All Forum Posts by: William Jenkins

You are here so that is the first step. You also have cash (or ability to quickly save) and that is even more important contrary to what some of the no money down gurus will tell you. I think you first need to narrow down your strategy. Flipping is a full time cyclical job and will be a difficult time commitment given your travel circumstances. Buy and hold is probably more of the direction I would suggest given your end goal of creating side income. It will also be a little more manageable with your travel schedule. Although properties here in St Louis are selling for a premium there are still some ok SFR deals to be had if you are patient. I understand the family time issue as I have a 1.5 year old. If you can get a little rental cash flow going perhaps that would allow you to take a local job that may be a little less demanding. At that point you could also focus more time on real estate and go after true freedom. It will not be easy but it can be done.

Looking at the photos, the space looks to be in good shape. I would not do anything to it aside from a deep clean. Your profile shows St. Louis, Mo so I am assuming the property is located there as well. The market in STL is relatively good, but this does not translate 100% to class b and c space. The tenant will be in the drivers seat for this type of space. Your most likely tenant is going to be a similar use to what was there before or just a general office user. Only offer buildout for extremely qualified (look at financials) tenants on a long term lease and build it into the rate. Try for a 5 year lease but realize that you may be year to year after they balk on it.

In the St. Louis, MO area there are over 100 municipalities. Most of these municipalities require occupancy inspections every time a SFR is turned over to a new occupant. More and more municipalities are requiring "landlord licenses" and "vacant property" registrations all at a cost. It is a revenue generator for the city and time waster for any investor. Nothing more and nothing less. 99 out of 100 inspectors know nothing about building or code compliance.

I should have stated this earlier but the passive vs active classification I was referring too was at the LLC level where K1s are issued. Changes the game a little bit.

Check out the IRS definitions of active participant. You can actively participate in the business (buy, sell, manage,etc.) and still have it qualify as a passive activity. FYI.... Unless you are in a rare situation you likely want this to qualify as a passive activity. Next year you will likely have a gain even after factoring in depreciation. If it is active then you will be paying 15% self employment tax and ordinary income tax rates after that.

In my residential units I always purchase new. The time you are spending looking for appliance deals, checking them out, dealing with installation, etc. is not a good use of time. Buy new, have delivered, old hauled away, move on with life and get a one year warranty.

Unless there is something glaring that is wrong with the property I am inclined to go with price being the issue. On the retail level in the areas I watch (not Florida, at least on residential) buyers seem to be taking a step back. If a property is overpriced they won't even take the time to make an offer. Sellers have gotten very ambitious. Some are selling but most are seem to be going stagnant.

I think you need to get some advice on your tax situation because you are making some errors in your assumptions. First you must determine if your RE income is passive or active income. Unless you are a full time RE professional it is likely a passive activity for you. Passive losses are capped to $3 K as an offset against your ordinary income. Any additional loss will carry forward to the next year and offset of gains or keep accumulating as a loss carry forward. I would also look at what you are calculating as a loss. Vacancy? That doesn't count, only real expenses. Secondly, you seem preoccupied with losses and how they affect your income. Focus more on making money and worry about taxes second. Get professional advise.

One more thing.... should you choose to participate in this latest game of musical chairs go direct to the listing agent with your POF and have them write for you.

I remember this movie from 2006. Bottom line is the market is not rational and you are competing with people who are not rational either. I would consider taking a time out or looking in a different market.