an LLC not disregarded...so are payroll taxes being withheld from his checks or will he be issued a 1099 for his payments?...if he is a member of the LLC I'm not sure a 1099 would work...just some other facets of your arrangement to think about.

Hello...I have been reading everything i can get my hands on here but this is my first official post.  I am looking for some general advice about financing so that i don't make a mistake right out of the gate.  I actually have done several different real estate deals through the years, my first being a 3 unit rental that i bought in the mid 90's. In 2008 I lost my son in an auto accident ( and in 2006 i lost my nephew in another auto accident) and i really slowed down my investment activities.  Recently, I have made a commitment to get myself back on track and start growing my portfolio again.  However, my son's death, and the subsequent divorce (and mental shut down) really hurt my credit.  I have been working hard to clean things up but i had my head in the sand for a good many years so it will take a little while to get things back up to my pre-2008 credit score of over 800.  My score is hovering around 655 currently.  I have no mortgage on the 3 unit building (roughly valued at $70,000, and a single family home (roughly valued at $60,000).  I owe 86,000 on my home which is valued around $175,000 and i co own a commercial rental we owe $68,000 on and it is valued around $150,000.  I also co own a mobile home on a piece of lake property valued around $40000 (free and clear).  I have flipped a couple houses, one of which i purchased for $6000 and completely gutted and rebuilt it.  I also have done many renovations in units i have owned over the years.  I enjoy every detail of fixing and flipping very much, from rethinking the layout to choosing the color scheme.  I have always done as much as i can myself (i love doing tile work and painting).  I am eager to do a few fix and flips but i am most interested in multi unit rental.  I feel..frozen with fear at my less than perfect credit, even though i know i have a nice advantage with so much equity just sitting there untapped.  To give even more details about myself, i have an associates degree in business admin, and a bachelors and Masters in accounting.  I teach accounting at the college level.  I have a teaching license to teach business in middle and high school charter schools (but i havent actually taught at this level yet)  I am an Enrolled Agent and work seasonally for Intuit in their Turbo Tax division.  I also own my own tax practice and handle tax resolution cases for Tax Defense Network. If that doesnt keep me busy enough, i own a small town liquor store.  In the past, i enjoyed putting deals together...figuring out a way to make it work.  I owned a restaurant at one point, and traded it for a single family home that i flipped.  I have put together several deals simply by asking the seller to take a second mortgage for 20% of the purchase price...that was back when my credit was strong and i had established bank relationships.  I am asking for advice on how to start back into the real estate business, with my first goal to be to acquire more multi/single family rentals to buy and hold for cash flow, and also to fix and flip some homes so i can build up some cash reserves and pay off my student loans.  

Thanks for listening and for all of your advice!

Tammy