Closing Tomorrow! - Posted by Rich

Posted by Justin on December 11, 1998 at 19:08:04:

The bar is just what I’m looking for! Where is it located? E-mail me, and give me some more details…Thanks, Justin

Closing Tomorrow! - Posted by Rich

Posted by Rich on December 10, 1998 at 21:05:26:

I’m closing on a rehab property tomorrow, and want to fix it up and sell it as quickly as possible. I’m thinking of offering part interest in the property to a contractor friend of mine for doing the rehab. And then divvying up the proceeds when sold. How do I go about structuring an arrangement like this, and how are capital gains applied? Thanks for any help. - Rich

Re: Closing Tomorrow! - Posted by Dan W.(NY)

Posted by Dan W.(NY) on December 11, 1998 at 09:50:49:

As owner of the property you are liable for any capital gains AFTER all expenses have been paid. So if you should choose to share the profit with a contractor, their share of the profit would be simple income to them. Your share would be liable for capital gains.

I agree with Sandy, why share the profit with a contractor? Their job is to do the renovation work. You are the one taking the big risks!!! Use a reasonably priced contractor with good references. I like going the time and materials route on my projects, and I pay for the materials with a credit card.

Also, as Sandy said, you should have all the numbers (and contractors) worked out BEFORE the closing!!!

Re: Closing Tomorrow! - Posted by Sandy FL

Posted by Sandy FL on December 11, 1998 at 07:05:38:

Hi Rich! Congratulations!

However, you should already have your rehab plan in place so you can ‘hit the ground running’ so to speak, as soon as you have the keys.

Did you finance the the purchase with hard money? Do you have any available credit cards to buy supplies with and pay the workers? Would you be willing to borrow from a wealthy person in town and offer to pay him or her 15% interest on their money when you sell the property? Personally I would not give up control of my deal to a contractor (even a friend), you stay in charge and pay the workers as you go … and are you living in the property? Are you planning on doing any of the work yourself… These are all questions which, when answered, can help us understand your situation better. Time marches quickly and you will soon be making payments on the property.

Please share your ‘numbers’ with us so we can all learn. Lots of people here like to talk about rehabs (right, Piper??).

Sandy FL

Re: Closing Tomorrow! - Posted by Rich

Posted by Rich on December 11, 1998 at 13:16:10:

I borrowed $10,000(the purchase price + some demolition) and am required by the city to make the visable improvements quickly (they had a court order ready for the previous owner to tear it down). My contractor thinks I could have it rehabbed for $40k - $50k. The homes in this area are in the $80 - $120 neighborhood. One home, 3 houses down the street, is on the market for over $200k. I’m hoping to get the bank to refinance the improvements, but they want me to show the ability to pay off the loan if I can’t sell it right away. I already have 3 other mortgages and own 4 other properties. My problem is varifiable income. I deal in antiques and collectibles, and always manage to come up with enough sales to pay my debts, but it can get a little tight sometimes. I’ve been trying to lease a bar/restaurant that I own (1 of my mortgages), but can’t seem to find anyone that wants to try their hand at it. So if anyone out there wants to move to a nice college town and run a neat old-time bar, here’s your opportunity.