All Forum Posts by: Aaron Zimmerman

To qualify for the STR Loophole, you need the following:

1. Average rental period of 7 days or less. As you correctly mentioned, you’ll need at least two stays.

2. For the material participation test, the easiest way to get it is Via the 100 hours and worked more than anyone else. If you can do that, then you can qualify. 

3. Don’t use it between Now and year end. 

Practically speaking, it’s going to be quite challenging unless you spend significant time. If I was you, I would just make sure you do everything in your power to qualify in 2025 because it’s going to be quite challenging. 

It  really depends on your level of risk. To me, I think having great properties in great areas is the play. Similar to what @Henry Lazerow said, you'll want to quality areas. I'd recommend suburbs or cities in faster growing areas after doing your own due diligence. $750k would be more than enough to buy several houses but you'll need to be mindful of DTI after getting a few mortgages if they're not DSCR.

Could not agree more! Well said!

It  really depends what you value. If you want more time, REITs and stocks are perfect for you. 
If you want less time, real estate could be for you. However, it’s harder than it used To be to find a good deal for sure. That’s not to discourage you. Places like Texas where you’re at will likely continue to face significant insurance increases given more weather related events which makes it challenging To pencil, but if you have good population growth, things should even out. Like others have mentioned, there’s appreciation, depreciation, leverage, and tax benefits that produce a compelling risk adjusted return. 
Another avenue people seem to be exploring is buying businesses. This would be the least passive but potentially the largest upside. 
I wouldn’t say investing in crypto is necessarily the best, but I think putting up to 5% in net worth is worth it for the upside it could generate. 

May I ask why you’re thinking about collecting social security at 62 or 63? If you wait until 70, you can maximize your benefits. 

I think Option B is the best option. You don’t have to leverage it up all the way to reduce cash flow. If your expenses are say $50k per year, you’d have a run rate of 4 years if you leverage it at 70-75%. 

Do you have any other income producing assets? 

Given that time is a constraint for you, I think getting into real estate syndications would be your best move. It requires you to due diligence on the investor group initially and the deal itself, however, after putting in money, there’s not a lot you can do. If you’re okay with the lack of control, it could Be good for you.

A benefit in addition to being passive is that you can invest in whatever markets you’d like. So if you’re bullish on the Midwest, there’s syndications in the Midwest, as an example. 

I think leaving the money invested in cash and earning a yield is okay in the short term but not your best long term move. 

I like the 50/50 option a lot. I think being diversified is important for a variety of reasons and can allow you to take other risks. If the real estate is producing a steady return, you can make more aggressive bets with stocks or other alt assets. That’s the approach that I’m taking with me and my wife. We have some real estate and are 100% equities with 401k and post tax savings. 

That said, I would not invest monies into the stock market that you’ll need within the next 3-5 years as the market can be volatile!

Would it  be possible to get an additional roommate where you and your boyfriend live? Or move down to the basement?

You would likely get higher daily rates by renting out the 3 BR. 

That would help alleviate the 50% of take home income issue.

What do long term rents look like in your area for both units? 

You may be in a situation where you’re paying for tax prep only. I would encourage you to ask your CPA what’s included in the scope of services.

If you have a California LLC, there's an $800 per year filing fee, at a minimum, so that's likely why your accountant is saying not to have an LLC.

The leases can be set up under your name. That’s what I do for my leases.

I echo the comment on getting really good insurance with an umbrella policy as well. 

@Garrett Kula thanks for posting!

I’ve personally house hacked in the Irving park neighborhood in Chicago with a multifamily so not completely relatable experience to what you’re looking to do but hopefully can provide a few insights.

If you go with the suburbs in a SFH, you could rent by the room and presumably increase cash flow. You'll likely need to get more bedrooms (probably 4-5). Another thing about most suburbs is that the property taxes can be brutal which needs to be factored in to your analysis.

The biggest thing is where ever you buy, you need to feel comfortable living in AND upon move out, the property needs to cash flow. 

Feel free to PM if I can be of any help. Happy to be a resource! 

I would also encourage you to get involved in networking groups in the Chicagoland area as well as listen to the straight up Chicago investor podcast.