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post #1 of 25 (permalink) Old 06-10-2005, 12:15 PM Thread Starter
 
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Property Investing

Has anyone done property investments for flipping or possibly even rentals?

this could include foreclosures but any info from people that are actually involved in this would be great. i am very skeptical about this so i would prefer to hear first hand accounts from people that i know.
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post #2 of 25 (permalink) Old 06-10-2005, 12:23 PM
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I bought a house in September of last year at the foreclosure auction. It was a good deal, however, you are always in for a surprise. You must be willing to remodel the house completely before the bidding and then if you dont have to its your bonus. I had to completely remodel, and I mean 100% minus roof and siding. It is always better to pay someone to do the work and be done in month or two then do it yourself and be stuck with it for a almost a year. The good thing is you can always make money on it, either by selling or renting. Goverment auctions are cheaper then bank owned propeties.

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post #3 of 25 (permalink) Old 06-10-2005, 12:25 PM Thread Starter
 
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Quote:
Originally Posted by RSVMillenian
I bought a house in September of last year at the foreclosure auction. It was a good deal, however, you are always in for a surprise. You must be willing to remodel the house completely before the bidding and then if you dont have to its your bonus. I had to completely remodel, and I mean 100% minus roof and siding. It is always better to pay someone to do the work and be done in month or two then do it yourself and be stuck with it for a almost a year. The good thing is you can always make money on it, either by selling or renting. Goverment auctions are cheaper then bank owned propeties.

Enjoy
wait, so you bought a foreclosed property for the purpose of fixing and selling or to fix and move in?
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post #4 of 25 (permalink) Old 06-10-2005, 12:37 PM
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Fixing and selling.

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post #5 of 25 (permalink) Old 06-10-2005, 12:47 PM
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I dont know the ins and outs, but my buddy has been doing this for a few years, and he said the only way to make money doing it is to live in it for some sort of minimum of time, something about the capital gains taxes on the sale........???

"When in doubt, use full throttle. It may not improve your situation, but it will end the suspense."
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post #6 of 25 (permalink) Old 06-10-2005, 12:48 PM Thread Starter
 
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Originally Posted by Mladinrep
I dont know the ins and outs, but my buddy has been doing this for a few years, and he said the only way to make money doing it is to live in it for some sort of minimum of time, something about the capital gains taxes on the sale........???
i could be wrong on this but i think capital gains goes away after 2 years. that isnt doable for investing purposes. at least the kind i am thinking about.
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post #7 of 25 (permalink) Old 06-10-2005, 12:59 PM
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Quote:
Originally Posted by Hawkeye
i could be wrong on this but i think capital gains goes away after 2 years. that isnt doable for investing purposes. at least the kind i am thinking about.
Maybe thats it, but he always has two going, one that he lives in and one that his wife lives in (not really)...........he turns any where from 30,000 to 60,000 a year on the house sales, and has a full time job too......and now that you mention it, he does move every 2 years............he only sub-contracts work that he cant do himself, and basically guts them..................pretty cool if youve got the time.

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post #8 of 25 (permalink) Old 06-10-2005, 01:01 PM
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its true about capitol gains, but you can avoid that if you role the all the equity into the next home. once you get to a point where you have a serious amount after numerous roles then keep that one for 2 years and rent it out, that way you are making a profit for the 2 years and then you can sell it and avoid the capitol gains.




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post #9 of 25 (permalink) Old 06-10-2005, 01:12 PM
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Your best bet is to invest in new construction. A home appreciates the MOST in the first five years of being built. This is what I do for a living, pm me and I can fill you in on some details.......we have some great investment opportunities going on right now, I have seen many investors purchase new property and rent them out (for what there monthly mortgage is).......
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post #10 of 25 (permalink) Old 06-10-2005, 01:12 PM
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+1 on what Tony said. If you are employed and can only work on weekends then it is better to subcontract someone and make sure that you have all permits and that your contractors are insured for workmans comp. Some work you can do yourself, like painting, windows replacemet, tiles and such, however, my recomendation is to subcontract a plumber, electrician, HVAC, drywall and patching and whatever will take more then few days for you to finish on your own. Also tax deduction is another benefit of subcontracting. It is always better to make $30K in 2 months then $60K in 4 months. I know people that do this for living and are doing most of the work and make $40K-$70K per investment every few months. Also if their is any asbestos (most likely in older homes) you will have to have that removed ($2500-$10K depends on the amount and location of asbestos).

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post #11 of 25 (permalink) Old 06-10-2005, 01:23 PM
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Quote:
Originally Posted by HDTony
its true about capitol gains, but you can avoid that if you role the all the equity into the next home. once you get to a point where you have a serious amount after numerous roles then keep that one for 2 years and rent it out, that way you are making a profit for the 2 years and then you can sell it and avoid the capitol gains.
That's not exactly how it works. You would have to make the rental property your primary residence for 2 years before you can sell it to get rid of the capital gains. If you rent the property for two years and sell it, you'll be socked with capital gains.

If you want to read something on Capital gains read this> http://www.fool.com/taxes/2000/taxes000428.htm

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post #12 of 25 (permalink) Old 06-10-2005, 01:28 PM Thread Starter
 
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this would definitely be more of a part time thing since i work full time and dont plan on moving away from that. i would like to start setting this up so that it could shift more to a full time gig for the wife once we get up to speed on everything and get some success at it.

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post #13 of 25 (permalink) Old 06-10-2005, 01:30 PM
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Quote:
Originally Posted by HDTony
its true about capitol gains, but you can avoid that if you role the all the equity into the next home. once you get to a point where you have a serious amount after numerous roles then keep that one for 2 years and rent it out, that way you are making a profit for the 2 years and then you can sell it and avoid the capitol gains.

no you cannot avoid capital gains because they are not your primary residence You will also pay taxes on rental gains and you will pay a higher rate of interest on your loan. You will also almost always need 20% cash down on the property to obtain the loan.

My advice is to read, read, read, if you want to get into this as well as consult a tax attorney

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post #14 of 25 (permalink) Old 06-10-2005, 01:35 PM
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Quote:
Originally Posted by norton
Your best bet is to invest in new construction. A home appreciates the MOST in the first five years of being built. This is what I do for a living, pm me and I can fill you in on some details.......we have some great investment opportunities going on right now, I have seen many investors purchase new property and rent them out (for what there monthly mortgage is).......


This has interested me recently. Especially since you could theoretically put money on a place and sell your rights to the contract before you take delivery. Plus you could do it all under the understanding of primary residence. Builders seem to smell this from a mile away though and do'nt like it when it goes bad and they get stuck with a home for sale

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post #15 of 25 (permalink) Old 06-10-2005, 01:37 PM
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Thats right I forgot about the primary property deal. But correct me if I'm wrong the only time you report if this is your primary residence is when you do your mortgage closing. So if things changed after that no one whould know.




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post #16 of 25 (permalink) Old 06-10-2005, 01:41 PM
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Quote:
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Thats right I forgot about the primary property deal. But correct me if I'm wrong the only time you report if this is your primary residence is when you do your mortgage closing. So if things changed after that no one whould know.
Tony,

If they prove you lied on a mortgage app it ain't no joke bro

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post #17 of 25 (permalink) Old 06-10-2005, 01:57 PM
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Quote:
Originally Posted by Crazy
Tony,

If they prove you lied on a mortgage app it ain't no joke bro
I know that. I'm not saying lieing, I'm saying it is your primary residense, but then later things change and you decide to rent it, You dont actually have to report that to anyone. Correct?




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post #18 of 25 (permalink) Old 06-10-2005, 02:07 PM
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Quote:
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I know that. I'm not saying lieing, I'm saying it is your primary residense, but then later things change and you decide to rent it, You dont actually have to report that to anyone. Correct?
I'm saying you can get away with it, but if you plan on doing this more than once, like Hawk is, you're better off being up front instead of waiting for someone to catch on

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post #19 of 25 (permalink) Old 06-10-2005, 03:18 PM
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Quote:
Originally Posted by Crazy
I'm saying you can get away with it, but if you plan on doing this more than once, like Hawk is, you're better off being up front instead of waiting for someone to catch on
People do this all the time. They usually say they are "downsizing" or getting a "divorce" etc etc.......but come closing they say they are gonna "move in" but never do and end up renting the property out.......Remember investment properties are gonna cost ya a bit more in interest rates/points etc.........
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post #20 of 25 (permalink) Old 06-10-2005, 03:24 PM
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Quote:
Originally Posted by norton
People do this all the time. They usually say they are "downsizing" or getting a "divorce" etc etc.......but come closing they say they are gonna "move in" but never do and end up renting the property out.......Remember investment properties are gonna cost ya a bit more in interest rates/points etc.........

hmmmmm....I guess that makes it ok then

this what I said before:
Quote:
I'm saying you can get away with it, but if you plan on doing this more than once, like Hawk is, you're better off being up front instead of waiting for someone to catch on

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post #21 of 25 (permalink) Old 06-10-2005, 03:38 PM
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hmmmmm....I guess that makes it ok then

this what I said before:

I missed that, don't plan on doing it twice....Mortgage companies will catch on and catch on fast they will..........................
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post #22 of 25 (permalink) Old 06-10-2005, 03:41 PM
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Have you already taken possession of this property?

If you are just starting out, you don't have to be the one that buys and closes on the property. If you have done your homework and their is a good amount of profit potential, you can "assign" (sell the contract) the deal to a willing investor and collect an assignment commission (finder's fee). It's known as assigning or wholesaling.

I'm not big fan of foreclosures because it is a part of the public record and everyone and their mother may attempt to bid on the property.

Instead, you may want to look into orchestrating deals in which you create a database of bird-dogs (people who help you find REI opportunities and willing sellers) and inventors.

If you are really interested in this sort of stuff, I suggest you pick up a RE book by Allen Watkins:

http://www.amazon.com/exec/obidos/tg...books&n=507846

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post #23 of 25 (permalink) Old 06-10-2005, 03:46 PM Thread Starter
 
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Have you already taken possession of this property?

If you are just starting out, you don't have to be the one that buys and closes on the property. If you have done your homework and their is a good amount of profit potential, you can "assign" (sell the contract) the deal to a willing investor and collect an assignment commission (finder's fee). It's known as assigning or wholesaling.

I'm not big fan of foreclosures because it is a part of the public record and everyone and their mother may attempt to bid on the property.

Instead, you may want to look into orchestrating deals in which you create a database of bird-dogs (people who help you find REI opportunities and willing sellers) and inventors.

If you are really interested in this sort of stuff, I suggest you pick up a RE book by Allen Watkins:

http://www.amazon.com/exec/obidos/tg...books&n=507846

Good Luck,
now this is what info i am looking for. i am not clear on what you are talking about for assigning and wholesaling. i am checked out for the weekend mentally but i would like to hear how a situation like that plays out. i will have to check out that book also.
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post #24 of 25 (permalink) Old 06-10-2005, 11:02 PM
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Talk to Riley at the next SRR race. He is the biggest slum lord I know. He has a bunch of experience in rental property.
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post #25 of 25 (permalink) Old 06-11-2005, 02:38 PM
 
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Does anyone have any information on these government foreclosure auctions? How do you finance such a thing? These things are somewhat hit or miss - do you have to get a financing company to back you for each and every property you may bid on? Doing the internet search doesn't seem to help much. I'm currently looking for a house that I could renovate while living in it.
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