All Forum Posts by: David Beard

Hoang, you understand it right on 50x monthly rents. In the midwest and southeast you don't want to settle for an 8.16% net yield on multi-family property of a caliber where mthly rents are $425 for a 2BR unit.

This type of property should have net yields of at least 12%, thus gross yield of at least 24% (assuming the standard 50% for expense/vacancies/reserves), which equates to paying no more than 50x monthly rents, assuming tenants pay heat/electric. Paying more than that in THIS area of the country is a poor use of capital, IMO, as there are better deals. It may be difficult to locate 12% cap MF deals in Louisville at this point in time, but that still doesn't make these good deals. You can be more aggressive in looking for motivated sellers by contacting absentee (out-of-area) owners, for instance.

So I completely agree with Hoang's buying discipline here.

* Timers on interior lights.
* Motion activated lights outside
* Radio playing inside
* Security sign (like ADT) in the window and in the yard.
* Give contact info to neighbors and ask them to watch.
* http://simplisafe.com/burglar-alarms

A blog post:

http://www.biggerpockets.com/blogs/1396/blog_posts/9875-power-of-e-community-for-new-members-

Equity Trust posts the following info on RE flipping in an SDIRA.

http://www.trustetc.com/new/self-directed-ira/self-directed-investment-options/rehabs-and-flips.html

Jon, thanks for asking. Rob, I agree and I passed on this!! This was one of the first things I looked at after deciding to start actively investing. Now having looked at a much larger number of deals, it is obviously way too pricey. It's still on the market and they've since dropped the price about 10%, but still way too high. Seller is not sufficiently motivated.

I'm now looking (should get inside this week) at a 24-unit vacant all-brick REO complex in an improving C area. Could possibly get for $80k and be all-in after rehab at $9-10k per unit (all 2BR), with mthly rents of $500-550/unit, and tenants paying gas/heat/electric. The prior owner paid $720K for this complex in 2007, but this price left zero buffer for vacancies, defaults, and evictions that hit, and so the bank now owns it. It was already rehabbed back around 2005, so I think it's probably in better condition than it's external appearance suggests (1st floor windows boarded, which is scaring off folks, as well as its vacant status, meaning it's an all-cash deal).

I'll post on this as anything develops.

As you're probably expecting to hear, it does sound too thin to burn $50k of your hard-earned cash on. The net yield (cap rate) is just 7%, and your cash ROI with the loan would be just 9%. And that's assuming that tenants pay their own gas/electric/heat, and that the landlord pays water/sewer/trash. If landlord pays heat, then the returns are even worse (assume 55% expenses at least in this scenario).

Honestly, you should be looking for minimum 10% net yield deals in this buyer's market, regardless of how nice the area is, and preferably 12%+.

For multis, you should pay no more than 50 times gross monthly rent (the "2% rule"), and preferably 40. I really don't know if that's realistic in your area. You may need to range farther afield.

This thread is several months old (years in smartphone time), and I'd be interested if any of the posters has changed their opinion of their phone they selected, has latched on to a new phone, or if any one else would like to comment on the smartphone they currently use in their RE business and what they like about it.

Also interested in who might be effectively using an iPad or other tablet technology in combination with a generic phone.

Dave -- it sounds like you're stating that liability that stems from your LLC-owned rental property can't be shielded from your personal assets if you manage the property.

My understanding was that you have personal liability if you acted in a negligent or fraudulent manner with respect to your rental property. I would think that many successful lawsuits do not entail negligence or fraud, and my understanding is that your LLC would in fact provide some limited protection from these type of lawsuits.

Please clarify. Thanks.

Why don't you put the details in a spreadsheet (maybe you already have them there), upload to Google Docs and post a link.

The author was a senior trial attorney for the IRS ("resume irrelevant"??). SDIRA companies are indicating that this can be done as well, on a relatively small scale, which is where many of us would fall. I don't know the answer at this point, but I don't think it's by any means clear enough to be dogmatic about it.

Well, here's the author's resume.

https://www.estillandlong.com/Scott_M_C77P.html

Will, I'm going to e-mail him and ask him to defend his position with tax court precedent or something concrete.