First Deal In Place-but Rent or Flip?

Congratulations, Laura. I'm so proud of you.

Laura you did it! I am sooooooo!!!! happy for you doing your homework paid off. And with these wonderful group of people we work with how can we fail.

FLIP!
Just came back from my closing! What a feeling....
I have never felt more proud of myself than at this moment.
Everyone doubted me - and I DID IT!
Plus - I know I made a sad, ugly house beautiful, and the new, first-time owners are getting a great house at a great price,
and I made a few bucks in the deal too! (20,000 for 6 1/2 weeks of work!)
I'm stunned and overwhelmed!!!!!
Thank you to everyone on this site who has encouraged and supported me through this first deal - I couldnt have done it without you guys, my DG family!
And I hope this somehow gets back to the man himself - Dean - so he can know that even though this was my first baby step in real estate - he's changed my life with his generosity of knowledge and time.
Laura

I just read this thread from start to finish. I have been reading on this site on and off and this is by far the best thread I have come across. I just couldn't stop reading, what a wealth of information and at the same time a very exciting story. I read Deans book back in April and started looking for that first deal but things got busy this summer so I haven't been moving forward. This has given me the inspiration to get back out there and find that first deal. Thank you all

I did a 1031 exchange before with my dad. Here's the low down. You only have to hold the investment prop for a year as long as you have 2 tax fillings. Some will recommend two years but is not nessesary.

Since you are buying your prop you could rent out for cash flow for the year and see how it goes for you. If you decide you want to do a 1031 after holding your property for a year and a day this is what you do.

You will then have 45 days to locate a "like kind" property. Ex: a s/f home, duplex, tri-plex for the same amount or more (up to 200% more I believe). Now this 45 day rule is carved in stone, it does not matter if it is a holiday or a Sunday!!! You may locate up to 3 properties for this part in case inspections and details hold you up you will have a back up plan.

Then you have 180 days (also carved in stone) to actually aquire the new property. Money for this transaction MUST be held by a qualified intermediary-your 1031 exchange expert or tax attorney who does 1031's will help you find the intermediaty to do this.

Hope this helps...good luck!!! : ) Sincerely, Angie

Hi Laura,

You can do a 1031 for a lower amount prop BUT will have tax issues even if it's a 1031 that is why you will want to do it to a same value or higher...hope it helps a little. It's always nice to have several plans rollin around in your head for the future of your investment:) .....

Angie - thanks for that info on 1031 exchange..I actually flipped this house but all knowledge for the future is greatly appreciated!
Rpreheim- I am glad that my experience here has inspired you! It is SO exciting and rewarding! I highly encourage you to step back in and fit the time into your life to make real estate work for you. The time invested now in learning and most importantly DOING will result in time/money freedom for your future, and we are so lucky that we have discovered Deans wealth of info at this most opportune time in the market cycle! Best of luck and hope to read YOUR success story real soon!

I'm a little late here just ran across this thread hidden within another.

While I have been a landlord for many years, I have been exploring other strategies since I read the book 1 month ago. This strategy will go back on the table thanks to your post!! (and I will definitely be showing this thread to my skeptical boyfriend who I have slowly been working on to join me in this business. He is becoming more and more of a believer.)

How would you describe the economic climate of your area? Obviously, not good but would you say your area has been more/less/comparably affected as the rest of the oountry. And as far as the price range of the home..is that average, the price for a starter home, or above average for your area. Just curious as I am dealing in homes in the 100K range that rent for about 900-1000..trying to purchase a REO right now for about 78K that is "valued" at 120K (realistically probably sell for more like 95-105 with almost no rehab, paint, clean carpet, and stage a little). That is a starter price range though for this suburb and wondered if I'd do better if I stepped it up a little as the competition declines quite a bit when you get to the 150-200K range. It seems I could do better dollarwise but not percentage wise. Just thinking out loud....that seems like silly phrase to type.

Anyways, congrats and welcome to the world of real estate investing!

Kate

WOW...Like everyone is saying, this is an awesome thread...Granted a couple months late from when this started, but I am just so in awwww...Def gives me more courage to get out there and make things happen...Im so excited, and nervous, but I know it can work...So thats the best part...I have gained so much knowledge from the postings, and reading(and rereading) deans book, that I know its just a matter of time. So thanks for the inspiration and look forward to reading more like this one.

Hello everyone!

I'm a new member of the Dean Graziozi family. I have yet to get started; mainly because I am learning how to do everything and I am in the process of setting up an S Corp. I was talked into setting up an S Corp with the Tax Club. Will this really provide me with all of the tax benefits that they tell me about? Is it really as good as it sounds?

Thanks!

Hey Laura..I wanted to add another question to the ones above as you fired me up to consider a flip and incidentally..another one of my watched foreclosures has come to market and this one could be a flip opportunity rather than my normal buy and rent strategy.

I know you paid for the down payment with a HELOC but what kind of mortgage did you get (and rate)? And, did your personal income support the additional payment?

Thanks so much!

Hello to all of you! I am amazed and humbled that by sharing my experience I encouraged (and still encourage) people to move forward with their dreams! I will try to answer all your questions as best I can. Firstly, my area has been affected like rest of country - but at the same time its a market thats hard to navigate. While many homes are in foreclosure - house market prices remain quite high. REO houses are hard to find - and when they hit the market you have to be quick in jumping on them. I just had my hands on my next flip -bank had verbally accepted offer and I was jumping for joy. Next thing I knew someone threw in a full CASH offer and it was taken right out from under me. So its a tough market competing with more experienced investors with lots of $$$ in their pockets. The average, fastest selling home in my area is 300,000 and under. First time buyers getting their first home. Finding houses low enough in price to fix and flip in that price range and still make a profit is tough like I said. But I know I will - just never give up and search every day! I would just advise to really know your local market, find the best selling price from a realtor, and then find something in a great location in that range. LOCATION is definitely a major factor in a successful flip! As far as your HELOC question- firstly, my HELOC has a great rate - prime minus 1% - so I use that as much as possible cause its a better rate than any mortgage! Second - I have a great mortgage rep who got me a good rate - 5.75 at that time. Since it was my first house, I applied as an owner/occupant, not an investor. As far as making the payments - I only had to make one mortgage payment before I sold it - so that worked out great! Now on my next deals I am applying as an investor - and the rate I was going to have on the house I just lost was 6.5 - not too bad! The whole thing is to plan to buy, fix and flip BEFORE you have to start making payments! That is another reason why location and pricing is so important. Also, of course - I got Lowes and Home Depot business credit cards, which I only had to make minimum payments for two months before I sold the house and paid them off. So as long as you dont have an extended holding time - you dont really have to lay out that much actual money - mostly for the labor. Hope all this helps - I've rambled on - writing as I think haha....best of luck to you and cant wait to follow YOUR story!
cylegreen, I'm sorry I cant advise you on the S corp question. I did not use the Tax Club. Personally, I have an LLC. I would suggest you speak to an accountant knowledgeable in the laws of your state to find out the best way to go. Good luck!!

THANKS AGAIN!!

WOW, 6.5 for an investment property being rather new..that is really good. Is it a local bank that keeps their own mortgages? I wonder if you would share the name of the bank (maybe you can get some bonus points for a referral) as I was quoted 3 extra points and I even have a credit score of 780 and am experienced. I was considering going owner occupied too for this property I am bidding on but the loan officer warned me that they are checking so I had second thoughts as this house will need very minimal work before renting and I don't want to lose any rent.

Thanks again for openly sharing!

Cylegreen,

There is so much good information here... I was wondering about the same info (about LLC and S Corp) awhile ago, and remembered reading about that, and I found the link for you!

http://www.deangraziosi.com/node/927

Andrew

...

Well, believe it or not....my mortgage rep works for countrywide! I have read several posts where they are one of the most difficult banks to work with in trying to buy REOS from - but as far as a lender she has been able to do right by me. Guess I lucked out!

That is who I got my pre-approval letter through for this property to go owner occupied and she was the one who forewarned me that they are verifying occupancy so I inquired about investment property rates and she was like..don't even think about it. So I got online and researched mortgages and found this horrible site about countrywide and all these nightmare stories. I have a countrywide mortgage and have never had a problem but all these stories were a little unsettling. I guess I'll just have to continue to hunt.

Thanks again..and good look on your continued pursuit. I believe right now is the time to get the best deal. Although I just got one accepted today and planned to see how this went before looking more..I'm almost thinking I should make another offer before year end. It's addicting.

Look forward to talking again!!