All Forum Posts by: Ed L.

Just looking for some guidance on a important decision.

I'm in the process of selling a parcel of land that is currently paid for.

My basis in the property is pretty low. My plan was to unload the property before cap gains rates increase.

My original intentions have been to sell the land and apply the funds towards the loan on a small strip mall I own.

I should be closing on the property within the next month, so I've been over analyzing all my options. .

If I convert the funds into equity it would basically be earning 5% which is the current interest rate I'm paying on the commercial loan.

My thinking today has me more inclined towards doing a 1031 exchange and purchasing a 4 plex.

My goal would be to purchase the 4 plex for 100-110,000. Gross $2,000 per month. Leaving me with $12,000 per year in clear theoretical profit.

Roughly a 12% return vs a 5% by investing the money in the mall.

At the same time I would pick up some added depreciation on the 4 plex and also would help diversity my portfolio instead everything tied up in the commercial property. I'd also save some funds on taxes by doing the 1031. Although that might backfire if Capitol gains rates go up.

Is this sound reasoning?

Should I hassle with the 1031 or should I just pay uncle sam while the rates are still low?

What would you do/done in similar situation.

My wife and I did both.

Started off eight the in class course. We learned a lot of valuable real world info but apparently not enough to pass the stupid in class exam in order to take the state exam.

We tried both times and were being faced with having to take the super course all over and pay again. Quiet a scam IMO.

We then took the online course and both passed the state exam first try. N

If you want to pass I say go online. My dad had 6 employees who wanted to get their re license. They all failed the state exam after taking the in class course. The instructor is clearly to blame for some of this so I guess the results will vary depending on who is teaching. Online is much more consistent.

I'm with j Scott on having equity in my primary residence.

I decided to buy my current home at the age of 19. I had approximately 40,000 in savings doing absolutely nothing.

I put it down to purchase my home.

Haven't missed the money one bit, but I do sleep well knowing I could sell my home tomorrow if needed and not have to bring cash to the table.

My original intention was to pay down my mortgage ASAP , but I've since started re investing and prefer to keep cash reserves.

My primary goal in life is still to own my own home, my office building, and 10 sfr rental free and clear.

First bit of adipose is to take about two weeks to study your market.

Get on the Mls and search all active listings. Watch for pending and closed listings to get a idea of what is selling and for how much. you may need a re agent to provide you with this stuff so make a friend.

Spend some time driving every neighborhood you can just to familiarize yourself with the market

Once you have a complete grasp of how the market is working I would search daily for new foreclosures, estate, corporate owned etc.

Find a good prospect and have your realtor friend submit a all cash offer with a 7 day due diligence period to perform all necessary inspections.

Have the home inspected. Make sure to get a good termite inspector if they are common I your area.

Close the deal and get ready to learn. You will probably nave plenty of noob problems stating out. If you turn a profit great. Break even great. Lose a little and consider it the price of tuition.

Good question I've often pondered myself.

In my market you have to buy at a substantial discount for a house to be a profitable rental. In general single family homes rent for 1% of average market value.

In order to find a 2% home you have to buy a foreclosure and rehab modestly.

For me it's been hard to rationalize keeping the homes instead of just turning them for quick profits.

On the other hand I surpassed the amount of income I need to maintain my current lifestyle within the first quarter of 2102. I really don't want or need any additional cash infusions for 2012. Therefore I'm currently looking for rental candidates to buy. That way I can have some rehab write offs for this year and stretch the income over time reducing tax liability.

That's my take on the topic at this time.

As a realtor and fix and flip investor I find it hard to believe that "wholesalers" are able to find so many deals that are so great that they can scrape 5-10 k off the front end and still leave a decent margin for the actual investor. Maybe a few a year, but not enough to make a full time living.

I'm guessing it may work better in larger metro areas.

As a agent you have access to a much larger pool of buyers and sellers. I firmly believe that if a person is knowledgable, motivated and socially adapt to be a wholesaler they could be a rock star sales agent. Sales agents can wholesale, but wholesalers can't act in the capacity of a sales agent.

Then there is the prospect of eventually having your own brokerage. Being a agent is a career, being a wholesaler is just something you do for money until you have the savings and credit to strt investing on your own.

That's my .02

Also don't be afraid to negotiate commission splits. If your paying 50/50 to a brokerage your being ripped off. I would charge a new agent I had to baby sit that amount. Experienced agents who require minimal handling have a very low opportunity cost.

Honestly I don't think anybody can answer that question... Like Pelosi Said "In order to know what's in the bill you have to pass it first" something to that effect iirc.

You should be able to keep your plan.. IIRC employees with over 50 employees will be required to offer health insurance. I"m not sure if you will be obligated to purchase insurance through them, or if they just have to provide it as a option.

From my understanding everyone will be required to carry some basic form of health insurance... I'm not sure what the minimum requirements are at this time.

Low income individuals will benefit from the law. Millions of Americans will now be eligible for medicaid..

Other mid/low income individuals will receive vouchers to help off set the cost of having health insurance.

Health care cost are still projected to keep rising, so I would expect your premiums to keep rising..

Cheers to liquidating some property before the end of 2012....

Cap gains rates were fun while it lasted lol...

The savings alone are worth me having and maintain my license. I just couldn't stomach giving Realtors 3% on the front end and 6% on the back end..

IMO it's just leaving money on the table for next to nothing..

Nobody is going to handle my business as carefully as I would...

That Said:

I am more than happy to pay selling agents 2.4% to sell my properties.

I'm also happy to let selling agents represent me if they actually find the deal and bring it to me.... That isn't going to happen unless they are bringing deals that are unlisted.. In that situation I'm glad to compensate them for their knowledge.

I just can't see where Medicaid is going to get the funding to pay for the millions of new beneficiaries who will now be eligible..

Same thing for the low income vouchers.. Somebody has got to pay for such a considerable increase in cost...

Especially considering how Medicaid is already such a problem....

Ironically my health insurance was up for renewal today......

My premiums have climbed 50% in the past 2 years...

My wife and I are 25... Need catastrophic coverage in case of unforseen medical emergency...

Just under $4,000 per year for absolutely nothing..

Just seems like absolute robbery to be so expensive for someone our age, non smoker, non drinker, not overweight, with a $10,000 deductible....

Financially we are thinking about dropping coverage, and self insuring... Better enjoy that right for the next 2 years.....