All Forum Posts by: David Lilley

Property taxes are one thing to watch out for. You need to assume the property value will be assessed at the sale price and then be taxed at that rate. This could be a huge increase. 

I'm assuming you are managing it? Underwrite for at least 10% vacancy. You also need to determine what major systems (roof, HVAC, plumbing) will need to be replaced during your ownership and set aside money for those capital expenditures. Depending on age, $500 or more per unit for repairs and maintenance. Be conservative and add 10% to your total expenses.

@Michael Burks if you really have the passion and the funds, you need nothing else. Read everything on this forum, read books, listen to podcasts, go to REI meetups, meet like minded people to partner with on deals, and buy something. Easy as that.

Your best bet is to approach a reputable broker and have them bring you their top buyers. The fee will be less than a traditional listing and it will be worth it to avoid the non-performers and tire kickers.

Anyone would be happy with that return and hold period. Great work!

@Corey Reyment best case scenario, you will need to contribute half of the equity requirement. You get 15% from seller, you contribute 15%. 

@Josue Vargas If it were me, I would bite the bullet and take the tax penalty now. That money will get taxed eventually and potentially at a less favorable rate. Rolling that fund into anything self directed wouldn't be worth it either since you would be investing in real estate. Utilizing a 1031 exchange, you can grow that money tax deferred just like a retirement plan and you will get paid nice cash dividends while you do it. In a self directed fund those dividends would have to go back into your fund. 

That being said, know your limitations. If you don't have the will to really learn real estate investing then find a competent operator that can invest that money smartly so your money only grows.

@Philip McCleary any reason why you don't want to scale up to multifamily? Is the debt non-recourse on the 15 SFR's you own?

1-4 unit properties are valued based on comparable properties. 5+ unit commercial properties take cap rates into consideration when determining value.

@Hakeem Valles glad to see you like the Phoenix area as well. We just closed on a 16 unit multifamily in Chandler last month. Always looking to add to the team!