First Deal In Place-but Rent or Flip?

I just read this whole thread and what a great one. I don't think I have seen so much useful information AND motivational text in one thread on anything I have read online. Please keep it coming!!!

STRIVING FOR FINANCIAL INDEPENDENCE

Even tho I am on my third property, I still learn a TON from my REI counterparts here on the DG site!!!!!!

WHAT AN AWESOME COLLECTION OF PEOPLE!

Nick, you say it well; "Keep it Coming!!!"

Regards,
Rohn Everson
DeJor Properties, LLC

Hi Laura,

What is HELOC? I'm new to all this and just ordered Dean's book.

Thanks,

this whole site is so full of inspiration and information it is unbelievable! if not for it i would never have moved forward on my first house. Tomorrow ends the first week of rehab and is it ever fun! I just look around and can't believe its really happening for me! I must say the paperwork and red tape with closing and the township for permits, etc. was a frustrating learning process....but once I got the green light its amazing....as far as this thread and what i will do with it when its done i will keep updating as i go......to be continued........good luck in all your endeavors and you will realize your signature line of BEING financially independent!!!

Home Equity Line Of Credit

Thanks for the encouraging words. I know that it is going to work out, especially with a great network of fellow investors here who are just as eager to succeed.
Thanks and keep us updated on the rehab.
N

If you are worried about taxes on the proceeds there is a way to insulate yourself from a rainy day, or way to take advantage of tax saving by taking a new job. I'm not a CPA or tax attorney, so to cover my butt just consider this a theory until you have it validated by someone with the proper credentials. I do know someone who had to sell their home after they lost their job and received this credit a couple years ago.

In the tax code for capital gains on primary homes, at least as recently as a year or so ago, there is a clause that if you had to sell your home due to hardship or change in employment, you do not have to pay capital gains in the traditional sense. Instead it is prorated at a very low schedule and is pocket change compared to the full capital gains.

Hardship can be due to an unexpected reduction in income (ie: you have had steady contract work before you bought your home, but it dried up), loss of hours, loss of job, health problems and maybe other reasons.

If you do not already have a primary residence you could move into that one. If you have a primary residence, you could sell it (although its not a good time to sell) or start renting it.

Then, if for whatever reason you experience a hardship, or take a different job (an article I just found says 50 miles away or more from the house) you can squash the cap gains.

See this link for more info (dated 2004, so check recent code): http://realtytimes.com/rtpages/20040326_capitalgains.htm

Great advice! I am considering all of these ideas and will do more research.....

Thanks, Laura

well, its day 12 of my rehab, and things are going awesome! I will admit I have sore muscles where I didnt even know I had muscles haha! But hey, its more fun than going to the gym - so I'm getting in shape, learning alot AND working on my future independence at the same time! There has been a number of unexpected things, (as expected ha) but all in all I think I'm on target for being done within 30 days! Dealing with town permits is a bit of a frustration and slows things down, but I'm just going with the flow, and I find that as long as I stay positive and believe things will work out they always seem to! Even some of the workers on the site cant believe when I find solutions to obstacles they thought were a big deal! I am definitely going to go over on my rehab budget - but not by too much.....but that brings up a question if anyone reads this far... how do FSBO's work with realtors? I told mine that of course she would list the house when ready -but since I'm going over budget I want try and save the 6% commission. So I want to call and offer that if she steers anyone my way and they purchase I will quarantee her 2% of selling price. Thats equal to or even more than she would get if it was listed and she split commission with the other realtor and her agency. But I dont know if she can do that 'outside' of her company. Does anyone have experience with this? I want to keep things on the up and up, and of course maintain a good relationship with her. So I would like to know if thats a legit offer before I call and tell her I'm going to try to sell it on my own first.
Thanks!!!!

I am not quite sure I understand your question. let me try and get this:
-you are the owner of the house and when you are done rehabbing it you will put it on the market with your agent as the listing agent?
-you are trying to negotiate her commission so you can alleviate your overbudget situation?
-since you are the seller, wouldn't you be responsible for paying both the buyer and sellers agent commission? (i assume that you would want your agent to represent seller as well?)

Please let me know if I am completely misunderstood here.
Thanks,
Nick

yes, I am the owner.
when done rehabbing, I want to sell it on my own, which would mean there would be no actual listing agent or guaranteed commission on the sale. I would therefore save 6%.
So what I would like to do is to encourage my realtors to bring traffic through by offering them 2% of selling price for anyone they steer towards a deal.
I do believe realtors can represent clients in FSBO houses, but I dont know how the commission works in that situation.
Hope I've made myself more clear

You've come this far by yourself, you can certainly sell it by yourself and keep all the money you make. Put a for sale sign up on it now while you're working on it, you'll be surprised at the traffic you're going to get by just doing that. Then put up some bandit signs at the exits of your local walmart, or grocery store in the neighborhood, also put ads on craigslist, backpage.com and you should get plenty of calls on it. No offense to any of the Realtors on here. I'm just sharing what worked from my own experience. There are also flat fee listing services you can use that will charge you a flat fee to list it on the MLS, that cost a couple of hundred dollars as opposed to thousands. Hope this gives you some options to think about!
Let us know your progress, we're all pulling for you.

These are great ideas, and as always when I have doubts about things working out I come here and find the support I need to maintain my confidence!!!! Thanks!!! I had no idea of flat fees for mls. I will check into it right away....one other thing I have going for me is that there are two other houses on the street on mls that will bring traffic past mine, so thats great too! And of course - my house has more to offer and will be lower priced since they were my comps! Thanks again!!

Well there you go... Now that's the way to think girl! Get a sign and put it up in your yard today, with a lower price and more to offer you'll have a buyer by the time it's ready. Way to utilize the traffic the Realtors listings bring, now that's how you work it girl! My rehabber friend always got interested parties just by using that method. I kept telling him start putting up signs before it's done, but he's so stubborn, so I put one up for him and low and behold he got that first buyer within a week... Ha! The proof's in the puddin' darlin'. Keep us updated hon, we're so proud of you.

well, by the middle of next week the house will be complete! Its looks great and I'm proud of it, but I have to say I'm getting a bit of fear creeping in...no responses to ads/sign yet - but most of all is the fact that the houses on the street that were listed higher than what I planned have now dropped below.....so I plan on still trying to sell, but will have to explore other options - lease/purchase, rent etc...which I will start studying right now!!!! Anyway - doing my best to stay positive and know it will work out!!

Stay positive, sister! You've got lots of options and you've just started your marketing! Here's a bunch of suggestions for marketing that people have given. http://www.deangraziosi.com/node/6947
Also, to have a better idea on the numbers, can you have someone get you comps on houses that have sold recently in your area? That might help you to get a more concise picture of what homes are actually going for and help you decide on what options you want to keep in play.
We're rooting for you, Laura, and it just takes that ONE right buyer! He/she's headed your way!! MOST important, keep that winner attitude!! So often, it is the PERSON that sells, as much as the PRODUCT. You've got a great house and a great personality! How can you lose?!

Rina

P.S. Congratulations on getting that house ready so fast!

You are always a great source of information and inspiration! I did run comps, and feel that I am within fmv at my starting price - the others dropping so low just threw me... I know my house has more to offer than the others on the street...so I will proudly show all that off! I am sticking to my plan and keeping all other options open! I debated sharing my fears on the forum, but I knew this is the place where I could come and do that and receive the encouragement I needed to help keep me on the positive track! Thanks a million!!!!
Laura

I forgot D asked you the "comp" question awhile back. lol. You're right on top of things.

Great job on everything you're doing, Laura! And remember, by you sharing your experience, everyone gets to learn & grow. Thank you!
You keep it up, girl!

Rina

Here are a few exit strategies for you, so you're not stuck with just one. The more you have the better your chances are to make money. So always keep this list and add to it as you get more experience:
http://www.deangraziosi.com/node/7282
Don't worry, you have lots of options!

Continued success and blessings,

really appreciate all the support! I'll let you know what works out for me

My pleasure Laura, I'm confident you will have much success! We're with you all the way so keep us posted!

Congradulations,

laurajohnson on your deal, dean book is great! and you are absolutely right when you said it is amazing how strangers on this web site can become your best friends, everyone work to give each other advice and support, a lot of my questions has been answered because of this web site. YOU GO GIRL!!!!!!!
Regina:)

Wish you best of luck in all your endeavors too! I really never have time to get online late - am EXHAUSTED but so happy - finishing up this first house.....ran a week or so over but carpets going in tomorrow - then just finishing touches! And lots of prayers that it sells!!! What a feeling it is!! I'll post again once I sell or rent to let everyone know.........

If you're peeking back in I wanted to say it is SO cool to be able to experience this with you through your posts! I'm so excited for you! Don't feel like you have to wait to post, though, until you sell or rent. I know you've already gained a LOT of wisdom from this adventure and we'd love to hear from you.
So keep in touch.

Rina

Ditto, Nick!!

Keith in Florida

What an experience! I havent been on site for a long time....but heres the grande finale of my tale.....6 weeks after buying my first house it was done, and after a week on the market - SOLD! Actually had several offers to choose from! I'm just blown away! Came out of attorney review today, and will be closing middle of next month! I did use a realtor and I'm happy about that, even though the commission would be nicer in my pocket haha. But for 2 months of hard work I should walk away with approx 22-25,000!!!!!! Thanks and love to everyone on this site for all your encouragement, knowledge and support...I truly wouldnt have done it without this connection! For anyone who hasnt completed their first deal yet - keep on it! Its the best feeling in the world!

it's NOT everyday you hear a GOOD story like that one, SOLD in 1 week? in this market? sweet jesus, your doing something right

We are SOOO proud of you!!! Where do you live? Let's all get together for a party this weekend! Seriously, I wish I could be there to celebrate with you. Thank you so much for making us a part of your story from start to finish. That is so COOL! It's an inspiration to everyone on the site.

God bless, (and you deserve it. )

Rina

Ha! Rina, I wish we were all close to celebrate too! I'm in Jersey - which makes selling it in a week even MORE of a miracle! There are definite jaws hanging open by all my sceptics! LOVE IT!! But Sully, I must say - its because I did what Dean taught - scouted my target area for good - no, make that GREAT LOCATION, bought way under market value, fixed it up and listed a beautiful home priced UNDER the competition, and done deal! Its like a dream - I cant wipe the smile off my face