All Forum Posts by: Tobias Falzone

@Pavan Sandhu - It was off-market through a wholesaler I met at one of the local REIA groups.

I just flipped a house in west sac and had considered Airbnb and renting it out before deciding to sell. I think Airbnb is only viable close to the ball park or near the bridge to downtown. It is definitely a formerly tough neighborhood that is well on its way to being revitalized. But it still has lingering problems related to its past. Long term rentals are a good option in the other areas and I feel West Sacramento will appreciate faster than the neighborhoods around it due to the revitalization of new construction and proximity to downtown.

Feel free to reach out to me. I have flipped a house in Sacramento and did the GC work myself, but can recommend one GC that does a lot of flips for other investors, but he is expensive. Do you know of anyone in your area? I have a house under contract in San Leandro that I plan to flip.

@Caleb Bryant - A lot of what I'm seeing some on the market are deals that people bought empty or nearly empty after the recession that have already been repositioned.  Vacancy is down so a lot more properties are stabilized and financeable.  Direct marketing for deal is going to yield better results.

@Brian Reynolds - No experience with new construction here, but I have seen rents much higher for newer complexes.  Its probably worth looking into if you can find all in constructions costs under, but I would prefer to buy and existing property because it is inherently less risky.

Yes, but be aware you will be charged the $800 per year Franchise Tax as a corporate entity doing business in California.  If you hold it in your personal name or as a sole proprietorship/partnership, this tax will likely not apply to you.

I am pursuing 20+ unit multifamily properties in Huntsville right now.   If you are interested, maybe we should organize a meetup sometime in January for folks interested in multifamily in the area.  I'm interested in connecting with other active investors in this area as well with interest in larger 5+ unit properties.

Are you interested in any particular niche or class of property for investing? I’m happy to connect and grab coffee/lunch sometime if you’d like. Are you a part of any REIA groups?

I'm also interested in learning more about the multifamily market in Huntsville. I have plans to try to acquire a small complex with a local partner in early 2018. From what I have seen, the vacancy issue experienced a few years ago is stabilizing. I would like to focus on finding off market deals because the area is relatively small and not much inventory comes on the market on a regular basis.

Ok, so I just had a literal tax nightmare last night, awaking from a deep sleep in a cold sweat. Here is what has been keeping me up at night lately. There are a few proposals for income tax reform that I have been thinking would seem to really affect RE investors. 1) Elimination of State & Local Tax Deduction - property taxes. 2) Elimination of Interest Deduction for Loans. and 3) Effectively eliminating the Mortgage Interest Deduction for most homeowners by increasing the standard deduction. It would seem to me that this 1-2-3 punch of changes would significantly affect how I would have to do calculations for buy and hold properties, forcing me to estimate taxes in a new way really tanking cash flow. Here is a quick back of the envelope calculation illustrating how a cash flowing 8% CAP property could turn into negative cash flow with these additional taxes.

Price	$500,000.00	$500,000.00
25% Down	$125,000.00	$125,000.00
75% LTV	$375,000.00	$375,000.00
8% NOI	$40,000.00	$40,000.00
5.5% 20yr am Loan Payments	$30,955.00	$30,955.00
Cash Flow	$9,045.00	$9,045.00
Year 1 Interest	$20,360.00	$20,360.00
1.2% Property Tax	$6,000.00	$6,000.00
Additional Taxes (35% Bracket)	$0.00	$9,226.00
After New Tax Cash Flow	$9,045.00	-$181.00

I fear if these numbers are accurate, it could trigger a shift in GRMs and Cap Rates across the RE investment spectrum driving down asset prices, particularly for buy and hold investors.  At the same time, reducing or eliminating the mortgage interest deduction along with rising interest rates could serve to dampen traditional real estate purchases as well.  So, my question to you all is are these fears justified, and how would your investment strategy be affected by these proposed changes?

It all depends on your goals. If cash flow is what you need to live on, then high cash flow markets out of state could serve you well, especially if you plan on relocating. If instead you have a good job and want to focus on net worth growth, then different areas with less cash flow and greater chance for appreciation could bring you better gains in the long term. Think about your goals and find a strategy that allows you to meet them. There are real estate investors in every market, but some areas favor different investment strategies, which is why you need to understand yourself, your strengths, and your goals before you even begin thinking about choosing where to invest.