All Forum Posts by: Timothy Doenges

Great! I would definitely look to find someone with experience doing 1031’s, or maybe professional legal advice, when doing a 1031 because my understanding is there are some regulations that need to be followed pretty closely. But it sounds like this might be a good strategy to turn a couple properties before the move.

I hear a lot of people here saying to season he property until the two-year mark. I’m curious, though, what your goal is after this property. It sounds like you want to flip, pay debt, and repeat? Would you be interested in looking into a 1031 exchange to get into the next flip? If you are in a slow market, you may have the advantage of a) waiting to find the best deal available, or b) find a really motivated seller for your incoming property and get another killer deal. This would protect you, I believe, from the capital gains tax that you would face if you sold now, while also giving you the equity you need in the new place to increase your profits. Last, if you flip the next house as well, you will be looking to list property #2 in a potentially better housing market when weather gets nicer. Thoughts on trying a property exchange in this situation? Tim

Hey all! Thanks for the replies. As always, I find the best info out on BiggerPockets. As the China Energy deal goes, my understanding is that is going to be invested mostly in the Ohio Valley area, including southeast Ohio, western WV, southwestern PA, and then possibly some near Charleston. Sounds like it will have a great effect up in your neck of he woods, but it remains to be seen if south-central WV will get any of that money. Also, great points about knowing the area and job market. There are a lot of economic indicators that lead me to believe that my market is going to grow, both with major job market improvements and communities on the mend from the drug crisis. I’m going to keep an eye on it, but I think that I can get cash flow and appreciation in my area if I’m correct.

Hey, thank you for the great resource! I will definitely have to check out one of the monthly meetings. Beckley is one of my target areas, actually. There are a lot of cool things going on in he area that lead me to believe it is going to start growing in the next few years, both in size and income. Very unique situation from the rest of the state. Do you think there is a stigma that keeps people out of WV, or is it just that properties here don’t meet their criteria for markets to invest in?

Hello all, I’m an aspiring investor coming up in central WV, and also just passed my exams for my WV real estate license. I’ve been trolling the BP forums for a while now, but see almost nothing on BiggerPockets about West Virginia. I wanted to ask a few questions: 1) Are there any investors on BP from West Virginia? I’ve used the ZIP code search to find members near me, but can’t seem to find any within 50 miles of me. 2) Is there any interest in WV from out-of-state investors? There are several markets near me where you can pick up the standard 3/1.5 or 3/2 in B - C+ areas for around $50-70k on the MLS (I’m sure lower for mailers or marketers), and the average rents in those areas are between $700-$800. Not quite 2% rule at list price,but still cash flows for sure. There also seems like there is room to flip homes in the B+ and A areas, but after looking at recent sales, there doesn’t seem to be a lot of flips going on. 3) Most of the podcasts and articles I’ve heard and read work with evaluating hot markets (or at least high-volume ones). Are there any good resources for valuing homes in slow or low-volume markets from an investment perspective? It seems like a whole different beast working in a town of less than 20,000 people as opposed to one of 100,000+. Thanks, Tim Doenges (Soon-to-be Re/MAX agent!!)

Welcome back to the States! Hope your vacation was nice! I’m currently working on a deal where I’m using some financial assistance from a development fund in West Virginia. I’m about an hour outside Beckley, and since I’m close to New River, I have access to regional lending through New River Gorge Regional Development (NRGRDA). If you want to PM me, I can hook you up with some contact information of my guy there so you can reach out and see if you qualify. In addition, I’m working with he West Virginia Small Business Association (SBA), which has some free state-sponsored business coaching. The coach I’m working with is an investor as well, and seems to have an ‘unfair advantage’ in knowledge of available resources and funding available to regional businesses. Again, PM and I’d be happy to send over some contact information to you.

My goal is to purchase a vacation rental property in the next 60 days and use the revenue to fund my family’s first real vacation in 5 years!

Hi there! I'm up in Nicholas County, WV, and I have been poking around and looking at numbers in the area you're mentioning for a few months now. It seems that vacant land is really cheap compared to home values, especially downtown. Have you considered either having a MF built or doing knock-down rebuilds on some of the 80s ranches near downtown? Only ask because the area piques my interest.

Wow, that's fantastic information. Thanks for clarifying Schedule E vs Schedule C. It really doesn't make sense to use a Schedule C in this case, since I don't think the current owner put near 750 hours into this property, and didn't have any others, so I'll have to get some more information from my banker as to why they are requiring it for this deal.

The one thing my wife and I believe we can do in this instance is play to our strengths--that is, leverage social media and online booking tools to increase the occupancy rate. The current owner has an outdated and, frankly, not-too-useful website and client list that will convey, but beyond that does not list the property on any sites like AirBnB or VRBO or HomeAway, and relies almost entirely on referrals from other vacation rentals in the area once they fill up. We believe that we can add value instantly by increasing the online presence of the property.

Even at the high vacancy rate, creative financing on down payment, and with accounting for property management and cleaning costs (which we plan to pay ourselves to do, but may want to outsource later if able), the cabins at their current rent price will cashflow, according to the actual NOI formula above, so we are feeling pretty confident in the purchase even if the value add play doesn't work out. And, not trying to be a speculator, but there are a lot of attractions nearby that are ramping up tourist interest so there is also potential for rapid appreciation if that comes to pass.

Hello everyone! New REI here, and looking to get straight into a vacation rental property that my wife and I will maintain ourselves. However, something with the seller's Schedule C isn't lining up with my expectations.

I was told by the seller that they have maintained around 37% occupancy over the last 12 months, and I know the amount the seller has said that the cabins are rented for. However, when I do math for total rent per night * 365 * .37 to get an idea of gross rent for 1 year, I get a number around 3 times what was reported on Schedule C. 

Is this something to be worried about? or is my math flawed? I did some title searching as part of my due diligence, and didn't see any tax issues at all there, so I'm hoping that it may not be an issue.

Also, does anyone know if the Schedule C is used in appraisal of property value for commercial loans? I'm not sure if the seller would agree to sell below agreed purchase price if the appraisal came back much lower than their expectation, and I would hate for Schedule C to be a deal-breaker.

Thanks so much, and I greatly appreciate all the amazing information on here! Keep up the good work!

Tim Doenges