All Forum Posts by: Elena P.

Good thing if you have somebody in the area- just to keep an eye on the things- a freind or relative, at least at the beginning. 

From my experience, your best bet is appreciation.

I thought to get the house paid for ten years- it came hardly to 80% after all.

The rent also changed a lot, but as individual LL you will not want to rise the rent

substantially every year and lose the good tenants. 

With elevating PT, accumulating repairs etc your cashflow will become less and less attractive, until you decide to sell.

I already stated my bitter OOS experience in my first post on BP. The people are right about PM is the key factor.

BTW, I have been not only out of state LL but out of country most of time,

Unfortunatley, 8-9% from rent is miserable income for anyone. So mostly PM makes money on rehabbing and repairing.

I would advice avoid big PM companies, try to find local small guys wanting to start up or scale the business.

They are usually flexible, can contract on month-to month basis, can even agree to use your contractors. I prefer get rent on my account and not in PM escrow, since it gives me more power to depart if we do not "click" together.

And be ready for turnover every 3-4 years. That's normal for this business.

To revive the topic:

I contacted some agencies from BP, selling DST.

It appears, I can not do this option anyway, since I have only 250K to invest, and mostly DST are designed for accredited investors with minimum one million to contribute.

Regarding 1031- I do not see what net 5% ROI above can be achieved anywhere in suitable for me locations.

Even in hot locations I do not believe in even double appreciation in another ten years.

And after ten years I still have to pay the leftover capgains, plus useless depreciation.

I think, 1031 just has no sense in this case (I'll not do 1031 forever, and my descendants have no plans to return to US).

Hi Dave,

I greatly appreciate your guidance and help. 

I'll definetely look close on commercial.

I l've read about DST, but found it too complicated and not suitable for the short horisont of investment.

Also, I am a bit apprehensive to the fractional ownership, since you do not have full control over the asset.

It is comparable to condo in this regard. But it might be more passive, for sure.

All depends on math, and that I do not plan much more than 10 years (if I will survive up:).

If I factor the expenses (related to cost of the residental rental) 2,5%depr+1,5%ptax+2%insurance+management etc., that leaves me really small space to get the profit without appreciation.

May be for commercial the numbers will look different. I will sure check the appropriate board on BP.

Oh, sorry, missed condo part. In this case nobody knows..Also the board can try to pull as much as possible from HOA fees, I suppose. Depends on market, but mostly you can rent everything, even shed:).

Depends how long they stayed in the water, can take from couple weeks to month.. Did you see mold inside? As long as you will be able to recover to the decent condition, prove it's mold free (take out insolation and repflaster anyway), I do not see much difference to the other properties in neughborhood.

I'm not sure about out of state in Philly- it looks like pretty much taxed for my taste (search on forum for Philly tax).

The help with discrediting some of the options above is also appreciated.

Hi wonderful BP community,

I need your help in decision’s making.

Ten years ago I purchased (without seeing it!) about 100yo MF in MA, hoping to get it paid off in ten years. In couple of two weeks visits, I rehabbed it with the craigslist “proffies” for like 15K, which was not bad at the time.

In retrospective, there were two things, which significantly reduced cash flow:

1. the location- as excited first time “investor” I did not pay attention to numerous sump pumps (the house actually sinks in the swamp- not unusual in New England)
2. the property manager- I had one great guy for the first four years (also found in craig). Unfortunately, after a while he decided that PM is not his thing. Then I hired a “big” PM firm- which was a pure disaster- the permanent turnover of the staff, skyrocketed repairs. Then I was fed, I’ve found another one-guy- management, he was building his PM business, but his repairs costs were building up as well.

My remarks along the 10years-way:

a) It might be a business circle for rental, but after ten years, they all inevitably come to the point when the major repairs are necessary to keep them alive.

b) Though appreciation has doubled or even tripled the sale prices in area, the rent raised only about 50%.

c) The cost of rehab and repairs tripled as well (well, for “craigs-profi” may be doubled). In general, it correlates quite well with the overall income level in the area.

I’d like to draw comparison to an investment apartment in one of capitals of east Europe. It’s B-class, was rehabbed long distance for 10% of purchased price, strict 0.5% rule regarding cash-flow (or 5% yearly, but the property taxes there are practically nonexistent), all the utilities on the tenant, super landlord friendly, great PM found through internet and absolutely hassle free. While at the last year, it was not a couple months passed before I encountered yet another $$$ problem with my MF.

The thing is all B...R process is getting old and I am getting 50+. I am buried out of US with family and other commitments and cannot fly transatlantic on every whim .I’m finally going to sell and looking to reinvest for another ten years by exchange 250K of profit. But in what??

I’d like it to be

• As much as possible new ( built not before 1950) and updated
• Sitting in B/C-neighborhood, and able to find “its” PM, not charging arm and leg.
• Here comes the hard part- it has to be in range of possibly short direct flight from Europe, namely, on the border of the major metropole, in case I do need to be present. Great Boston is still ideal from the distance point of view, but the inventory is almost nil, crazy-priced and mostly antic.
• Deliver at least 5% ROI yearly after all expenses (taxes, management, insurance etc.)

Sketching the math for ten years- I got 100K CG rolled in, 70K future depreciation (which I have no use of due to low rent income, but will be forced to claim on a future sale), 20K closing/settlement etc. So even going to exit after ten years with the same entry price, I will lose 50K. Which means, the property has to deliver in rent 5K net yearly, only to break even and do not lose the equity. If I want to call that “investment”, comparing to 2% bank CD, then it should deliver 10K net, which is min18K with all the expenses. What and where it might be?

• Condo in outskirts of Boston. It will hardly deliver 5% ROI and hardly will appreciate. Also I will have to find somebody just to collect the rent from individual condo unit- have no idea where to look for him?
• SFH in middle of nowhere in MA, may be an hour from Boston- here again not so much PM options and looming rehab issues.
• Turnkey or such out of state -I would go to Midwest if I was living in US- but it might take me one full day and couple flights to get there. I’ve checked some metropoles along East Coast- I get or bigger property taxes (MA is 1,4) or equally hot prices. Many locations appeared to have the tax homestead exemptions, which farther kill the cash flow.
• Land in Midwest- no rental income but no depreciation as well+ usually higher selling commissions +waste of property taxes. Appreciation is rather unpredictable. Also I got impression, the land selling is a long process without giving substantial discount.
• Did not look commercial, but I suppose, it’s not so much money to make the game worth?     

Would be great to have your opinion or help in sorting “this soup” out. As you see, I am quite broad-minded and open to the ideas.