All Forum Posts by: Rob Geringer

Q: If you buy on contract for deed can you still depreciate a commercial asset?

Background: I'm in discussions to buy storage units w/ seller financing w/ very good opportunity to increase net cash flow. The Sellers are retiring and the common sense kind of people - they run the operations and let professionals handle taxes, bookeeping, legal, etc. They don't want cash - they want an installment sale for tax purposes and certainty in cash flow.

To that end, they've been advised to sell contract-for-deed for the ease of taking the property back should the need arise. I've been advised by my CPA that he doesn't think we can depreciate the asset if we don't hold the deed in our entity name. The Sellers' CPA says there shouldn't be an issue. In speaking to both, neither sounds 100% certain about their position.

Thoughts? What's your experience with this?

Great work Devan!!

On the rehab, I'd say it depends on how quickly you'll get it done. If you can get the extra rehab done quickly (2-3 weeks?) it's an 'easy' 15k. However, given how quickly you're burning through deals, you should weigh the extra profit against lost opportunity for profit. 

I'm sure you've already thought about it, but a 31% ($50k) shift in value has implications in relation to the rest of the neighborhood. If at 160 you're at Rock bottom you could affect values for your own future sales in the area. On the flip side, if at 210 you're priced in the clouds then perhaps you may not move it as quickly as you like and could get beat up on price.

Great job on the podcast too- I wish I had my head on as straight as you when I left college!

I agree with @Jerry W. much of Wyoming is getting hit hard and Casper is right in the middle of it. Major employers are laying people off, large budget cuts at the City and the real estate market is headed south. 

From what I recall of the Casper market you'd be picking up the duplex for a good price. However, I would anticipate a much higher vacancy rate or be prepared to cut rent to get people in. 

With $50/bbl oil we're seeing a slight increase in oil activity in some areas but I wouldn't expect the economy and real estate to come roaring back quickly. NatGas is also low and coal is in the doldrums. Casper is highly affected by the energy industry.

You'll definitely want to plan on a much higher vacancy rate and perhaps you'd be pleasantly surprised. Otherwise you could also wait and perhaps see the price of that duplex  and others drop even further.

I'd suggest the first place to start would be your local building and planning offices to check if zoning would allow it and if services for water and sewer can be split, as well as particular building code requirements to separate living spaces.

Good luck Cody!

The specific list may be dependent on how big your marketing area is, which is to say the number of cards you'll be sending out. Are you targeting SFR or will you include townhome/condos? One of my target markets has a population base of approximately 75000 people. After narrowing down to SFR / high equity and other criteria I'm left with about 1000 addresses. I'd recommend playing with listsource with varying criteria to see how big the list is. The more criteria, the smaller the list - just optimize it for your marketing budget.

On that list in that area, I've had much much better success with yellow letters than post cards. I also know that post cards in the right area work outstandingly well. My theory is that if the area has a lot of exposure to this kind of marketing people are more open to basic advertising such as postcards. If not much exposure, then a more personal touch such as yellow letters appearing to be handwritten is more necessary.

@Jim Lindstrom welcome to BP!

@Jeff F., @Joseph Neary, @Daniel Holbrook it's great to see more Cheyenne folks on BP!

I wasn't able to make the meetup this week but I'm glad @Cheryl Packham continues to coordinate them - it's a great opportunity to get to know other investors in the area.

I'm involved with fix/flip and wholesale opportunities, although not to the scale that some others are in our area - @Corey Loghry and Shon are knocking it out of the park!

If any of you guys want to grab a coffee and talk real estate in Cheyenne hit me up.

@Joseph Conrey I've done mid-sized land development and residential new construction but have scaled down to rehab and flip single familes and occasional wholesales.  If you come up with any deals in Cheyenne I'd be happy to take a look!

@Jerry W. is correct, much of Wyoming is going through a rough patch due although so far the Cheyenne market is somewhat insulated - we feel a lot of influence from the Front Range and that appears to be quite brisk. It's been a combination of oil prices and the squeezing of the coal industry that's been hitting hard.

Best of luck and look forward to hearing from you!

Welcome to BP Joseph and thanks for your service! I think you'll find there are a number of military, both active and retired, that are members here and successful investors. That said, I've found through both the podcast and the boards that it doesn't matter your background or current job, *anybody* can be successful in real estate if they have the desire!

What part of real estate interests you? Buy and hold, fix and flip, wholesaling...? Commercial, residential?