All Forum Posts by: Will Barnard

Not always, but it is a natural progression. I feel there is more money to be made in the commercial area. Apartments, retail strip centers, storgae facilities (as you mentioned), etc.

Others continue to just build larger residential portfolios. The choice is yours and it really depends on your style of investing.

You could simple have a realtor on your team to pull up the comps/sold properties/etc. to find out. You can also get a membership to dataquick which allows you to get that and much more info on properties all across the country, including who owns the property, what outstanding loans are present, local comps, and specs of the home/property.

While large banking institutions such as B of A are convenient (many locations), they offer very little in the way of creative financing options for investors and you are just another number to them.
Try credit unions. There fees are much lower and they are much more open to giving you loans.

Also, for commercial loans, you need to get contacts in small local area banks who offer commercial financing. Go to the BP blog. There was an article on how to find such banks and contacts.

Has anyone used HSA's and if so, have you self-directed it and invested in RE? I have just recently come across this type of account and find it to be very beneficial to RE investors. It is similar to an IRA (which can be self directed) but has even better benefits in that you get a "top of the line" deduction on your taxes and the money pulled out is also tax free as in a ROTH. Of course the money must be used for med expenses, but you end up saving money on medical insurance premiums and by self-directing the account, it can grow to a sizable account for not only medical expenses in retirement, but an account which can be passed down to heirs.

Any thoughts, experiences, etc.?

I agree Jon. Good explanation. In addition, utilizing a land trust could avoid the possibility of a due on sale clause as only the beneficiary changes and no official title change has occured (the way I understand it)

Also, if an investment is held in an entity such as an LLC, buyer could purchase the "shares" of the company which hold the asset, so no tiltle change shows up. Of course, with some investigating from the bank, they could find out that the original owner of the LLC has changed and then have the right of the due on sale clause. Again, this clause is rarely used and I have yet to hear of an investor who suffered from it. I do know of an investor where the bank made the threat, the investor called there bluff and said "go ahead, I can't pay it and you will have to foreclose" and the bank decided not to as they were receiving timely payments.

Because of your personal situation you described, it sounds like this is something possible for you to accomplish. Congrats on all accounts. Having no debt is a wonderful start and advantage to investing. It opens the doors to many options not available to most others.

Having said that, I still personal believe that using leverage is one of the greatest benefits to RE investing and you are missing out on some of it. If you applied both strategies simultaneously, you could buy multiple at a time now while RE is "on sale" and when it starts to climb down the road, you will have the advantage of many properties gaining appreciation. At that point, you could refi some and pay off the others, or 1031 all into a large commercial, or etc. etc. etc. (Unlimited options at that point)

You got it! Of course that assumes you make a good investment decision which produces positive cash flow. The basic principle here is that you are putting the cash stored in the walls of the home to work for you. When equity sits in a home, it earns you 0% return. It also makes you potentially vulnerable to being sued as attorneys see a nice payday with the equity in the home. By "seperating" the equity from the home, you reduce/eliminate that potential.

What area do you live in where property taxes are 6%? That is an area I would like to stay away from. Also, even without the high taxes, buying a pre-owned property for $180k with rents of only $900 or so is a guarantee of negative cash flow. You would need to get more than double that rent just to get close to a positive cash flow.