All Forum Posts by: Allan C.

@Dee Shaun do you think that an economic downturn will benefit you more than the other scores of investors sitting on the sideline? My hunch is that the RE scene will be fairly competitive during a downturn since more folks will be prepared for it this time, and many, like you, are waiting for the opportunity to dive in deeper.

@Connie Chan I use TaskRabbit for my one off handyman repairs for my remote properties. I used to keep dedicated handyman but everyone eventually becomes unreliable. TR has a rating system similar to Yelp that allows you to choose your service provider. Taskers also list different hourly rates, so you’ll eventually figure out which one is better value for money.

I was reluctant to go with a platform like TR at first, but they have not disappointed.

@Bryan Kurtz I agree that buy and hold is better long term wealth generator. As Brandon suggests, most people ignore the tax implications of short term capital gains. It’s not about how much gross income you generate, but rather how much you keep. You can only 1031 so many times and the limitations reduce your realized gain.

Deferring your tax obligations via depreciation is a large benefit to a buy and hold strategy. It gives you more net cash to re-invest.

I still enjoy renovations, so that is a side hobby.

@Connie Chan I agree with everyone else to not comply. I have a Bay Area home with a pool heater and I continuously contemplate filling in the pool every year. Neither the heater nor the pool adds value to the home - it’s a liability.

@Thomas Smith it appears that he isn’t willing to preserve the friendship as much as you are. That may give you pause to consider whether the path of keeping this partnerships will result in other issues down the line, even if he is willing to pay you for PMing.

However, I suggest that you don't react to anything yet unless you hear his rationale for his buy-out calculation. He may be equally offended at your valuation, so you'll both have to have an open discussion first. I do believe the disagreement is how you treat the future cash flows of the properties. The multifamily homes should be straight forward in that they price on a cap rate and already account for future income. The SFH should not be based on future income since that is not how SFHs price in the market.

IF you decide to continue the partnership, you should address the exit strategy and not kick the can down the road. Good luck.

@Dan Gerding does your relo policy have a loss protection clause for the sale of your nola home after you relocate back to your base location? Does the policy also cover realtor commission on your home sales? If so to both of the above, then you have considerable factors that support a Nola buy.

I just caution you to have good inspections since many homes were renovated by DIYers and contractors who cut many corners post Katrina.

@Patrick Dean as you are considering, sometimes I move funds into an online savings account when I prepare to acquire an asset, but have not yet closed the deal. I‘ll typically plan for it to be in this liquid account for 3-6 months.

@Michael Ealy Your point about the benefits of appreciation in a leveraged asset is the biggest driver for leverage that people miss. Many folks believe that having more properties is what creates the wealth, but that is not true.

Having more properties diversifies your risk, but comes at the cost of inefficiency (ie. extra work).

But when you get to capture the benefits of appreciation on 100% of the property value when you only have 20% or less skin in the game is when people realize that leverage is powerful.

zillow provides an ok estimate for SFH if there are a high number of comps, though it doesn't take into consideration the condition of the property. If you don't want to get a Realtor involved to provide a professional comp, you can look at the other listings as well to assess yourself. Find comparable interior sqft, lot size, #BR and #BA homes to compare how the listing pictures compare to your property. If you find that current listings have nicer amenities, then factor the cost of freshening your property for sale.

Don't forget to account for applicable transaction costs, like Realtor commission, depreciation recapture, transfer taxes on all legs of your transaction (NC sale, CA buy & sell). Unless you are getting a phenomenal deal on your CA purchase, i suspect that you'll find it tough to make money on a flip in SoCal if you are sub'ing out all of your trades. You'll also get hit with short term capital gains on your flip. Many investments are make or break depending on whether you've accounted for all tax implications correctly. 

@Benjamin Tighe Great post and thank you for sharing your thoughts. People in general tend to lack perspective, so you providing another angle is very helpful to a forum like this. You also display humbleness and a calm demeanor, so your good communication skills will go a long ways to creating strong connections and supporters.