All Forum Posts by: Account Closed

You are worrying about the wrong thing. The question to ask yourself is why is this property only worth $35K? You didn't get a steal because it doesn't appraise for even that much. Usually risk is proportional to return. If the returns are that high there is a reason. What is the risk you are not seeing? Why have local investors not snapped this up long before you came along? Those are the real questions. Taxes are hardly the main issue.

Im not buying SFRs anymore and just into MF. As a result I do see a lot of deal flow from sophisticated investors who look at markets nationally and do great data analytics. I can tell you for sure that no rust belt city is on the radar for MF investments. The population and employment dynamics just don't support it. Texas, Fla, GA, AZ, are the most popular places for investment these days. Positive population and job growth is the main reason.

From a pure investment perspective all that matters is IRR. Its the sum of cash flows plus appreciation over a given period. It also includes a discount rate but you can ignore that for simple comparisons. Now in a more practical sense cash flows matter if you are dependent on them for your income. And highly negative cash flows need constant input of capital, which also impacts IRR negatively. If you are in the wealth accumulation stage, go for the best IRR possible with some positive cash flow. While people say appreciation is not guaranteed, neither is cash flow. Both have their own risks.

My PM contracts always charge a percent of rent collected. Zero rent collection means zero PM fees. 

Real Estate is dominated by Fannie Mae for residential properties. If any government takes that out of the equation or reduces it that is a major event. As far as I know low interest rates and government subsidies to homeowners is a staple feature of both parties. 

Other minor changes in tax policy will not move the market in any direction. Serious economic disruption due to Covid is likely in either case. The US has given up and failed entirely in managing the virus. That may actually be a plus for real estate as there is no appetite amongst Americans for serious shut downs of the economy. People may die but markets must thrive. Other possibilities include expansion of Section 8 (good for REI), extensions of eviction moratoriums (bad for REI), and tax changes (probably slightly bad for profits but not market moving).

Ive also seen some reports that say delinquent mortgages are at a very high level. Once foreclosures are allowed some markets will probably see the effect. 

@Misael Carlos Vera Yes. Owned many properties never had an LLC. The only reaaon for an LLC is if you are partnering on multiple properties with other people. Then an LLC may be a good way to share ownership pf the assets. If its just you then no need.

Whats the average rent per unit? If its even $500 the 21 units not being rented could be earning $10K per month. Does your day job pay that much that you can piss away $10K/month?

This is exactly why long distance BRRR or flips is a very bad idea. Unless it is with people you have a long past relationship with and trust 100% or you are willing to spend the time on the ground to personally manage the project you are better buying already rehabbed properties for rent.

Yup. Most of the pro formas use the current tax which is before rehab and sale. Your taxes will be based on your purchase price. So factor that in. Amongst a whole bunch of other undercounted and over optimistic assumptions in your typical pro forma! Better yet, ignore the pro forma all together and do your own analysis.

Well the US is actively pushing out highly educated H1B holders by non renewing visas and making the process for a green card impossible. Many of these highly paid people are moving to Canada. With remote working there is nothing to hold them to a country that makes them feel so unwelcome. Net loss to the US in talent, tax receipts, innovation and population. Net gain to Canada. I don't know if the numbers are big enough to move the needle on property prices but the fact remains.