All Forum Posts by: Teri Feeney Styers

@Norman Bamford I disagree with @Brandon Battle in his order of doing things. Write up an offer for the owner including owner carry terms and earnest money. One of my favorite philosophies is: ASK! The worst they will say is no... And when there is an actual offer and money in front of them that can be persuasive. In that contract there will be a period of time for you to do your inspections, due dilligence, etc. Don't waste your time doing this ahead of time when you don't know if you are able to negotiate the deal. Then, if during your inspection period, something expensive crops up you have 3 options: ask the owner for a price reduction, decide to move forward anyway, or walk away - your earnest money will be returned. Brandon is correct in that you need other sets of eyes looking at the various issues - don't waste people's time - but use the experts to help gain your education. The inspection clause is a great tool. 

@Brandon Beale a standard contract in Colorado has an area exactly for that. You should look online for an example of one for West Virginia. (BTW: West Liberty University graduate here...) 

@Cave Johnson makes a very good point. After that, look at your numbers very closely. You say you would recapture the cash outlay in 4 years? That's probably decent enough. Perhaps do one first and then the second? (Although you mention house hacking and living in what seems like a perpetual remodel can be taxing). Are you factoring in the ARV to your calculations? I would assume that a 4 plex would have more value. However, what is your tenant demographic? If it is a college area then they might like the 4 bed options spread among roommates. If it is young professionals then the smaller option might be preferrable. As a flipper, let me tell you that there is ALWAYS risk when you "open things up" and you should have some contingency funds for this. Also, creating new spaces may requires updates to meet code. Lots of homework - but don't let it scare you.

@Devin Mann

Make sure it is HUD approved and has the "label" on it. (If you don't know what his means then you need to educate yourself). A purchaser will find it difficult to get a loan on one that is "pre-HUD" - no matter how nice it is. I assume that it is on rented land if it is only $15K - so park rents & fees are important to look at since that will be part of someone's monthly payment. You can find comps of solds in your area and deduct the value of the land from those that were on their own parcel. Really, it is the same as running numbers on any house - the numbers are just smaller. And buyers want the same thing no matter the budget: clean, bright, no clutter (paint, flooring, appliances, skirting, etc.)

@David Dachtera I don't disagree at all. I am not familiar with how much a tax planning procedure for someone in my situation should cost. And while I have been successful in the past with some IRS battles they were in areas where I felt confident that I was right. Having used this previous accountant for over 20 years (mainly for a retail business I owned) and then finding out that the last 5 years I've been maybe receiving improper guidance has shaken me up. I kinda thought I had it all together... I DO want to do things right and I DO want the right tools and I thought I had them... I'm currently paying an electrician over $5k for his skills and a plumber another $6K for his... so it is not like I won't part with funds. This scenario just wasn't in my plans for 2016 and I'm not liking it. That said, I'm still thinking my plan as laid out to @Brandon Hall isn't unreasonable. It buys me a few extra months to proceed with the caution I feel I need at this point.

@Logan Allec and @Mark Nolan - yes, very aware of this and am working with a good custodian company that will keep me on track (New Direction IRA in Louisville, CO). I am issuing payment checks online and consulting with my tradesmen but performing no work myself. And as previously stated, changing CPAs to one who is knowledgeable in these.

@Brandon Hall - so glad I to see this... I have been struggling the past few days. My accountant of 20+ years kind of fired me because I have begun to use my self-directed, checkbook Roth to acquire flipping properties. She said she would need to be paid more to do her homework before she'd be comfortable preparing my taxes. So I reached out to a CPA in my REI group. He is very familiar with these types of transactions so I sent him my 2014 return which included both rental properties and a flip I had done. He picked it apart rather mercilessly and said she was treating my flip portion incorrectly (among other things). He said I was a "dealer" on that property. He also said that he saw about $15000 worth of items that I wasn't taking advantage of and that my tax should have been about $2000 less than I had paid. He is willing to take me as a client - but he charges even more than my previous accountant AND he won't take me unless I agree to some serious tax planning with him prior to this and that is another $2000.

In 2015 I sold two rentals (long term holds) acquired and resold one flip, and acquired another flip in late December partially using Roth $$ - so that one will be a 2016 item. 2015 was my busiest year to date but I have no more rentals (nor plans at this point to acquire more). Although I paid my quarterly estimates, I'm nervous about what our real tax liability is going to be. 

I have been doing one flip per year to supplement our retirement savings (we work fulltime jobs). In 2016 I will most likely do 2 and perhaps 3. I'm steady but not super prolific (although I would like to increase). My bill with the new CPA for the planning and 2015 tax prep will be $5000 which is a huge chunk of change for me and freaks me out somewhat. He said he's happy to refund if I don't see a benefit from the consulting portion. My thought process is: prepare and file my own extensions (making sure I've paid in at least 110% of what was owed in 2014). That buys me time. Consult with him at a cost of $2000. Perhaps go back and "enhance" my 2015 bookkeeping to make sure I take full advantage of any deductions or breaks he points out - and then file. Am I on the right track? BTW: we are 61 & 62 years old - and hoping to retire within a few years from our day jobs... I plan to continue real estate for quite awhile beyond that.

@Michael Lenahan in your area there are many historic properties with finishings that would be expensive to replicate. You don't want a policy that will give you a new, contemporary construction if the building you owned had lots of carved woodwork, special exterior features, etc. Make sure that you are able to truly "replace" what is there if it has significant old style charm and craftsmanship. 

@Nathan Gesner Welcome! While I am an experienced investor (I focus mainly on flips these days) I am just embarking on my own "out of area" investment. I found a tiny town in western California that we think would suit us as a winter home. I have conversed with several Realtors on the few listings in the area and began a letter writing campaign to property owners there. My hope / plan is not just for a home for us but to create some snowbird opportunities (vacation rentals? flips? lot development?). 

@Monika Haebich I'd like the link but can't watch at that time. Will it be available as a replay later? 

@Bob H. I think I would try to find or create a coalition of others with your same needs. Maybe even connect with a small motel and see if you can create "purchase power" that way. A cleaner or cleaners that worked for the group would have more incentive because there would be more work. Likewise - if they failed to perform they would lose ALL their clients.