Does this RE deal sound good?

[thefed]

I put an offer in on Door #2 Friday morning. They were asking 14.9k, i offered 10k to get the ball rolling.

I'm SOOOO anxious, i can not stand it any more! It's only been 3 days, most of which was weekend, but dayyam! I'm getting ready to explode. I wish they would just counter me an offer of about 12k and I'd close tomorrow!

I have a lot of detailed estimating done, labor lined up, all my proverbial 'ducks in a row'.

Now, with all this prep work, watch them say they have a higher offer! LOL

It's been on the market about 60 dys, so I doubt that....but with my luck.... :

 

[Arif]

I put an offer in on Door #2 Friday morning. They were asking 14.9k, i offered 10k to get the ball rolling.

I'm SOOOO anxious, i can not stand it any more! It's only been 3 days, most of which was weekend, but dayyam! I'm getting ready to explode. I wish they would just counter me an offer of about 12k and I'd close tomorrow!

Yep that's the way I feel everytime I submit an offer on a house I just "have to" rehab. I've got one now that I'm waiting on a response from the bank...multiple offers and about 17k in profits make for an anxios wait.

 

[thefed]

I hear ya. after more research, I'm seeing about 25-35k on the table for this one! I'm dying to hear something....

 

[CybrMike]

as long as you 1031 it, otherwise taxes will make it not worth the profit.

 

[Arif]

as long as you 1031 it, otherwise taxes will make it not worth the profit.

That's why I like having rentals AND doing flips. The depreciation (and other expenses) from the rentals can offset some of that "profit" from the flips. Also if you do enough work as a RE professional then you can write off more than the 25k loss limit per year. My pm doesn't do 1031s when he sells he just writes off all his business expenses against the profits.

 

[ESRBob]

TheFed-
So have you heard anything? I'm feeling the drama on this one as if I were doing the deal myself. When do you expect to hear? Good luck on it. Man Ohio real estate numbers are a far cry from where I live. btw, how 'bad' is the neighborhood -- is it high crime or just a bit run down?

 

[NinjaPigeon]

as long as you 1031 it, otherwise taxes will make it not worth the profit.

I don't get this. It's a short term cap gains tax, so it's taxed at his normal tax rate anyway. So getting 25k in profit and paying the tax is comparable to just working a 9-5 and earning 25k.

Am I missing something?

 

[thefed]

sorry its been a while!

Well, the deal is 99% done. just need to sign the papers. I took house "B".

The neighborhood is not great, not terrible. No burglar bars on windows, BUT the bassement window in the house was kicked in the other night (no biggie, im putting in glass block windows soon). It doesnt look like anyone went inside, although thru the home is writing on the walls from high school kids. I think, in many neighborhood,s that if a home sits obviously vacant for 6 months, kids or vandals will find it.

Overall, you would always want to lock your doors and windows and car....no exceptions. But liek anywhere, if you treat people with respect, they'll often reciprocate.


I'm in the home for 13.5k including closing, and anticipate about 7500 in expenses right now. i will be renting it to a friend for 500/month, resulting in about a 250/month cash flow. One year lease. I will try to get as much out of the home (HELOC) as I can to help finance the next one.

wish me luck!!!!!!!!!!

 

[ESRBob]

TheFed'
You took the one with the lead paint problem or the other one-bedroom one?
If the lead paint issue, you won't have any issues with your friend staying there, right? Hate to have him, no matter how good a friend, coming to you later, especially once you've made some dough, for damages from having been rented a toxic apt!

 

[thefed]

TheFed'
You took the one with the lead paint problem or the other one-bedroom one?
If the lead paint issue, you won't have any issues with your friend staying there, right? Hate to have him, no matter how good a friend, coming to you later, especially once you've made some dough, for damages from having been rented a toxic apt!

yes, the lead paint one. as long as he doesnt start eating the walls, he shouild be okay. I'm going toa 5-day training class to become a lead abatement specialist. it costs 850, plus a few exams to get the license. Once I have that, I can proceed to repair the home. To eliminate the lead, you either scrape and re-paint, or replace. Outside, you can put up vinyl siding and that's acceptable. Overall, it's no big deak.

The home has 4/5 bedrooms, its a ranch, fenced big back yard, not the greatest neighborhood....but acceptable for the price range. All new windows and electric. Needs roof, flooring, all walls taped/mudded/sanded/painted (its all fresh sheetrock), siding, and a gravel driveway.

I cant wait!

 

[ESRBob]

Sounds like you've created the perfect set of challenges for yourself, with a nice profit waiting at the end, to boot. Good luck with it and let us know how you are progressing over the months ahead.

 

[thefed]

thanks! I will certainly keep you all updated, as I think this will help facilitate my ER in 23 years (im 22)

 

[tryan]

14% cash on cash return ((250x12)/21k) without figuring appreciation/sweat-equity. That's a good deal in todays market.

Good luck!

 

[thefed]

14% cash on cash return ((250x12)/21k) without figuring appreciation/sweat-equity. That's a good deal in todays market.

Good luck!

especially when you figure out that I'm only pulling 4k or so CASH from my pocket, and the rest is leverage.