All Forum Posts by: Charles Worth

@Dean Letfus

problem is good luck finding someone who can agree on what equals overpaying. You could say "retail" but as noted that figure can be a little misleading for numerous reasons.

Just because I like a good challenge with @Engelo Rumora I will jump in and disagree but only to an extent and only in certain situations. I think there are situations where it might make sense (this is not advice its just hypothetical):

1) The investor in question either has good asset protection or little in the way of assets/income to go after. In this scenario, the downside is what one puts in and the upside is high. The bet is that the cash flow plus the upside if the market goes up outweighs the risk of losing what was put in. Yes maybe there is a loss but most properties at least per property don't have that much in them. 

2) You can invest the difference between the 5% or so being paid on the mortgage and the cash amount in something that earns money and is not necessarily dependent on the economy. Course this is a risk too but if it can be done even if the property doesn't cash flow much or is negative for a time.

3) The leverage is non-recourse and in an LLC with very little in the way of money in, either cause of BRRR or because that is the way they were bought

4)  The investor is disciplined enough to have reserves. This is true with or without leverage but even more so with leverage. 

Course this is not the case for most so its really more of a thought exercise.

Disclosure: This is not advice just my opinion. 

@Joe Splitrock

The other side of that is what made almost as many millionaires were people who started investing in the 1980s. People waited and waited for it to drop and it did eventually but it was a heck of a lot later and not to that point. Not saying that is the scenario here but I tend to think that when everyone thinks something will happen it goes on longer than people think until most give up.  

It happened in the mortgage crisis and that probably had a lot more triggers than we have now. 

@Ashish Acharya

Well both would be preferable (the deduction and the investment). I can think of a number of ways to syndicate the deduction and either buy land that was not even a decent investment or give the actual benefits of the land to the syndicator. 

@Ashish Acharya

Besides for the tax deduction, why is it not a normal investment?  Do you not get the rights to the land? I assume the partnership still holds the land? Easement land is not worth as much but I doubt it would be worthless. 

I did read about the audit risk that is certainly a consideration. 

I am also surprised there are not more people who let you actually have the whole land itself where you could actually own it and take the deduction but retain the land for your own use. 

As someone with a full-time job and W2 income in a very high tax state I have been looking at ways to maximize my tax deductions. As part of this strategy it was suggested I look into land conservation easements. However, I have had trouble finding companies that seem to specialize in offering out of state investors these type of properties (hard to find good properties for this in NYC for sure) especially with some type of property management. Another alternative would be a syndicator in this area but again I have not really been able to find much here or elsewhere. 

Has anyone here utilized easements? If so, what was your experience?  Has anyone done it from out of state where they actually own large plots of land or farm land as both an investment and for easements? Any experiences or referrals would be appreciated. 

Kudos to @Brandon Hall for the suggestion to look into easements, always has good suggestions for us RE investors. 

Just saw this thought it was interesting to this conversation as I just saw this today. Not that its big news or anything just happened to see it and thought of this thread. 

https://www.ccn.com/buying-a-home-with-bitcoin-mak...

@Graham Lutz

This is not advice but I would recommend you talk with a securities lawyer. Anyone doing a syndication I would assume has one so he/she can discuss with you. You probably can't get paid directly for bringing investors as part of just this offering but you might be able to help the Company with their efforts as an IR person etc. 

@Engelo Rumora

Probably should not comment on a stock on this board. Feel free to message me. I don't know anything anyone else doesn't though. 

I will note that Tzero is not launched and right now they are just taking in investment. Someone else also recently launched their own exchange for security tokens way ahead of Tzero and a number of others are on the way.  Medici Ventures is their blockchain investment venture far as I know has not done anything too noteable. 

@Engelo Rumora

Thats a lot to have in one? I have it through a fund too though but a lot more of them as well.  We should talk crypto when you come back to NYC

@Nathan Gesner

Its still up huge from prior levels and people have bought houses with crypto. Thing is its a technology so price is really not all that relevant except for people making money with house gains (i.e. buying houses with crypto). Being able to use blockchain for various RE uses and/or money transfer activities is still unchanged as a thesis. If anyone but the tech people behind those efforts will make money is an open question. 

It is also already being used. For instance, in Chicago where I own RE every property now has a blockchain address that you can use.  Like any technology including the internet we are using now I am sure it will be a long time though before the final results are in. 

@Samantha Swenson

I think this question is more complicated than many give it credit for but most on these boards are heavily invested and thus have their outlook which is not necessarily wrong but can be a little more on the positive side. 

I think all the comments here are good. Buying right at decent prices with cash reserves and cash flow so you can wait is key.

One thing I think its important to point out though is that no one says they will panic in a bad situation but thats so much easier said than done. Everyone says they want lower prices and will just wait but its never that easy. 

Fact is when things go wrong its normal to doubt your decisions and think what if I was wrong especially if your net exposure is very high (i.e. you have $1MM in properties say but only have $100K in equity and/or cash put aside thus your net exposure is high). Its very tough to say put in $20K when your property gets trashed by a bad tenant or your roof just happens to need updating and you are sitting there thinking your properties are now not even worth what you put in. As another example when half the houses on the block are in foreclosure tough to look at your property and see roses and sunshine. Also, not all areas go up in value all the time, some areas will do good, others will get worse just the way things work. Its not assured you should just hold on always and forever.

In short, RE is much like other forms of investing. Getting overextended is generally bad, investing all in one area is a risk and temperament to be able to put aside cash for bad situations and to reassess where things are during really bad times is very important. Its a marathon not a sprint and you need to always be learning. I have learned this all the hard way.

Lastly, there is always some way to get involved and learn. If you can't get comfortable doing that kind of leverage than don't. Put a little more equity or find more creative ways to spread the risk. There is often a way and just throwing up your hands and giving up is rarely the only thing that can be done.