My first flip...

Echo · Oct 3, 2005

Nice jorb dizzle :thumb:

jacksonpt · Oct 3, 2005

Good luck...

TreeSaw · Oct 3, 2005

Sweet! Good luck :thumb:

narlus · Oct 3, 2005

be careful w/ inverted manuevers

biggins · Oct 3, 2005

remember to spot the lander on your way around and never take your eyes off of it.

N8 v2.0 · Oct 3, 2005

Sounds fun! I watch a 'reality' show on TLC or Bravo (can't remember which now) about flipping. Seems to be a had way to make a few grand to me.

I like building homes from the ground up and make mucho dinero...

pixelninja · Oct 3, 2005

Good luck! The wife and I are planning on giving it a go next year.

I'd love to hear about the process as you go along, i.e. what worked, what didn't, what you'd do different next time, etc.

JRB · Oct 3, 2005

Echo said:
Nice jorb dizzle

Why are you talking like manziman???

douglas · Oct 3, 2005

pixelninja said:
Good luck! The wife and I are planning on giving it a go next year.

I'd love to hear about the process as you go along, i.e. what worked, what didn't, what you'd do different next time, etc.

yeah.......keep us updated !!

TreeSaw · Oct 3, 2005

douglas said:
yeah.......keep us updated !!

and lots of pics too...Crashby's handiwork is :thumb:

Heidi · Oct 3, 2005

Sweet - we're working towards the same thing so I'll be interested to see how it goes for you.

Where is the property located?

Tenchiro · Oct 3, 2005

Apparantly I need to move to NY... Talk about reasonable real-estate prices.

hooples3 · Oct 3, 2005

i am still in shock that you can buy a house for $67,000. That less than my downpayment

N8 v2.0 · Oct 3, 2005

Some questions:

Do you have to offer any kind of warranty to the people you sell it to?

Do you have to be licensed as a home renovator contractor by your state or do you have to have the work done by one?

Do you have to carry any kind of liability insurance? This is my biggest overhead cost annually... :dead:

But it's good to have if you get sued.

Konabumm · Oct 3, 2005

I'll give you 1 million dollars

Brian HCM#1 · Oct 3, 2005

$34,900 thats awesome, the concrete patio pour alone at my sister-in-laws backyard was $30,000.

narlus · Oct 3, 2005

Brian HCM#1 said:
$34,900 thats awesome, the concrete patio pour alone at my sister-in-laws backyard was $30,000.

in NY it's considered gauche to mix semi-precious stones into the cement.

N8 v2.0 · Oct 3, 2005

Brian HCM#1 said:
$34,900 thats awesome, the concrete patio pour alone at my sister-in-laws backyard was $30,000.

That's a lotta concrete at $80/yard....

Brian HCM#1 · Oct 3, 2005

N8 said:
That's a lotta concrete at $80/yard....

It was a sh*t load and some was poured @ 10" thick for the huge trellis it supports. Its colored & stamped.

Brian HCM#1 · Oct 3, 2005

Crashby said:
Ahhhh, all those questions I have been addressing over the past few months.

Warranty= no - not in upstate NY...

Licensed = no - as long as the work is done with proper permits and everything up to code, and ultimately passes any inspection done for the future buyer... all is well...

Now... insurance... - What makes my plan so appealing is that I can re-do the whole house for $6500. Many reading that would think I'm crazy, but that will be the cost. Now, that cannot be done with licensed, insured, bonded contractors as they cost anywhere from $30-60 per hour. I hired a team of "handymen" who will work for $12/hr (heavily referred to by my Realtor). That plan keeps my costs way down, and more profit for me.

As far as why I don't do new builds... this is my 1st project, and only had 50k to play with... besides, I'm looking at a 50% return on investment in about 2 months with only about 60 hours of my personal time at the property... not too shabby. I will move on to bigger things in due time.

@ $12 an hour watch it!!!!! Sometimes (most of the time) it's better to pay a licensed contractor to do the work properly. For one you have recourse if they F up, and trust me, when the house sells and the new buyer has a home inspection they more than likely find ALL sorts of flaws in their work in which you'll have to pay someone again to do the corrective work. Trust me, I've seen it all.

Brian HCM#1 · Oct 3, 2005

Crashby said:
I hear ya... my realtor has done 40-50 of these flips, and has used this guy for about 10 of them... they all sell w/in a week or two.

Certainly more risk here... but that's where large rewards may lie...

Just make sure they do EVERYTHING up to code, it will be a nice profit if everything works out as planed.

ghostrider · Oct 3, 2005

The federal gov-ment will appreciate their portion of your profits. Sounds like they need the money, too.

OGRipper · Oct 3, 2005

If you flip it into another investment property you can defer a lot of the taxes indefinitely, so the government doesn't get as much as you think. It's called a 1031 "like kind" exchange (Section 1031 of the IRS code). Also works for your residence. You have a period of 6 months (I think) between the sale of one and the purchase of another.

Brian HCM#1 · Oct 3, 2005

OGRipper said:
If you flip it into another investment property you can defer a lot of the taxes indefinitely, so the government doesn't get as much as you think. It's called a 1031 "like kind" exchange (Section 1031 of the IRS code). Also works for your residence. You have a period of 6 months (I think) between the sale of one and the purchase of another.

If you do a 1031 exchange I believe you have like 90 days to reinvest the $ without having to pay taxes.

Heidi · Oct 3, 2005

But, the IRS stongly frowns on you for not holding the property for at least a year in a 1031.

douglas · Oct 3, 2005

Requirement that property be identified and that exchange be completed not more than 180 days after transfer of exchanged property
For purposes of this subsection, any property received by the taxpayer shall be treated as property which is not like-kind property if
(A) such property is not identified as property to be received in the exchange on or before the day which is 45 days after the date on which the taxpayer transfers the property relinquished in the exchange, or
(B) such property is received after the earlier of
(i) the day which is 180 days after the date on which the taxpayer transfers the property relinquished in the exchange, or
(ii) the due date (determined with regard to extension) for the transferors return of the tax imposed by this chapter for the taxable year in which the transfer of the relinquished property occurs.

ghostrider · Oct 3, 2005

douglas said:
Requirement that property be identified and that exchange be completed not more than 180 days after transfer of exchanged property
For purposes of this subsection, any property received by the taxpayer shall be treated as property which is not like-kind property if
(A) such property is not identified as property to be received in the exchange on or before the day which is 45 days after the date on which the taxpayer transfers the property relinquished in the exchange, or
(B) such property is received after the earlier of
(i) the day which is 180 days after the date on which the taxpayer transfers the property relinquished in the exchange, or
(ii) the due date (determined with regard to extension) for the transferors return of the tax imposed by this chapter for the taxable year in which the transfer of the relinquished property occurs.

Well, that clears that up. The point being that the tax laws can take a good portion of the fun out of real estate transactions. I propose he buys a fixer 1979 Porsche 911 Turbo after he sells the house and tries to pass it off as a "like-kind" investment.

N8 v2.0 · Oct 3, 2005

Crashby said:
Yep... The 1031 can be a powerful ally...

I meet with a high powered tax accountant next week. There are lots of fun things you can do with your money... especially when you do everything through a corporation. I intend to incorporate by the end of the year.

I set up my biz as an S-Corp and as an LLC. Has advantage for me anyway.

OGRipper · Oct 3, 2005

douglas said:
Requirement that property be identified and that exchange be completed not more than 180 days after transfer of exchanged property

Thanks, I was pretty sure about 6 months but forgot about the indentification part.

And Heidi good point, I'm pretty sure the "frowning" you mean is that you are taxed at ordinary income rates rather than capital gain rates if you own it for less than a year. I am not sure if 1031 allows deferral of ordinary income or just capital gains but it's something to check out if it's a short-term investment.

On that note, I hope that nobody out there is going to rely on tax advice from a bunch of bike geeks! Talk to a pro....

N8 v2.0 · Oct 3, 2005

Crashby said:
Protection against personal liability is the really big thing for me.

Because yes, my $12/hr workers are not insured. Im OK on this 1st house because I have no "pattern" of doing this commercially. For all they know, this will be "ocassional work" for a "rental property", which is covered under my $500,000 liability clause under the home-owners policy. But, as soon as a pattern develops, no dice.

Yes as it should be. My liability insurance makes me hire only subs who are carry the same level of liability insurance that I do and workman's comp as well. It is no fun when a 'workman' or one of his flunkies, falls off a ladder on your job and files a claim against you.

:dead:

N8 v2.0 · Oct 3, 2005

Crashby said:
I think it might make sense to have 2 companies... one to hold zero assets except for the riskier flip house, and a second to hold larger, fully insured assets... and then transfer wealth back to me as needed from these two companies(via salary or a drawing account). What's your opinion on that strategy?

Sounds like a lot of accounting and paperwork to me but might work.

What I do, is keep only what I need to operate my company in the LLC. When my savings account builds up, I transfer the cash to my personal account as a dividend. Since I have an s-corp, I pay taxes on my biz through my personal income tax.

If sued, the most anyone could collect would be the assets in the company's name which are minimal.

bluebug32 · Oct 3, 2005

wow, I was expecting a pic. of a biker that crashed and landed face down in the dirt.

Real estate isn't good for as many laughs....

My first flip...

Monkey

crooked smile

Turbo Monkey

Mama Monkey

Eastcoast Softcore

Rump Junkie

Not the sharpest tool in the shed

Turbo Monkey

JRB

Guest

Chocolate Milk Doug

Mama Monkey

Der hund ist laut und braun

Attention K Mart Shoppers

Fuggetaboutit!

Not the sharpest tool in the shed

Konaboner

MMMMMMMMM MAGA!!!!!!!!!!

Eastcoast Softcore

Not the sharpest tool in the shed

Monkey

MMMMMMMMM MAGA!!!!!!!!!!

MMMMMMMMM MAGA!!!!!!!!!!

Monkey

MMMMMMMMM MAGA!!!!!!!!!!

7034 miles, still no custom title

back alley ripper

MMMMMMMMM MAGA!!!!!!!!!!

Der hund ist laut und braun

Chocolate Milk Doug

7034 miles, still no custom title

Monkey

Not the sharpest tool in the shed

back alley ripper

Monkey

Not the sharpest tool in the shed

Monkey

Not the sharpest tool in the shed

Monkey

Asshat

Monkey