All Forum Posts by: David Gotsill

@Candice Menard - I'm by no means an expert on these matters, but happy to share some thoughts. Although interest rates seem to be on the rise, they are still at historic lows. From a historical perspective, there's no reason to expect that rates will ever again be this low or lower. Thus, in any loan with an ARM, we could reasonable that the yearly rate will tick up over the course of the loan. This is the reason that so many borrows are in a flurry to lock in long-term loans (fixed rate) now, to capture these low rates. I believe this is the common wisdom at the moment.

If I were you, I would map out simple repayment plans for each of these loans (either in excel or using an online mortgage calculator). You can see what month payments are in each scenario, what total interest paid over the course of the loan is, and how that changes with your planned prepayments.

In terms of planning (and perhaps peace of mind), you can't beat fixed term.

I believe you're going to want to find someone licensed in the jurisdiction in which the properties are located, since a general review from a landlord-tenant law point of view is state specific, and a prudent review for short-term rental use may include a check of whether there are any local ordinances or zoning requirements to which the property is subject.

Not knowing the situation or any laws directly on point, in seeing that you'll have hot tub/pool, I would also want to involve and insurer, both to insure the property against misuse by short-term tenants (they wouldn't!), as well as to protect you from any liability claims (some slips and falls at the poolside, claims the ground wasn't reasonably textured or whatever).

I'm not sure what the nature of your question is, but in my experience (as an attorney) attorneys are often not the best source of information on taxes (there are exceptions, and some very talented business tax attorneys).  For most individuals, tax questions might be better addressed to a tax professional (like a CPA).

Having a non-US person invest through a single-member LLC is a commonly used approach.  But as to whether this particular LLC Agreement is good for you?  I think you're going to either need to engage an attorney for review (best), build some non-attorney contacts who can comment on whether or not it seems customary (better), or just risk it (first, of course, trying to understand the full scope of the risk).  Presumably you're investing a fair amount, either as an accredited investor in a 506(c)/(b) or as a sophisticated investor in a 506(b), and the few hundred dollars for a proper review might be worth it?

Ben - this is key one reason people should think long and hard about investing with partners. Some thoughts below, to the extent they're useful as you consider your options.

No early exit.  One great approach is to draft into the operating agreement that early exit isn't permitted.  All investors are in it until the property is sold in the ordinary course.  Great approach, because everyone knows what they are getting into and it's easy to understand.

Forced sale.  The other side of the spectrum is a forced sale.  If one partner wants out but the remaining partners cannot buy him out, then the selling partner can force a sale in the ordinary course of the property, and the proceeds are split in accordance with the operating agreement.  Not necessary a bad solution, because a selling partner is presumably incentivized to maximize profits of the sale.  This gets tricky is partners are not holding equal shares: can a partner with only 10% share force a sale by partners owning 45% each?

ROFR & Approved Buyer.  You could allow that the selling partner grants to the others a right of first refusal - meaning other partners get first bid on the share of the partner leaving.   If the remaining partners can't/don't want to buy, then the selling partner can sell to another third party (subject to some approval by the remaining partner).  

Other thoughts.  All of these carry questions of timing, notice, valuation, wind up and more.  You'd be well served to thoroughly discuss among the partners and really ensure that everyone understands and agrees from the get-go.

Same advice as above, only that we're recently upping our MTM premium to $150 in some cases, and with notice that even that is limited.  For example, we'll say we're willing to go MTM at +$150 per month for 5 months, but will revisit after 5 months.

I think the driving factor here is not "what is the standard MTM premium in the market?", but rather "how far under market are current rents?"  If your rents are substantially under market, then reach for the moon.  In such a case, a +$150 or +$100 might still be a steal for the tenant.  If you're essentially at market rents already, then maybe $50 is all the tenant will bite, and it's merely a $50 fee for convenience.

@Matthew Buaas - There's a small group of Japan-based US investors here in these forums - you might search the forums and see if you can find more of us.

First, kudos/congrats on everything: marriage, kid on the way, and not letting any of that unduly slow your investing.  Excellent.

I am also based in Japan, and would be happy to connect and chat about how I have gone about acquiring property in the US.  I'll send you a DM.

@Josh Surver - fellow Japan-based investor here.  I suggest you reach out the esteemed @Daniel Mills (also in Japan).  I imagine he may be able to provide share some contacts that would be very useful you. 

Curious if anyone out there offers there tenants a tech package or smart home package for additional monthly fees?  Options might include smart locks, smart thermostat and smart doorbells, among others.  The goal being to add an additional stream of income at the properties.  I'm concerned about what tech support we might need to provide, what issues others have faced, and if this service would be a differentiating factor for tenants. 

I've been thinking about offering as an option to tenants, but wanted to gather some field intel first.  Thoughts?

Hey @Dennis Maynard - in my experience, prices can vary wildly in Tokyo.  There are many factors, as with any real estate market:

(1) Location. Tokyo is huge, and the difference between a SFH in central Tokyo vs any of the various outskirts can be shocking. For example, first link below is a 2 yr old home, approx 1900 sf, in central Tokyo's Minato Ward. Asking price is roughly $2.4M. Second link is a similar size, albeit 10 year older home, in Setagaya Ward (a very desirable neighborhood), but still "only $1.2M.

https://www.homes.co.jp/kodate...

https://www.homes.co.jp/kodate...

(2) Age.  Many home buyers will want a new home, and older homes depreciate to zero (sounds crazy, right?).  So, valuation of property is split between land and structure.  Land generally retains value, and structures generally depreciate to zero.  So, if you buy an older home it's typically much cheaper, since you're not paying much for the structure.  In many cases, vacant land is cheaper than land with an older home.

(3) Construction.  I grew up in the Western US, where homes are generally constructed the same (broadly speaking).  That's not the case in Japan, where there is so much variation.  Some homes are 2 x 4 construction, like you'd see in Colorado or California.  Other's are steel beams, and others still are entirely concrete.  When building my home, I could easily have added $1M to the price tag by just using concrete and steel.  What's more, there's a lot of variation in the fixtures and other bells and whistles (like you might see in the luxury market in the US), so prices are all over.    

For S's and G's, below is the most expensive SFH on the market in Tokyo right now, followed by one of the least expense:

https://www.homes.co.jp/kodate...

https://www.homes.co.jp/kodate...

The condo market is probably more active than the SFH market, but I don't have much insight there.