My new house... finally

I feel kind of like Crystal now, having to write these horrible blogs about all the legal issues of buying a house, title issues, flood plain issues, property lines, etc. If you haven't read about my problems, check out my previous blogs. We made an offer on a house (not for invesment, personal, but still a rehab) in January, were supposed to close in February and ended up closing a couple of weeks ago. Short story is that there were flood plain issues, IRS leins, etc. This is the end of the story:

We planned to close on a Monday. As far as we knew all title issues had been worked out, all the documentation had been submitted for the loan, utilities were scheduled to be turned on, etc. On Friday we receive an e-mail. The title company would not close because they found out that there was still a person out there who had a right to purchase (Quit Claim Deed?) the property. Here is the story as we were told:

The house was going into foreclosure and an investor approached the bank and placed an amount down in order to get the right of redemption. Apparently, the owner (occupant) of the house still had the right of giving that to someone else, which they did. This superceded the first deal, so the bank attempted to contact the investor and tell him to come get his money back. He never got in touch with them. Now the title company found this on the title and had to get in touch with him to get the needed documentation from him. Luckily, they were able to get this taken care of on that Tuesday and the title was officially CLEAR!!! after months of issues.

Now I have had the joy of getting to spend the last 2 weeks scraping/sanding popcorn ceilings and coming home covered in a thick layer of dust each day. Finally, that is done and we can move on to the fun stuff. There is a picture in my pictures of the house with the new roof.
I have been so busy with this. I have gone over to the house almost every day straight from work and then working there till 9 or 10. I'm sure you all can relate. Hopefully I'll have some time soon to get a picture of me wearing my new RealEstateInvestor.com t-shirt posted on here soon.

The 5 Hottest and Coolest Real Estate Markets

by Brenda Spiering – RealEstate.com

Remember the old adage about the three most important things when it comes to real estate? “Location, location, location.” It seems it’s still true. While home sales in many parts of the country may be down from what they were a year ago, in some regions they’re still booming.

What are the hottest and coldest real estate markets in the country? According to the February 2007 National Association of REALTORS® home sales report, the percentage change in the median sales price of existing single-family homes between the fourth quarter of 2005 and the fourth quarter of 2006 was as follows:

Metro areas that increased in value the most in 2006
1. Atlantic City, New Jersey +25.9%
2. Salt Lake City, Utah +22.7%
3. Trenton-Ewing, New Jersey +18.9%
4. Beaumont-Port Arthur, Texas +15.1%
5. Salem, Oregon +14.9%

Metro areas that dropped in value the most in 2006
1. Sarasota-Bradenton-Venice, Florida –18%
2. Palm Bay-Melbourne-Titusville, Florida –17%
3. Cape Coral-Fort Myers, Florida –11.7%
4. Springfield, Illinois –10.4%
5. New Orleans-Metairie-Kenner, Louisiana –9.3%

But before you assume the average homeowner in Atlantic City has just made a small fortune and those in Sarasota have just lost their shirt, it’s important to understand a few things. First of all, the National Association of REALTORS® report based its stats on median home prices. While those numbers can be useful in tracking general real estate trends, they can be misleading when used to pinpoint specific peaks and valleys.

Take the two hot New Jersey areas, for example. Jeffrey Otteau, president of the Otteau Valuation Group, a real estate consulting firm in the region, points out that in both Atlantic City and Trenton, a significant number of new upscale townhouses were completed and sold last year. Assuming these units sold for considerably more than the more modest housing they replaced, they would have pushed up the overall median price of homes in the region, even if the price of many homes remained relatively flat.

It’s also fair to assume the sharp drop reported in certain regions of Florida may have been due to the reverse effect. If, during 2006, enough high-end properties with over-inflated values adjusted to more realistic levels, it would have caused the median price of homes in those areas to drop significantly even if, once again, the price of more modest homes remained far more stable.

So, while zeroing in on the hottest and coldest housing regions in the country may be interesting, it doesn’t necessarily give you a picture of the nation’s overall real estate market. The National Association of REALTORS® reports that the percentage change in the national median sales price of existing single-family homes between the fourth quarter of 2005 and the fourth quarter of 2006 was down 2.7 percent: from $225,300 to $219,300.

It’s also useful if you look at housing trends that have occurred over a longer period of time. Even in areas with recent price declines, most home sellers achieved healthy gains on the value of their home over the last five years. National Association of REALTORS® President Pat Vredevoogd Combs says “a broader view of home prices is necessary because housing is a long-term investment.” And while he isn’t predicting a big change in the immediate future, Coombs does expect to see “a gradual rise in sales and home prices that will be good for the overall housing market.”

Published on April 23, 2007

What Real Estate Investors Should Know About Security Deposits

I had questions about this, so thought others might be interested as well. It sounds like you have to find out what your state's regulations are, because there are no clear cut answer that apply to everyone. If anyone has any links to specific state's rules, please feel free to post them in the comments.

Thanks,
Matthew

Charging a security deposit to cover potential damages a tenant might inflict on a unit is part of rental income property ownership inherent to smart real estate investing.

There are rules, however, and not unlike other landlord-tenant issues, there are state limits and exemptions regarding deposits that real estate investors should be aware of.

Should You Charge a Security Deposit?

Real estate investors who do not charge a security virtually let in tenants who have nothing to lose by damaging the unit.

Yes, you should charge a security deposit—the bigger the better. You inherit less of a financial burden if the tenant leaves owing you rent or if you have to repair damage, and the tenant who has money at stake is more likely to respect the property.

How Much Deposit Can You Charge?

Many states limit the amount that can be charged for a security deposit.

Alaska, for example, exempts income property owners from security deposit laws when the rents are above $2,000. Hawaii and Massachusetts restrict the security deposit to no more than 1 month’s rent; Iowa and Virginia to no more than 2 month’s rent; Nevada to no more than 3 month’s rent.

Sometimes, the state limit is based on other factors such as the age of the tenant, whether the unit is furnished, what kind of rental agreement is being used, or whether a pet or water bed is being permitted.

The best advice is for real estate investors to learn what state limits are and to charge as much as the legal limit and the market will allow—though it is not uncommon for the market to dictate a security deposit below the legal limit set by state and local law.

The Importance of Remaining Consistent

If you charge different security deposit rates to different people you can be headed for trouble–a claim of discrimination could be held against you in a lawsuit.

Whatever deposit you charge, therefore, just be sure that your security deposit policies remain consistent with every tenant and avoid even the appearance of discrimination.

Can You Increase a Security Deposit?



Let’s say a long-time tenant obtains a pet—can you legally increase the security deposit? Yes, but it depends on the situation.

If you are using a fixed-term lease, you cannot raise the security deposit during the term of the lease unless the lease allows it. Otherwise, you must wait for the lease renewal date to increase the security deposit.

If you are using a written rental agreement in a month-to-month tenancy, the security deposit can be increased the same way that the rent is increased—by giving the tenant proper notice, which is typically 30 days.

If your rental properties are under rent control, raising the security deposit may have even more restrictions. In this case, real estate investors who own rental property under rent control are advised to understand the restrictions before raising deposits.

Must You Pay Interest on Security Deposits?

State laws vary regarding security deposit interest requirements.

Whereas some states impose no regulations, many states require that landlords accrue and pay interest on deposits.

Washington, for example, unless it is specified in the lease or rental agreement, permits the landlord to keep any interest accrued; Iowa lets the landlord keep the interest for only the first five years of tenancy. New Mexico requires payment of interest if the deposit exceeds 1 month’s rent; Minnesota requires the landlord to pay interest, period—accruing the month after the security deposit was paid.

Conclusion


Real estate investing consists of layers of nuances particular to real estate investment property important to successful investing—like security deposits.

Whereas a smart real estate investor will charge a tenant a security deposit before use and occupancy of a rental property to insure payment of rent on time and responsible care of the unit; the prudent investor will also understand state and local regulations where the income producing properties are located, and above all, abide by them.
Whether you are seasoned or beginning real estate investing for the first time, if you are unsure about these issues, do not hesitate to consult with legal and other real estate professionals for advice.

Gathering sound investing real estate information from reliable and knowledgeable sources is what a smart real estate investor does.

Kitchen Cabinets

We are working on completely pulling out a whole kitchen and replacing all cabinets, countertop, sink, appliances, etc. Once before, we bought unfinished cabinets from Home Depot and sanded and stained them ourselves (a lot of work). We're talking $40-100 per piece. I don't know how much that is per linear foot on average, but it's not cheap still.

This time we are doing a higher end kitchen and don't trust ourselves with the finish/installation, etc. At a local REI group here in Kansas City, there was a vendor there who sold building supplies to contractors. They had an annual membership fee ($100), but they were offering free signups that night. I signed up because they gave generous discounts off of retail price. For example, on flooring, they give you 30% off. Basically they want you to be able to go into their showroom with a client and tell your client that you can get them 15% off of the prices, while you pocket the other 15%. For me though, it's a full 30% discount.

Recently, we got a rough quote on cabinets and found out that the base price is approximately $106 per linear foot. Then we found out that this was retail and with 40% off, it would only be about $63 (Not bad!!!). After choosing a finish and door style, it boosted that to $75, but still easily doable.

Basically what I'm trying to say, is that it is worthwhile finding these places in our area. They can definitely pay off when purchasing materials, over using a big box store.


Question: Does anyone know what a standard rate would be for a contractor to come in and install cabinets? I have a feeling I won't want to pay what the store would charge, but I haven't gotten a quote on that yet. Anyone have experience with this?

Popcorn

We are about to close on a fairly large house (2,800 sq ft living space). The problem is, every celing is covered in popcorn. I guess that makes approximately 2,800 sq. ft. of popcorn, not including vaulted ceilings, skylights, etc.
I searched online and overwhelmingly found that the best (though messy) way of removing popcorn is to spray it with water using one of those pump garden sprayers and then scrape it onto a tarp. After that, you should be left with unfinished sheetrock again that you can patch, sand and paint. A lot of work!

I recently heard a friend say that they were able to just take one of those joint compound sanding tools with the mesh, and basically only knock off the popcorn, but leave a foundation of textured mud still on the ceiling. Then all they had to do was paint over this to create a finished, textured look. If this works, I will go with this.
I'd appreciate anyone elses experiences with this type of work.

Also, I've read that the compound used prior to 1978 could have Asbestos in it. Our house was built in 1984, but I've still been given warnings. I was told that inventory that existed in 1978 when the ban was implemented was not required to be destroyed, so that it is not uncommon for houses built in the 80's, to still have popcorn with asbestos. Also, I called a testing lab (only $20 to test), and they told me that you can still buy materials today that contain it. Really? I guess it's better safe than sorry. I'll at least know whether or not I should wear a respirator.

Mixed Messages For Real Estate Buyers

APR 17, 2007
Realty Times

"It's a great time to buy," says the National Association of Realtors.

Alternatively, says NAR, existing home prices in February 2007 were down 1.3 percent when compared with a year earlier.

Unlike stock, there's no such thing as real estate short-selling, making a sale profit when prices decline. So can this really be a great time to buy if home values are falling?

The New York Times looked at this issue and concluded that "it's now clear that people who chose renting over buying in the last two years made the right move. In much of the country, including large parts of the Northeast, California, Florida and the Southwest, recent home buyers have faced higher monthly costs than renters and have lost money on their investment in the meantime. It's almost as if they have thrown money away, an insult once reserved for renters." (See: A Word of Advice During a Housing Slump: Rent, April 11, 2007)

Increased real estate ownership is a national goal which has produced helpful and useful national policies. For instance, we encourage homeownership by tilting the tax system to favor owners. As a property owner you can write off property taxes, you can deduct mortgage interest in most cases and when you sell you can shelter profits of up to $500,000 if married and $250,000 if single from federal taxes.

We do these things because we believe that ownership gives people a greater stake in local communities and because owning a home affords individuals a certain ego, status and financial standing. We also encourage ownership for a very simple reason: Money. In additional to all the good qualities associated with ownership, each real estate transaction generates substantial transfer taxes, brokerage commissions, loan fees, insurance charges and legal fees.

As to renting, not so much. There are no transfer taxes to be paid when someone leases, no closings, no new mortgages, few if any legal fees and only small real estate commissions.

And yet as a society we need renters and we recognize that not everyone benefits from homeownership. We need renters because without 'em investment real estate would make little sense. Also, not everyone should buy, especially individuals who will be short-term residents in a given community; those with small, declining or uncertain incomes and, often, individuals who live in areas where both jobs and people are leaving.

Real estate ownership is not a good short-term option because of the costs to acquire and sell property, but it routinely makes sense for those who expect to hold for a lengthy period, say eight to ten years. Indeed, the Times recognizes this and says "most striking, perhaps, is the fact that prices may not yet have fallen far enough for buying to look better than renting today, except for people who plan to stay in a home for many years."

NAR says it's a great time to buy or sell because interest rates are near historic lows, "prices overall have stabilized," there's a positive outlook according to Alan Greenspan and during the past decade real estate has been a great investment.

"The national median price of homes bought ten years ago has increased 88 percent. The number of US households is expected to increase 15 percent during the next decade, creating a continued high demand for housing," says NAR.

The points made by NAR are all true -- and each deserves to be examined with some care.


Interest rates are near historic lows and that means borrowers should grab fixed-rate loans rather than elastic ARMs, a form of financing where rates can rise and the advantage of low monthly costs can be lost.

To say that prices have "stabilized" is a good example of creative wordsmithing. This is a cute expression, but irrelevant. The important issue to check real estate trends with local brokers because some communities are seeing price increases, some are seeing declines and what happens nationwide may not reflect local market activity.

Alan Greenspan, the former chairman of the Federal Reserve, is quoted by NAR as saying that "most of the negatives in housing are probably behind us. The fourth quarter should be reasonably good, certainly better than the third quarter." The thoughts of the Chairman Greenspan are no doubt interesting, but quarterly results are for Wall Street and not homeowners. The real question is where local values are headed in five or ten years, something unknown.

Price increases during the past decade have plainly benefited most owners in most communities. However, as they say on Wall Street, past performance does not guarantee future results. What happened before does not tell us what will happen tomorrow. One way of another, we just do not know.
The view here, for whatever it's worth, is a little different: People ought to buy real estate because it's an investment that provides shelter, tax breaks, amortizing loans, the potential for appreciation and encourages the joy of individualism, having something of your own to shape and develop as you wish -- an option unavailable to tenants.

MC Homes LLC

It's official. I am half-owner of a company... a real life company.
I just went online to the Kansas Secretary of State website and for $160, it took me about 5 minutes to set up an LLC. Then I called the IRS and 5 minutes later had an Employer Identification Number (EIN). I copied a sample "Operating Agreement
and made a few modifications. Now it's on to getting a business bank account set up and buying our first house. We already registered to bid at our county's tax sale coming up at the end of this month. We might be able to come out of there with something under 10K. Keeping my fingers crossed!

Matthew

A Surge in Foreclosure Filings

Just thought that this was interesting and good news for many of us...

A Surge in Foreclosure Filings
http://www.nytimes.com/2007/03/18/realestate/18WCZO.html

AFTER 20 years as a lawyer, David Volman has handled enough divorces to know that many marriages collapse under financial strain. So when his practice, in Shelton, began receiving an unusually large number of divorce cases last summer, Mr. Volman took it as an omen. “Divorces go hand in hand with foreclosures and bankruptcies,” he said.

Real Estate Community

I ran across a site today that I saw in a news article. It's another community site, similar to this, but narrows each user down to state, county, and city and then you can find information and network with those in those specific areas (note to this site's admins, once there are more users). That could be a great enhancement to this site in the future. I think it is geared more towards what would be called real estate "professionals", but should have some useful information for investors as well.

http://activerain.com/action/referrals/kcrealestate
(FYI - I will not get anything besides points on the website if you sign up through this link)

It never seems to stop...

So, if any of you have read my previous blogs, you may remember that after making an offer on a house (for my family to live in), that was being sold as-is, we found out it was in the FEMA flood plain. Well, we eventually got that figured out (refer to previous blog).

Well, three days before the closing, I was looking online for investment properties. I went to the IRS treasury department site for house auctions. I clicked on my state, and my city and there was one property. As I started to scroll down the page, I sarcastically thought "wow, that's interesting..." as I saw the address of the house that I was supposed to be buying. Bid commitments were required by March 17th, but an auction date had not yet been set. Needless to say, I was a bit concerned by this bit of news.

I contacted my realtor, who contacted the seller, who contacted whoever they bought it from, etc. Apparently it had been wholesaled before the seller bought it. The seller thinks that the IRS is wrong and that they don't have redemption rights. Of course the IRS thinks it's theirs. So, as of now, the results are as following:

• Lawyers are having friendly discussions
• We extended our closing 30 days, in hopes that the issue will be resolved.

The IRS is trying to get $20,000 more than we are paying for a minimum bid. Good luck!

Thank God that I came accross this site, somewhat by random.

Apartments as investments

I have been hearing a lot from the Gurus about buying rental properties as one of the best ways to gain long-term wealth. I am very interested, but was wondering a few things. I found one apartment building listed with 18 units. It states that 2 are 1 bedroom and the other 16 are EFF. What is EFF? I found one place online that said it was an EFFiciency unit, but what does that mean? Is it like a studio?

Has anyone purchased both apartments and houses for rent? What are pros/cons of one over the other.
And finally, does anyone have a document that they would like to share that they use to calculate cash flow? I just want to make sure that if I go this route, I'm not forgetting any expenses. i.e.

Gross Monthly Rent: $2,000
Tax: $100
Mortgage: $700.
Etc..
Net Cash Flow: ?????

Thanks

An investment opportunity I have never seen

Hello,
No matter how much this post sounds like an advertisement, believe me it is not. Also know that I will not get anything in return if you visit this site, or choose to do business with the person.

I have a relative who is a very successful real estate investor. His name is Al Lee and I believe that he only invests in rental properties. Recently, I contacted him to get some advice and discuss my plans. One of his websites has an opportunity for investors that I am curious about. Someday I may ask him more details, but I don't want to try to ask too much at once.

Basically, he builds new housing developments, then sells you a house for $119,000 with 20% down. He then turns around and leases it out for you and handles all of the management duties (so you could even be out of state). You receive a rent payment, that is higher than your mortgage payment and you will own the house.
I am wondering if you think it is a good deal and also where do you think he is making his money the most? I believe he is renting to section 8 tenants, so I guess maybe he is getting more from the government, and then paying you less, so that both you and he are having positive cash flows.

The website is: http://buyrenthouse.net/GarReturn.htm

Check it out and please let me know what you think about it. Feel free to help out my family. Who knows, maybe if I do send some business his way, he'll give me a cut!

Tax Sale Auctions - Info and Advice?

I recently discovered that my county (and probably every county) holds tax sales to auction off houses which have back taxes owed on them. The list of properties shows the address, and the delinquent years and the amount of back taxes owed. From what I understand, the county auctions these houses with a starting bid of the amount of taxes owed (generally $2,000 - $5,000).

The part that I'm not sure about, is what happens to any liens that are on that property? If the person who owned the house had an unpaid mortgage, will that become your responsibility? Does the county take care of the loan with the mortgage company before auctioning, or is the mortgage company just screwed?

It seems like an awesome opportunity, if I understand it properly. In my case, they will be auctioning off over 300 properties on one day with starting bids at the amount of tax due. If anyone else has ever purchased at one of these sales, please let me know.

Thanks

Reason above Reality

I am finishing up reading "Rich Dad, Poor Dad". Near the end, Robert Kiyosaki states that you need to have a Reason to do what you're doing above the reality of what the world gives you. In essence, your reason for doing what you do will need to be strong enough to get you through the times when reality sets in. He is really talking about our "Why". Why are we doing real estate. He says to make a list of the things that you don't want in your life, and that will help generate al ist of wants in your life. Here is what I quickly jotted down.
Don't Wants

• To neglect my wife
• To miss my children's lives
• To become anti-social, absorbed in work, etc.
• To work for the rest of my life
• To live for each paycheck
• To go to work when I'm told to
• To do what I'm told to do
• To set a bad example for my children
• To have a mid-life crisis because I didn't do anything of worth

Wants

• To spend as much time as I can with family and friends
• To have the means and opportunities to give gifts and opportunities to family and friends
• To choose my daily activities
• To set myself up so that in a few years, "work" will not be necessary
• To never have to wonder if I can pay the bills
• To never have to wonder if my parents can afford their retirement
• To leave my children a great example and a secure financial future
• To have freedom to travel at will
• To have the ability and means to help meet the needs of suffering around the world

Make your first flip your own

This is strictly my opinion, but I think it makes sense. When deciding to start rehabbing homes, I suggest that you make the first one a home for yourself. This can be a great learning experience.
My Reasons:

• No rush
• No need to worry about carrying cost
• No risk of losing money
• After fixing it up, you can get an appraisal to see how you did. If you did well enough, maybe it's time to move

You can live there a few years, build some appreciation, avoid taxes and move up to a bigger and better house
It may not be for everyone, but it worked out for me. We bought a small 2 bedroom house for $57,000 4 years ago. It's not in the most desirable part of Kansas City, but it's still a nice neighborhood. We spent several months remodeling most of the house, but kept the expenses very reasonable. We recently got an appraisal at $108,000. We're moving up to a house in the 200K range that needs just as much if not more work. I estimate it to be worth around $250,000 in a couple of years after our rehab. Since we will already have about $50,000 in equity from our first house sale, plus our new house will be up $50,000, we can move up again if we choose to.
Of course there are always cons as well:

• No rush. Without the pressure, it will probably take 4 times as long to accomplish what you want.
• Just like with any rehab project, there could be unexpected repairs.
• Inconvenience of living in a house that you are working on
• You may fall in love with it an not want to let it go (but that's not a bad thing).
  
  

The dreaded flood plain

Here's a little story of a recent event in my life. This isn't directly related to real estate investement in this case, but easily could be related to any house purchase.
My wife and I recently purchased a home for ourselves to live in that was being sold as-is with no disclosures. We knew the place was in pretty rough shape, but the price was around 20% below the market value once we fix it up. Here are the things we knew about or discovered in the inspection.

• Needed new paint and general cosmetic work
• Needed squeaky floors repaired, new flooring, etc.
• Updating in kitchen, baths.
• Needed a shake shingle roof removed and replaced.
• Signs of termite damage.

These were planned expenses. It was not until after we negotiated with the seller to pay for termite treatment and most of our closing costs, that we received an appraisal that the lender had ordered. The lender told us that the house was located in what FEMA calls a SFHA (Special Flood Hazard Area) and that they could not give us the loan unless we obtained flood insurance. I contacted my insurance agent and was told that flood insurance was generally about the same price as the homeowners policy (in our case probably 700-900 a year). Also we would have to have an engineer measure our elevation for the insurance company (who knows how much that would cost). We were already near the top of our budget and did not expect the extra expense here on a monthly basis. We were trying to decide whether or not to try to get out of the contract, when I decided to spend a day on the phone researching this.

I discovered that the only way to get out of having the insurance was if you could prove that the FEMA maps are wrong and that your house is not in the flood plain. The only way to do that is to hire a professional who can survey your land and submit a LOMA (Letter of Map Amendment) and then FEMA will no longer require you to have insurance. The odds are that your house really should be in the flood plain though and you'll just be out the money for the survey.

I started calling around, trying to get information on my houses elevation and eventually ended up talking to an engineer at the city where my house is. I was informed, that actually the city had done their own study recently and determined that many houses listed by FEMA in the SFHA should not have been. They said that they were submitting these to FEMA and a new map would likely be released within the next year. This left me with the expectation that at worst, I should only need flood insurance for the first year. Still I hadn't expected the extra wasted $700-900.

They actually gave me the phone number of the engineers who did the study and I gave them a call. They let me know that for $250 they would submit their findings to FEMA for me so that I could get an exception for my house right now and avoid insurance all together. Better still, my realtor (and investment partner) is going to get the seller to pay that fee as well. I am now very relieved, but thought I'd share this experience for others who might not have ever thought about these issues.

FYI - Here is the link to the FEMA site where you can check if a house is in a SFHA: http://www.floodsmart.gov/floodsmart/pages/riskassesment/findpropertyform.jsp

Taking it all in...

Originally Posted: Date: 02 08 2007, 12:42 pm

As I've mentioned before, I'm trying to learn all that I can about the business of rehabbing, but I'm still full of questions. If anyone can offer stories, advice, etc., I'll be happy to share my stories when we get started this summer. We should be meeting with a CPA later this month and hopefully they can answer a lot of our questions, but if they don't specialize in real estate, then who knows.

I understand that you can run an LLC as a partnership, where the company itself is not taxed, but the partners are taxed (as self employment) on what they withdraw. I've always been told (at least in Kansas) that if you sell a house that you haven't lived in for at least 2 years, then you will be taxed on that. Is that only for an individual, or would that apply to the LLC as well?

What financial programs do you use? I generally see QuickBooks listed as the only full-featured program to use, but which version works best for you? I was wondering if the contractor version would be good since it includes job costing.

As always, I appreciate any responses that I get.
Thanks

Just getting started

Originally Posted: Date: 01 16 2007, 10:18 am

A friend and I have been dreaming about getting into the rehab business for months. We're also not rushing into it, and will not be starting for a few more months to make sure that we have everything under control. My friend is a real estate agent which should really help us out. We are located in the Kansas City area.
We're looking into all of the details right now including:

• Setting up a legal entity (LLC)
• Accounting necessities
• Tax implications
• Financing
• Supply costs
• etc.

I'm sure you've all been there. For the most part, I've found that there is no one jumping at the chance to help out with those questions. I almost feel that we're going to have to break down and hire an accountant and lawyer. I'm not sure if people are trying to protect the secrets or if the people we ask, just don't know the answers.
First of all, I would welcome any comments/suggestions that the users here would be willing to give. Specifically I am finding that financing is not as easy to come by as I would hope. What is the best resource for financing for rehab? In the near future, we should not need financing as we hope to have cash on hand by the end of this year, but for now it is a problem. Many places that I have seen that offer loans, specifically exclude real estate investment. Others that include RE investing, have outrageous rates. Can my partner and I get a traditional mortgage under the business name? Any help would be appreciated.