Author Archives: Patrick StCin

Sigh of Relief and Then … Start Planning For 2019 Taxes

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Many of our customers are both employed and self-employed, painting a tax picture that reveals itself slowly as incomes, deductions, and taxes paid are added and subtracted from a variety of the tax forms. If you just finished your 2018 taxes, this is a good time to review how well your business and employment worked together to pay your 2018 tax bill.

Personal: Review your W-4
On the personal side, review your W-4 form with the payroll or human resources manager at your place of employment. The W-4 is the form you fill out that tells your employer how much tax to withhold from your paycheck. Did you pay too much and receive a big refund or pay too little and owe a lot, perhaps even having to pay fines for underestimating? The taxes withheld from your paycheck reflect your filing status (single, married, head of household) and the dependents you claim. Check to make sure the information on your W-4 form is accurate.

toon-3125

Business: Set up a Paper and an Electronic Filing System
On the business side, make yourself a filing system so you can organize your business-related receipts and invoices in folders or envelopes if your receipts are paper and in computer files and folders if your receipts and invoices are electronic. Most likely you will need both paper and electronic files. Determine the categories your business expenses and income usually fall into and make folders and files that are named accordingly. Things like fuel, advertising, landscaping, construction materials, permit fees, banking fees, equipment repairs and maintenance, and new equipment purchases, contractor payments, interest on business loans, and home office expenses are common expenses in a fix-n-flip business. Check to see that your online folders are named the same as your paper files and then use that same name to enter the expenses in your Excel table or Quick books program. Remember, the IRS requires that you use these things for business if you deduct them.

Track and File Weekly or Monthly
File and enter your expenses weekly or monthly to avoid the pain of finding yourself in February of 2020 sorting stacks of receipts at the kitchen table for tax year 2019. You are bound to miss something and spend a lot of time searching for missing receipts. And, just running your unsorted papers in a shoebox over to your tax consultant means you are going to be paying them to sort out the papers, and they probably will not be able to do so without your help anyway.

woman in grey shirt holding brown cardboard box

Photo by bruce mars on Pexels.com

Pay Forward and Give Back

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Have you ever been helped by someone for no reason except they were themselves helped by someone along the way? Well that is the concept behind “pay-it-forward” and “give back.” I’ve been the beneficiary of business mentoring myself, so I understand the concept. At no cost to me, I have received coaching from people who have made it themselves, they but feel the need to give back to others and share what they have learned. That is where I learned to “talk to two people every week about what I do and who my ideal clients are.”

Philanthropy

In the US market today, where there are plenty of jobs and plenty of homes for sale, employers and real estate investors need to compete. They need to find that distinguishing virtue that sets them apart in the mind of employees, buyers, or sellers. In real estate, it makes sense to take up the philanthropic challenge with the virtue closest to our heart—Shelter the homeless.

Philanthropic work turns out to be is a two-way street that in one direction provides meaningful work, good morale, and purpose to people in business; and in the other direction, provides necessities, like housing to people in need. Profit is good. Awards are pleasant. Followers are GREAT!. ‘Likes” can’t be beat. But, building a home for people who really need one with a portion of the profits earned from selling a home completes the circle of justice, offers purpose to workers and investors alike, and brings joy to communities.

I was pleased to find that the following three charitable home-building models for giving back are active in our Texas communities. Sometimes it is hard to know where to start, so perhaps one of these examples may spark ideas that you would like to pursue.

GiveBack Homes

One company that gives back according to the one-for-one business model (sell one, give one away) is GiveBack Homes. According to their website, Giveback homes is a community of real estate professionals who are committed to creating social change by helping build homes for deserving families around the globe.

At their website, https://givebackhomes.com/, you can join the team or contribute to a project. Blake Andrews learned the one-for-one building model by working for TOMS. TOMS gives away a pair of shoes to a needy person for each one they sell. When Blake went on a giving trip to Nicaragua for the shoe company, he fell in love with the people and decided to dedicate his life and talents to giving back internally and domestically. He founded Giveback Homes in 2013. Scanning their website you can see that they are currently working on clean water projects and building homes in Nicaragua, Mexico, Atlanta, Austin, Chicago, Dallas, Denver, Houston, Las Vegas, Los Angeles, Oakland, Orange County, Phoenix, Sacramento, Salt Lake City, San Diego, San Francisco, and Sarsota.

New Story Charity Homes

New Story Charity homes is pioneering solutions to end global homelessness. On their website, https://newstorycharity.org/, they point out that “an estimated 3 million people will be living without access to adequate shelter by 2050, a 200% increase over three decades.” They research breakthroughs in homebuilding and prove them then share the information learned with other builders so home building can become affordable and efficient. Since 2015 they funded 2, 200 homes in 4 countries and 15 communities. The partner with home builders.

New Story partnered with ICON a construction technology firm to develop the first 3D printer designed to print homes. The first version of the printer was Vulcan 1, unveiled in Austin Texas in March of 2018. In 2019, Vulcan 2 will print the world’s first 3D printed community.

First, they ask before they build, asking families for their input before they build to increase the likelihood the communities will thrive. 100 % of donations go to home building. And, they work with local organizations who are experts in the location they are building in. So far, they have worked in Haiti, Mexico, El Salvador, and Bolivia.

Operation Unified Response

100316-N-5961C-020 PORT-AU-PRINCE, Haiti (March 16, 2010) An aerial view of Port-au-Prince, Haiti shows the proximity of homes, many damaged in a major earthquake and subsequent aftershocks.

Concierge Auctions

Concierge Auctions was founded by Laura Brady in Manhattan and is a luxury real estate company that moved to Austin, TX in 2014. According to an article in Barrons magazine by Alanna Schuback, Concierge Auctions partners with GiveBack Homes and funds the construction of a home for people in need for each luxury property it sells and offers its employees opportunities to visit and take part in the construction projects in Nicaragua and El Salvador. I couldn’t find any information about this program on their website, but it is a beautiful website at https://www.conciergeauctions.com/, so they don’t advertise their charitable work much. However, their founder Laura Brady is a member of GiveBack Homes so that is the connection. You can visit her profile at https://givebackhomes.com/laurabrady

According to the Committee Encouraging Corporate Philanthropy, “companies that donate a portion of their revenue to charities do better financially than those who don’t. (Barrons, December 8, 2018). And, some employees actively choose companies to work at because of their charitable activities.

Home sellers and buyers are passionate about more than money too. Like workers, they too are interested in meaningful work, good morale, giving back, and creating good.

Let me know if you have found any deals this month that you know you can turn around and resell with enthusiasm. I hope that I can be of help to you this month.
I can be reached at
Patrick@REICapital.cash
512-213-2271
Austin, Texas

References
Photo: U.S. Navy photo by Senior Chief Mass Communication Specialist Spike Call [Public domain] Haiti
https://www.conciergeauctions.com/
https://newstorycharity.org/
https://givebackhomes.com/
Real Estate Brokerages Are Building for Good, Alanna Schuback, Barrons, Penta, December 8, 2019

Needed: Homes for Modest Incomes

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“The lower end of the market is hot, while the upper-market is not,”

Lawrence Yun Chief economist at the NAR

According to the National Association of Realtors, developers built more expensive homes in recent years, while middle-income Americans are eager to buy cheaper properties. Thus, the high-end market has slumped and the market for mid-priced homes has increased slightly, equaling a 4.9% decrease in existing home sales in February 2019.

The article “Home Sales Fall 4.9% in Slow Start to Spring Buying Season,” Associated Press Wire Service, by AP Economics Writer, Christopher Rugaber. also says that mortgage loan applications are up, but cites no sources for that information.

As always, do your research and put your money where you see there is a need. In that market, it will sell.

gray house under blue and gray sky

If you find that modest home that you can remodel for a middle income family, let me know.  I have the funding tools to help you.

REI Capital Resources is a loan originator for select investor single-family residential projects. Our goal is to provide fast closing loans to fund your investment projects, so you don’t lose a great deal. This includes bridge loans for the acquisition of property.

Give me a call or send an e-mail for assistance funding your project.
Patrick St.Cin
512-213-2271
Patrick@REICapital.cash

 

 

Bridge that Gap

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Sometimes there is a gap that needs to be crossed or bridged temporarily between money going out for a new purchase and money coming in from a home sale. The bridge loan is the funding tool that applies in this multiple house situation.

toon-3111

REI Capital Resources is a loan originator for select investor single-family residential projects. Our goal is to provide fast closing loans to fund your investment projects so you don’t lose a good deal.

Enjoy your day!

Patrick St.Cin
512-213-2271
Patrick@REICapital.cash

 

Cartoon used with permission

Life Science Space Rentals

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Austin

Texas has not been on the list of the top life Science research hubs, but it could be according to an article by Chris Davis of KXAN, a post on the Austincc.edu website.

Central Texas has a need and it is something commercail real estate investors can help with. Central Texas needs for wet lab space for a growing life science industry. One example of the possibilities is the Austin Community College’s (ACC’s), Austin BioScience Incubator (ABI), a State-of-the-Art facility that leases space and equipment to start-up life science companies. The ABI is booming with 16 companies leasing space. Three companies have moved on, outgrown the facility.

Science/Business Incubator

This science business incubator was born out of an approximate 9,500 sf renovation of the iconic Highland Mall in Central Austin, TX. According to its website, the facility features 4,000 sf of wet labs, two ISO I clean rooms, open workspace, conference space, and support offices. Member companies have access to core laboratories and instrumentation.

Mission

The ACC Bioscience Incubator aims to expand on previous successes by establishing a permanent wet lab facility and business incubator to accelerate Central Texas’ biotechnology economy while training a skilled workforce

Austin Community College

The Austin Area Life Science economy was spurred to new growth by the University of Texas at Austin’s Dell Medical School. Austin is now home to more than 240 bioscience companies, according to the Austin Chamber of Commerce, employing 15, 000 workers.

Growing Industry

The life science business is not likely to go anywhere but up in the future. Life science industries involve everything about life including health care for an aging population and DNA research, as well as pharmaceutical research, tissue fabrication, sanitation and food safety, genetics for preventing disease, and nanotechnology for medical devices, computer modeling, and imaging technologies.  This industry has been adding jobs since 2000, 5 times faster than the US economy, according to a report by Cushman and Wakefield published in January 2019.

Adaptable Space

This is an interesting type of real estate to look at for an investment. The key factors in investing in commercial real estate to renovate and rent to life science businesses is that the space needs to have both office space and wet lab space. It needs to be efficient and adaptable space for housing imaging technologies, clean rooms, collaboration, and storage, preferably near universities and cultural amenities to attract and retain scientific talent.

white baby mouse

Photo by Pixabay on Pexels.com

REI Capital Resources is a funding source for SFR Fix-n-Flip, Fix-to-Rent, and Refinance projects as well as larger commercial projects such as office buildings, 5-40 door multi-family buildings, and many others. These programs vary wide and far throughout the gamut of lending. Call or e-mail for more information.

Patrick St.Cin
W – 512-213-2271
Patrick@REICapital.cash
Info@REICapital.cash

References

Life Sciences: Limited Supply, Increasing Demand Driving Increased Real Estate Costs, 1/31;2019, ww.cushmanwakefield.com/en/news/2019/01/life-sciences-report

Life Science Space Continues to Be in High Demand with Low Vacancies and Rising Rents, National Real Estate Investor, Patricia Kirk, April 22, 2019.

Where scientific breakthroughs happen: Three trends shaping labs of the future JLL , Mike Romer, Chicago, February 15, 2018

“Focused on Funding Your Success”

A Family of Land Websites to Admire

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I recently stumbled onto a family of fascinating websites for those of us who love land.   Whether you are interested in a vacation rental or garlic farming, solar farming or raising timber, hunting quail, or building a deer hunting preserve, this family of sites has much to offer those with land on their minds.

agriculture barn clouds cloudy

The first one I discovered was landflip.com because I was thinking about investing in vacant or rural land.  Land Flip lists the best vacant and rural land available.  So, if you  are looking for hunting land with a cabin, 100 acres in Sierra Blanca, or a poultry farm in Arkansas.  This is the site to visit.  And it is a beautiful site with property descriptions and lots of gorgeous land photos in its galleries.

The sibling in the family is lotflip.com.  Here is the site to go to if you are looking for commercial sites and land. Some of the same properties appeared here as on Landflip.com, like the poultry farm and the land in Sierra Blanca, but they were joined by industrial sites in New Jersey and housing sites in Northern Arizona.

The middle child in the family is farmflip.com, a site that features just what it promises, farms, but with much variety. Here you can find that horse farm in Wyoming, hobby farms, a working cattle ranch in Sabine County Texas, and timber tracts in Florida.

Auctionflip.com is the next site, and it features upcoming auctions, including galleries showcasing fenced land in Kansas, residential development land for auction in Indiana, a home on 15 acres in Platte County, Missouri, and a log home and bed & breakfast lodge with 52+ acres in Houston being auctions on April 27th at 10 am. The property includes a barn, a shop, horse stalls, feed room, chicken coop, dog kennels, and 2 ponds. This could be an interesting investment for the right person.

If your dream involves commerce, hard work, and land, and if you are looking for a piece of urban or rural land to perform on, the not-so-little brother in the family of websites is the one to visit, commercialflip.com.  I think this site had my favorite unique commercial opportunity, a trading post with 34 cabins in Gunnison County, Colorado, right in the heart of the Rocky Mountains. As a kid, I always dreamed of my family owning a trading post of bar in the mountains.  This would have been the place.  The site also featured a gallery of other commercial opportunities, like a Lake Michigan vacation home, a river ranch with cabins in Missouri,  and a family restaurant and motel in Michigan.

Finally, the daddy and the mommy site of the family, as far as I am concerned, where you can learn all about land is landthink.com This is where the blogs, articles, facts, and opinions live.  Here you find information to use and admire about topics like

  • the unique gourmet crops that will make money for a farm,
  • when to get into debt for land and when not to,
  • how to get a timber appraisal,
  • how to organize a community garden, and
  • how to clear land.

I am not sure but this might be my last post. I am off to plant garlic and willow trees.

Not really. But, I do recommend studying these websites for information and possible deals for your next investment, maybe a vacation rental.

Give me a call or send an e-mail and share with me your plans and needs, and I’ll see what lending solution I can generate for you.

Patrick St.Cin
W – 512-213-2271
Patrick@REICapital.cash
Info@REICapital.cash

 

 

 

 

Delicious!

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Did I mentioned avoiding termites when buying a house and appealing to the senses when staging your house for sale?  Yummy qualifies.   Looks like that is a tried and true professional fix-n-flip strategy.toon779-1

My I am still focused on funding your success and I have more tools to work with.

Contact me at
Patrick@REICapital.cash
512-213-2271

Used with permission.

 

 

 

 

REI Bridge Loan

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Although a bridge loan can be used in any business to raise operating capital or buy out partners, for our purposes, it is most often funds lent to cover an interval between two transactions, typically the buying of one single-family dwelling and the selling of another. Buyers (individuals or businesses) take out a bridge loan so they can buy another home before they sell an old one. The loan is secured by the houses.

Fast Financing
The main benefit of a bridge loan is that it is a way to get financing fast. Like a gap loan, it is useful if you have a seller that is in a hurry for some reason or if a buyer places an offer on a new house with a contingent for selling his or her old house and another buyer comes along and makes an offer on the property, requiring the first buyer to come up with the funds to purchase the property and remove the contingency or lose the opportunity to purchase the home to the new buyer.

In a sellers’ market, some sellers will not accept a contingent offer because they have so many offers, they don’t need to. In a seller’s market or in a auction situation having a bridge loan in place before you offer will make your offer more attractive.

Higher Interest Rates Over a Short Term
The main drawbacks to a bridge loan are interest rates, fees, and the risk of having to maintain a loan on two homes if your old house does not sell quickly. The expense of a bridge loan can be acceptable when you know you can pay it off quickly with a lower interest loan. Even though a bridge loan may carry no payments for a few months, interest will accrue and be due when the loan is paid on the sale of the old property. Fees on a bridge loan typically include:

  • Loan administration fee
  • Appraisal fee
  • Escrow fee
  • Title policy fee
  • Wiring fees
  • Notary fee
  • Loan origination fee

A home equity loan is cheaper than a bridge loan, but if your old house, the one with the equity, is on the market, some lenders will not lend on it. The interest rate is lowest for borrowers with excellent credit ratings and lots of equity. The borrower must be able to qualify for owning both houses. Both mortgages are rolled into one for a short time at a high interest rate.

Research Potential Time on the Market
In a seller’s market, buyers are plentiful so the home you are trying to sell might sell quickly unless it is in a totally different market. The answer here is to do plenty of research so you can estimate how long it might take your old home to sell and negotiate that term with the lender with an option for extending the bridge loan. You also want to be aware of any prepayment penalties in the case your property sells quickly.

If the housing market cools and homes are for sale on the market a long time, the number of bridge loans needed may increase to cover this gap between buying new and selling old. If there is a chance your old house will not sell quickly, and depending on your circumstances, it might be safer to wait for the house to sell before you make an offer on a new house or you could be stuck making two home loans.

white metal bridge under the blue sky

Photo by Tino Schmidt on Pexels.com

REI Capital Resources is a loan originator for select investor single-family residential projects. Our goal is to provide fast closing loans to fund your investment projects, so you don’t lose a great deal. This includes bridge loans for the acquisition of property.

Give me a call or send an e-mail for assistance funding your project.

Patrick St.Cin
512-213-2271
Patrick@REICapital.cash

 

References

The balance.com What exactly are Bridge Loans by Elizabeth Weintraub, January 2019.
https://www.thebalance.com/what-are-bridge-loans-1798410

Investopedia, Bridge Loan Definition, by Julia Kagan, April 9, 2019. https://www.investopedia.com/terms/b/bridgeloan.asp

Bridge Loan. https://www.thetruthaboutmortgage.com/bridge-loan/

Commercial Real Estate

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Most of our fix-n-flip projects have involved residential real estate, but commercial property can also be bought and renovated as an investment with our lending tools.

The commercial market requires some scrutiny to find the best, less risky, options for your investment.

Commercial real estate is property that is used exclusively for business purposes and property that is leased out to provide a workspace rather than living space. Investopedia

According to the “2019 U. S. Commercial Real Estate Market Outlook,” by CBRE, the outlook is good for all four major commercial real estate asset types: office, retail, industrial, and multifamily and three of our Texas towns, Houston, Fort Worth, and Dallas, are on their chart of the Top-10 Markets for Annual Rent Growth over the next 5 years.

On the other hand, JP Morgan is more cautious and expects more modest growth in the commercial real estate market. In their 2019 Commercial Real Estate Outlook by Alfred Brooks, they point out certain areas that are riskier than others and some that still look like good investments.

Together the two investment experts expect 6 situations to influence the market.

  • Online Consumption of All But Food: As more of today’s shoppers move online, traditional brick and mortar real estate stores and malls will be risky investments, except for traditional grocery stores, which have not yet been affected by online competition. JPMorgan
  • Online Goods Need Storage: While trade wars and possible recession affect the value of industrial property, the expansion of e-commerce creates more demand for industrial buildings that can be repurposed to store and distribute goods sold online. JPMorgan
  • More Jobs than Workers: Strong demand for modern and efficient office spaces with lots of amenities, driven by employers in their effort to keep employees in a competitive labor market will keep this market healthy as long as the spaces themselves and lease structures are flexible. CBRE
  • Upscale versus Modest Housing: Upscale multifamily housing has been overbuilt in many markets, but housing shortages still exist in affordable housing in the Class B and Class C units that cater to renters. This shortage of affordable housing makes more modest multifamily housing an attractive investment. JPMorgan & CBRE
  • Preference for Urban Living: Young people continue to live in the city and are willing to trade square footage to avoid a long commute and live where they work and play. Their preference has kept the multifamily housing market healthy. JP Morgan
  • Interest Rates: What can I say about interest rates other than interest rates affect everything, and the Fed looks like they might be raising interest rates and are unlikely to lower them unless there is a financial crisis. This situation makes this a good time to consider buying commercial real estate so you can lock in a lower rate. JP Morgan

REI Capital Resources is a funding source for large commercial projects such as office buildings, 5-40 door multi-family buildings, and many others. These programs vary wide and far throughout the gamut of lending. Call or e-mail for more information.

apartment apartment building architecture building

Photo by Expect Best on Pexels.com

Patrick St.Cin
W – 512-213-2271
Patrick@REICapital.cash
Info@REICapital.cash

 
References
Brooks, Alred R. JP Morgan 2019 Commercial Real Estate Outlook http://www.jpmorgan.com
https://www.jpmorgan.com/commercial-banking/insights/2019-commercial-real-estate-outlook

Chen, James, Investopedia Commercial Real Estate Definition, April 2019. https://www.investopedia.com/terms/c/commercialrealestate.asp

CBRE, 2019 U.S. Real Estate Market Outlook. https://www.cbre.us/research-and-reports

Thinking Like Your Buyer: The Joneses?

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The Neighborhood

As part of your regular routine, before you invest in a house to fix-n-flip, you will be researching the after-repair value, figuring out what price the house will sell for after it is remodeled, and how it fits in with the other houses in the neighborhood. While you are doing this, picture your buyer. Are they young and first-time home buyers? Do they have children? Are they older and downsizing?

If your buyers take the advice of  Investopedia’s “How to Buy Your First Home” a tutorial by Amy Fontinelle, they will want to pick a neighborhood that is a close fit to their own lifestyle so they will feel at home with their neighbors. They can find facts and statistics about a neighborhood’s average income and college educations on websites, forums, and neighborhood message boards, places you will want to look too.

Pressure to Spend
Like professional landscaping and groomed yards, expensive vacations, weekly maid service, landscaping contractors, cosmetic surgery, boats, restaurant-quality kitchen appliances, certain types of vehicles, and country club memberships can put pressure on people who live in neighborhoods that encourage conspicuous consumption. To be frank, will your buyer feel comfortable or will they feel pressure to keep up with Joneses who live next door if they come to live in the neighborhood where your fix-n-flip project is located?

“Stop Keeping Up With The Joneses – They’re Broke.”  Investopedia, (2014)

Lisa Smith, the author of the article, “Stop Keeping Up with The Joneses,” reminds us that spending money for the sake of flaunting your wealth, once something only done by celebrities, has come to suburbia, and to regular neighborhoods all over the world, but not necessarily for the good of their financial or their blood pressure.

 

white cruise ship on the sea

Photo by GEORGE DESIPRIS on Pexels.com

So, if you are remodeling a modest house, it might be best to find one in a neighborhood that is not extravagant about spending for the sake of the modest buyer who might buy your modest house.  This will speed up your investment turnaround.

It is true that you cannot always pick the house and neighborhood where the greatest deal pops up, but remember, you only get your money out of the house, if you sell it; and, if you are going to invest your money, time, and credit into a house to resell, be sure you can sell it to a real person in as short a time as possible.

Please give me a call when you find that perfect investment in the just-right neighborhood. I am still focused on funding your success and I have more tools than ever to work with.

Patrick St.Cin
512-213-2271
Patrick@REICapital.cash

 

References

Cruise Ship: Photo by GEORGE DESIPRIS on Pexels.com

Smith, Lisa, Stop Keepng Up With The Joneses – They’re Broke , Investopedia 

Fontinelle, Amy, How to Buy Your First Home: A Step-By-Step tutorial, Investopedia