Mel feller looks at rehab and sell or keep and rehab questions
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Mel Feller Looks at Rehab and Sell or Keep and Rehab Questions Of course, the first questions that you must answer is how emergent is your need for quick cash? You can likely generate the most SHORT TERM cash by selling a freshly rehabbed house. However, you will give much of it away in taxes come next April. If you keep it, you stand to make more! You will also enjoy some great benefits while you own it such as cash flow, a tax break, and MORE cash with the future appreciation. You can still pull some nice cash a few months after buying it when you refinance (post rehab) the property from your hard money (at 70% loan to value) to long term financing (at 85% or 90% loan to value).
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Mel feller looks at rehab and sell or keep and rehab questions
- 1. Mel FellerLooks at Rehab and Sell or Keepand Rehab Questions Of course,the firstquestionsthatyoumustanswerishow emergentisyourneedforquickcash?You can likelygeneratethe mostSHORTTERM cash by sellingafreshlyrehabbedhouse.However, youwill give muchof itaway intaxescome nextApril. If you keepit,youstandto make more!You will alsoenjoysome greatbenefitswhileyouownitsuchas cash flow,atax break,and MORE cash withthe future appreciation.Youcanstill pull some nice casha fewmonthsafterbuyingitwhenyourefinance (postrehab) the propertyfromyourhardmoney(at70% loanto value) tolongtermfinancing(at85% or 90% loan tovalue). The short answerisan investorisgoingtomake considerablymore moneybyhangingontoaproperty afteritsrehabbed.There isa downside toit.Youhave to be a propertyowner,andyouhave to decide if youwant to do that.I do not thinkitistoo bad as longthe landlordingisdone correctly. Letme illustrate the differenceinoverall moneybetweenrehabandsell,andrehabandrentinvesting withthisexample; Let ussay appreciationratesare 5% in yourtownand the average price of a freshlyrehabbedproperty inthe neighborhoodsinvestorsbuyinis$100,000. Letus alsosay there isBill andFred. Bill sellshispropertiesafterrehabbingandmakes$15-18,000 perhouse.Goodboy Bill! Fredkeepshisrehabprojectsandcash-outrefinances,pullingoutaround$10,000 perhouse within3-6 monthsof ownership.(Fred tradeshis70% loan-to-value (LTV) ratiohardmoneyforlongterm, 30-year mortgagesat a lowerinterestrate withan85-90% loanto value ratio.He pocketsthe difference betweenwhatitcoststo payoff the hard moneyandthe new mortgage lessclosingcosts.Thisworks out to about$10,000 perproperty.) Bill (rehabandsell) makesagreatliving.Tenhousesperyearis$150,000-$180,000 peryear...nice jingle! The downside isthatBill hasto keeprehabbingtokeepmakingthatlivingyear-after-yearandpaystaxes on all that moneyasregularincome (ouch!).Sohis$150,000 peryearis inrealitysomewhatless.
- 2. Fred(the rehabber) alsomakesagreat living.Tenhousesperyearmakeshim$100,000 or soin tax free, spendable cash.However,Fredcontrols amilliondollarsinreal estate anditisgoingup invalue year afteryear.In addition,Fredpaysnotaxesonthat moneyhe getsfrom the cash-outrefinances.Itspart of a mortgage,somust be paidback, therefore isnotincome!Ilove thatpart! Letus lookat what Fredisdoingmore closely. Let ussay Fredbought10 housesvaluedat$100,000 each,owes$90,000 oneach one (afterthe 90% cash out refinance),sohe controls$1,000,000 in property.If he keepsthem5 years(assumingalow appreciationrate,whichisprettyconservative): Purchase year- 10 housesx $100,000 = $1,000,000 Year 1 - Same 10 housesX$105,000 = $1,050,000 Year 2 - Same 10 housesX$110,250 = $1,102,500 Year 3 - Same 10 housesX$115,762 = $1,157,620 Year 4 - Same 10 housesX$121,550 = $1,215,500 Year 5 - Same 10 housesX$127,627 = $1,276,270 Essentially,Fredmakesanextra$50,000 peryear forkeeping10 properties.Afterowningthem5years, if he sells,he puts$276,000 inhispocket. Remember Some parts of the countrywill appreciate muchfasterthan5%.Heck some placespropertieswill double invalue in5 years. - Notax benefitsof keepingthe propertyisincludedhere.Thatequatestothousands of dollarsinreal income. - ThisisONE ten-house year.Letussayyouwant to "topout" at owning30 houses.Well,injustacouple of years,yourbuyingwill slow downtoatrickle andyou will startselling and cashingoutof properties.Imean,how manyten-houseyearstoyouneedtostringtogetherbefore youare setfor life?Whatif youholdthese houses10 years?The numbersgetexciting. If you are like me andyoudo not wantto do thisfor toomany years,thenholdingpropertiesforafew yearsmakesa lot of sense,especiallyif youdonothave much personal moneyinvestedinthem. ABOUT MEL FELLER Mel Feller’sdynamicpresence,instinctive strategicvision,andcreative thinkingproduce effective, sustainable bottom-lineresultsforhisclients.His“CanDo” attitude generatesconfidence inhis
- 3. executivecoachingclientsandstrategicconsultingcorporate clients.ThroughoutMel Feller’scareer,he has increasedthe profitabilityof nearlyeveryorganizationwithwhichhe hasworked. Mel Fellerhasaunique abilitytorelate tohisclientsbecausehe came fromThe UnitedStatesSenate, where Mel wasthe Chief of Staff fora UnitedStatesSenatorandwas alwaysmeetingwithprominent businesspeople orpoliticians. Hismainlove wasdealingwithconstituentsthatwere the grassroot voters! Since foundingCoachingForSuccess360 In 1989, he has effectivelytranslatedthatexperience intoresultsforhisclients.He focusesonseparatingdailydistractionsfromthe real issuesinordertoput the executive and/orbusinessonthe rightpathto grow and prosper.Resultsare immediate,growth sustainable,andprofitabilitylong-term. Dozensof Mel Feller’sclientshave beenonInc.’s500/5000 listandmany have beennamedasa “Best PlacesTo Work. UsingMel Feller’sintuitive,systematicapproach,andourprovenstrategicandtactical tools,we help youplan forprofit. Mel Fellerbelievesthatwhatgetsmeasuredisimproved.Therefore,he iscontinuallydeveloping processesandsystemsthatallowyoutoeasilymeasure,manage andmaintain ahighlyprofitable business. Mel Felleris readytohelpyouincrease yoursales,trimandmanage youroperatingcostsand see your profitssoarand/or leverage yourtime forBusinessorReal Estate! “Truth telling,honesty,andcandor:IlovedyouMel Feller!Youhave somuch energyandknowledge!I trulyhope I getanotheropportunitytobe coachedby you.I see myself alittle clearernow,andit’snot so bad.” Lisa Mathews “Mel Felleryouaddedmore value thanwe canpossiblysee rightnow.Mel Feller,youare warm, inviting,andaccommodating.Thankyouforcomingalongside usinthistransition!” VanessaCavanaugh “Mel Fellerthe besteducationsessionthatwe have attendedinmanyyears!Thankyousomuch — I am veryexcitedtoputeverythingyouhave taughtusintopractice!”
- 4. Michael Randolph “Mr. Mel Feller,Thankyou,thankyou,thankyoufor givinga marvelouskeynote atourSymposium! While we have notyetcollectedthe official feedback,the unofficialfeedbackwasthatYou Were a Hit! I heardnothingbutcomplimentsregardingyourpresentations.Thankyouformakingsucha positive impacton our attendees!” Lyle CunninghamVP "Mel Felleruseshishumor,compassion,anddirectnature tohelpbringoutthe bestinme.Mel Felleris committedtohelpingme live...Imean,reallylive,life toitsfullest." Jose Rodriguez Mel FellerLinks https://www.instagram.com/mel.feller https://ourmrmel.tumblr.com/ https://www.pinterest.com/cfs360/ https://twitter.com/melfeller/following https://wordpress.com/page/melfellerinternetbusinessinnovations.wordpress.com https://dribbble.com/melfeller https://biggerpockets.com/forums/79/topics/49008-larry-goins-bootcamp https://txbusinessdb.com/p/mel-feller