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All Forum Posts by: Zac Davis

Zac Davis has started 14 posts and replied 41 times.

Post: 1031 exchange strategy

Zac DavisPosted
  • Investor
  • Shelley, ID
  • Posts 41
  • Votes 2

I have a property that I've owned for a few years that I'm looking to 1031 exchange to something closer, and possibly better overall. meanwhile, I have just purchased a duplex which I originally planned to BRRRR. the lease on the older property is up in 6 months and the Tennant has decided to move on so it's really the best time to get out as I don't want to displace anyone right now. it's worth noting that this property is currently owned under an LLC I created, 100% owned by me.

I purchased the new property with a different LLC which I'm a 50% owner with a partner. renovations should take 4-5 months, and so here comes my question for someone who has experience with 1031 exchanges.

I'd like to finish the renovations, by then the value will be more than the old property, and finally sell this property to myself using the 1031 exchange.

it seems so simple in my head but explaining it is hard.

please let me know what you think. feel free to ask questions if you are unclear on what I'm asking. 

Post: funding a flip with a bank loan

Zac DavisPosted
  • Investor
  • Shelley, ID
  • Posts 41
  • Votes 2

Hello,

I actually have a few successful flips under my belt, however, the newest deal I have secured is on a larger scale. I have some money from private investors and for a normal project this would be plenty but for this one, it just about covers the all-cash purchase leaving none for the renovation. my question is, can I put a loan on this house after I buy it with cash? is there a period of time I have to wait before I do so? is there a better option? I understand ill have to leave 20-25% in the house but that would leave more than enough for the renovations. Please let me know what someone with more experience would do in this case.

Post: need help with first deal

Zac DavisPosted
  • Investor
  • Shelley, ID
  • Posts 41
  • Votes 2

this deal has passed by, but i still have the question. while flipping in a c to c- neighborhood safe, as long as the numbers work? i understand that there will always be the added risk of certain things but as for a general answer, if the numbers make sense, comps are selling in recent months, it whould be fine right? lots of people do it. not sure why i couldn't convince my partners, now someone else is going to make that 30k.

Post: need help with first deal

Zac DavisPosted
  • Investor
  • Shelley, ID
  • Posts 41
  • Votes 2

i found a property to flip and my very rough analysis is...

Purchase Price - 47200

Beds 2 

Baths 2 

Sq Ft 1717 

Built 1934 

Reno costs 20-24k

holding costs and fees - 12800

ARV - 105-115k

profit - 20-30k 

My issue is that this house isn't in the best of neighborhoods, c to c- area. Because of this my partners, also new to the game, aren't interested. All I can see is the potential profit and a good way to get going. I have been very conservative on the ARV as well as inflated my reno budget to cover unforeseeable issues because its really old.

My thoughts are that if the numbers crunch out, and comps are showing homes selling in the area within 6-8 months, there shouldn't be an issue right? the goal is a flip not a buy and hold so shouldn't the area the house is in matter less?

I don't have the money myself to make this one work otherwise I would do it i think.

Post: Which comes first, money or the deal?

Zac DavisPosted
  • Investor
  • Shelley, ID
  • Posts 41
  • Votes 2

i have heard and read that if you find a deal the money will come. I have been working with real estate agents, and sending out letters to home owners, with pretty good results, however after i put an offer on a few places and got turned down my agent said my offers need to show proof of funds to be considered stronger. Can anyone who started out with almost nothing let me know how they got over this hill?

Post: Taxes on my first flip

Zac DavisPosted
  • Investor
  • Shelley, ID
  • Posts 41
  • Votes 2

@Wayne Brooks thanks for the response. what would it ok like if it was over a year long project, taxed as long-term? capital gains

Post: Taxes on my first flip

Zac DavisPosted
  • Investor
  • Shelley, ID
  • Posts 41
  • Votes 2

Hello,

I'm to the point where I'm ready to dive in I believe. Just need to find the right deal and I'll be one of you all. I do have a question about taxes on the first flip profits (assuming there are profits)

I read that if you flip a property within a year the profits made are taxed as short-term capital gains, at the same rate as ordinary income? possibly have to pay medicare and SS as well?

Can anyone explain this? Maybe also some tricks to use here? And please try to explain it as though you are talking to someone with no experience with flipping or taxes for that matter.

Thanks!

Post: Owner Finance help

Zac DavisPosted
  • Investor
  • Shelley, ID
  • Posts 41
  • Votes 2

thank you everyone for the reply on my post. I'm getting discouraged though because in order to meet all these "rules" in order to make a deal work, seems like you have to talk people out of an extreme amount of equity they have in the property in order to buy at such a discount where it can be profitable. Logically I don't see many savvy people allowing that to happen, but obviously it does otherwise there wouldn't be success stories.  I know that they are just guidelines to quickly analyze a deal, but everything I have seen so far has been way off.

Maybe in this case, if someone is offering seller finance he shouldn't also expect a great deal of equity also? Maybe negotiating down to an acceptable price point and a more competitive interest rate should be possible? what do you all think?

Edward B.

Post: Owner Finance help

Zac DavisPosted
  • Investor
  • Shelley, ID
  • Posts 41
  • Votes 2

@Tom S.

Do you think this would be worth trying to negotiate down at all? if i was able to et him down to 170k @ 5%? this would bring it down to meet the 50%rule?? am i doing that right?

Post: Owner Finance help

Zac DavisPosted
  • Investor
  • Shelley, ID
  • Posts 41
  • Votes 2

hello,

I need some help from a pro! I found a guy willing to sell me his duplex for 174,900 or he said he'd be willing to do owner finance on the deal

$7000 down

30 years at 7 percent.

there is one tenant in it now paying $650(but rent will go up as the tenant is leaving in June) and the other is barely vacant and raised to $705. I have no idea how to analyze this, even if its not a good deal I'd like to know how someone would analyze an owner finance deal and distinguish a good deal from a bad one. What other questions do I ask next time?

I sought this guy out just to ask questions, I made no attempt to purchase at this point. I'm just trying to learn. This guy is selling 8 duplexes and a four-plex. Getting out of the game after 30 years.