All Forum Posts by: David Begley

@DJ Cummins  Following up on my above comments, I had no sooner hit "Post Reply" when the following BP Blog popped into my orbit!  Saying much of what I so ineloquently tried to say above:  http://www.biggerpockets.com/renewsblog/2015/01/11...  

@DJ Cummins 's assessment, and I'll bore you with my lessons learned since you asked and since this is similar to the very "problem" I was noodling on when I read your post. My situation is a little different. I decided to bow out of the rat race after a 25+ years as a banker (the last several years at a comfortable mid-six figure salary), and with my wife's tentative blessing, began REI full time. We decided an amount of our savings/retirement that could be used in my new business and after a period of research, studying, obtaining a real estate license, and a period of analysis paralysis, I jumped in with both feet. Lessons learned the hard way: 1. Draft a business plan and stick to it. I was (and still am) all over the board in how/where I want to invest. 2. Regardless of how long it takes, find the quality deals and don't jump at the first or just any opportunity. Be very selective. 3. Do not commit all your cash, regardless of how lucrative the deal may look, because 4. It is extremely difficult, if not impossible, to find bank or reasonable credit without a W-2 (my situation, maybe not yours) and financing real estate investments, even with a W-2 can be challenging.

For me, #3 & #4 is where I learned most lessons.  If you are doing this full time and/or will need to finance your investments, set up the credit facilities before investing anything - even if you think you won't need it; and keep back enough reserves to get you through those rainy days.  Adapting to cash flow fluctuations and the timing that requires takes more diligence and forethought than I was originally aware.

Good luck!  

Net listings by a Realtor/Broker are illegal in Georgia (and most states) and so is ANY marketing of any real estate without including your Broker's information "in the same size print..." in and on the marketing materials.  As I understand it, this includes even real estate you own - you must disclose to any potential buyer that you are a broker/realtor even if there is no agency relationship.

To say, cart blanche, that it is ethical and legal to wholesale as a Realtor is just patently false; even without a real estate license many wholesalers, if not most, border on the unethical even if not strictly breaking the law.  

 As others have stated, the short answer is No you cannot.  However, if your SDIRA can be converted in whole or in part to a Self-Directed Solo 401(k), you can lend yourself up to 50% of the value to be used for any purpose.  CAVEAT:  Check everything I just said - I know just enough to be dangerous on this subject, but I do have a Solo 401(k) and I can lend myself 50% value for any reason, as long as I follow the compliance rules.  

@Kush Patel   I wouldn't even consider moving management off-site until after 3 years when the interest only schedule ends. And then if you only need to from a cash-flow standpoint.  The complex will be "stabilized" by then and you'll be better able to evaluate the cost/benefit of remote v. on-site management. 

The five personal residence transactions I've been a party to in Atlanta were all 7.0%. However, since I've become a licensed realtor, I would roughly guess close to 100% of every MLS listing I've seen was a max 6.0%. I guess I just had a bullseye on my forehead earlier and went along with the 7.0% because I was convinced that was "customary". As a realtor, with a friend/partner as my Broker, I have the ability to list properties with a more attractive split to the selling agent - a 4-2 or even 5-1 split (for those that bring a full price in X days).

@Jill H.   You state that your Investor is wanting to sell these properties as Turnkey investments, either in bulk or individually, but have you educated him/her to what that really means?  You indicate 1/2 of the properties have renters already so I'm assuming the other rehabbed 1/2 are sitting empty.  In order to market these as true Turnkey properties, you will likely be expected to have a tenant with signed lease in every house, along with security deposits to be given to the Buyer; this also means having a Property Management firm in place as well as providing some assistance with financing.  Does he expect you to arrange the property management contracts, lease up the rest of the houses; provide financing assistance, etc?  Most good TK firms also guarantee rent for a period of time.  Marketing as a true TK investment without being able to list may be very difficult, especially if the Seller expects these other conveniences normally associated with a TK investment.

It would seem to me that trying to work with already established national TK companies like Norada or MemphisInvest may be a solution.  Do they do Consignments? lol   Seriously, I do wonder if any of the established TK firms do market and post others TK investments for a cut?  It would be a Win-Win, I would think. 

 Wendell, you state that the cost for the new porch and roof is included in the Sales Price? Am I reading that correctly?  Also, as another mentioned, the pictures indicate the property will need a lot more work than just a porch and roof.  Is the property financeable in this condition? 

At the risk of asking what likely may be a dumb question, but how does one define or differentiate an investment property or area as an A, B, C, or D property or neighborhood?  Does it differ per geographical location in the country or a particular city?  Is it a function of crime rate?  Price? etc  I've always thought the designation was somewhat arbitrary but Turnkey companies seem to put a lot of emphasis on this designation.  The primary reason I'm asking is that I'm presently rehabbing a house in a "transitional" area of Atlanta area code 30307 and am considering a backup exit strategy if the finished house languishes on the market too long - I may want to try to market to Turnkey companies or use as a rental investment myself.  As I consider a rent strategy, I'm wonder if I'll have a "B" property or a "C" property and how one would make that determination.

@Bryan Hancock 

 Good luck Bryan!  I look forward to following your success.  I hope you branch into Georgia, Tennessee and the Carolinas.