All Forum Posts by: Eric MacDonald

Eric, so much to unpack here. But first, I see you're in Ann Arbor. My wife and I nearly relocated there in 2017... we even had offers on several properties before we grew tired of being outbid and ended up moving to Troy.

I like the idea of staying local for you or, at most, investing in the Detroit market. I'm biased there as I have 12-doors. 

In Detroit you could hit a 10% cash-on-cash return unlevered. That would hit your goal pretty easily. And if you are staying in B class areas of Detroit I believe you'll see appreciation as the city is on a major upswing.

That said, you probably can't go wrong staying in A2!

Starting out, I would recommend going slow and only buying 1-2 properties at first. Give it some time, see if it's something you enjoy, and then scale up. You have a lot on your plate... real estate could be more work or mental bandwidth than you realize/are wanting to expend.

Personally, I like starting with SFH's or small multi stuff like duplexes. It's a great way to learn while being hands on and much easier to exist if you decide it's not for you. As you gain experience larger MFH stuff may make sense.

But of course, everyone is different. Hope that's helpful to some degree!

@Eric MacDonald

a few random reactions below...  (I always wonder about these "I have $XK cash" posts...i hope you're real!)

-your goals aren't particularly specific.  just about everyone wants cash flow, appreciation, and diversification.

-start local.

-definitely employ a PM.  there is no reason whatsoever not to based on your situation.

-LTR and STR are very different. which do you want?  similarly, SFHs and small apartment buildings are very different.  which do you want?

-if you buy on-market single families requiring minimal renovation, you won't cash flow - you might even be negative.

-find the local REIA meetings and go to all of them. if you have to drive 30 or 45 or 60 minutes to find a few, so be it. see what everyone else is doing.

Hello Eric! 

Today I just had lunch with a friend in a similar situation. Bear with me here, ask yourself the following: 

Could your wife be considered a "real estate professional" from a tax perspective? 

To qualify as a real estate professional, a taxpayer must satisfy the following tests: Perform more than 50% of services in real property trades or businesses (“50% test”), and. Perform more than 750 hours of service in real property trades or businesses (“750 hours test”)

We want to know that to determine which real estate you should consider buying. Paying taxes is our highest expense, and if we can get those reduced or even eliminated, it will severely juice your returns in the positive direction. 

If you have that much cash, you maybe able to buy a small apartment complex, around 1.5mil for example, and only put 25% down. Then with the remaining cash, you can put that into stocks, lend it out, buy corporate bonds with nice yields or even buy more real estate. The losses generated from that 1.5mil building via cost seg and depreciation would be more then enough to offset your income, and you could invest in other things if your not comfortable putting all your eggs in one basket. Our first few deals are rarely our best, so buying multiple deals allows you to learn quicker and make mistakes without to much at risk. 

Please let me know if that helps! My wife and I were in a similar situation and this plan I described above is what worked for us. 

Your strategy is very well thought out! This is exciting to enter the real estate space. I highly recommend bypassing the LTR route altogether unless you invest in multi family. I would recommend investing in multiple STR's where returns are 20-30% vs. LTR single family where returns are next to nothing in the immediate phase. If cash flow of 6-8000$ is important to you, STR is really your best option. Much more fun and attractive as well to invest in the manner. Best of all people staying in your home do not obtain tenant rights.

Good Afternoon Eric,

It is wonderful to hear of your success of your previous investments and management of your current assets. The next step should be investing in real estate!  I work in Northwest Florida and recommend it as an area to check in to for rental investments.  We are experiencing incredible growth here and it is an area that always does well despite market shifts and economy because we are surrounded by 3 major military bases.  In addition, our beautiful beaches and tourism are flourishing.  Residential rentals, house flips and vacation homes are hot in the area.  If you want I would be happy to email you some comps. I am an investor and real estate broker myself.

Best regards!