All Forum Posts by: Yoni Benimetzky

For simplification purposes what you're suggesting is feasible to a degree but you'll find that actually doing it is harder than it seems.

You need to account for closing costs. That 11% profit that you showed in your first example could very easily turn into 5% after accounting for standard commission and other closing costs. Not to mention the ordinary income tax you'll owe (since you're "flipping" in less then a years time) 

Finding a deal that is "discounted to market" requires a lot of work. It's not as simple as finding a high cap rate and saying the next guy will certainly buy this for more than I did. Nothing is certain, supply and demand govern pricing, cap rates do not. 
 

Credit score shouldn't be as heavily relied on. I would speak to his employer and get a character/reference check from them and get physical proof of his retirement income but overall I would probably let someone like you're describing move in. The extra deposit money is your insurance. 

You can try presenting an offer that has an "acceptance bonus" that expires after a certain amount of days. Might get the two brothers motivated to make decisions. 

These types of situations can last a long time so either prepare a long game or try to force a quick decision by offering an incentive. 

Hey @Johnny Duncan

I like creating single purpose entities when I make investments. It keeps my books and bank accounts clean. 

You can buy a property with an existing LLC but just keep in mind that the company will inherit any previous liabilities that you might not want your new purchase to be be attached to.

Hey @Account Closed

I think you have solid plan to start with. If you have spare time you can also get a real estate license. 

They say a jack of all trades is a master of none but honestly you should learn from every angle. 

Regarding the taxes, you only need to hold on to the property for one year to avoid the paying the "big fat % as tax" 

After one year the property will be taxed as a capital gain (20%) and not based on your personal tax bracket. 

The house could be in a flood zone or have certain violations that restrict it from getting financing.

Florida deals with hurricanes and has more flooding than the rest of the country. If you can't insure a house you usually cant get a loan on it. 

Welcome to the community 

Hey @Lee Yoder

Your year one profit would be the $25,700 plus the 8% pref. You aren't investing your future profit you're investing day one. 

I'm not sure where you syndicate your capital but investors will want to know you have skin in the game. Same thing goes for any lender you're talking to.  

You can roll over your acquisition fee in the deal but you should still have at least 5-10% of the equity coming from you. Anywhere between 25k-50k, just shows good faith. 

The deal is in the buy!! 

Everything is important but getting a good deal is the first step! 

Stay organized and have professionals review your comps and construction estimates. Stay on top of the entire renovation process and try to learn as much as you can. 

Keep your finger on the market to know where you should focus your energy and resources (what kind of upgrades and finishes etc) 

By full picture I mean what your business strategy is. Are you planning on renting it for passive income or selling it. What are the market prices for a new home compared to your overall costs basis etc. Either way it sounds like renovating first is the best way to proceed.