All Forum Posts by: Account Closed

Thanks Scott, I really appreciate the insight.

Was hoping to get some insight on holding companies or LLCs that have Subsidiaries which hold the investments. I've been researching the last few weeks on this because I'm planning on purchasing my first investment property this year; I don't believe I 'need' a parent LLC for liability protection (especially because it'll be my only asset).

My question is this: should I create a holding company now (in which, I'm the principal) and then create an LLC for my investment(s) (where the holding company is the principal) in anticipation of purchasing several other assets over the course of the coming years, or should I take it step-by-step, put the property in an LLC and wait to embed anything until I have more assets?

I don't quite understand all the logistics; I know everything is relatively dependent on which state you live in (Arizona, btw). Not asking for legal advice, just need enough info to ask a better question.

How much "lead generation" do you do every day for your business?

I'm curious as to how many investors are actively looking for deals every day. It seems like a lot of people expect great investments to glide right into their lap every time they come around; and I think that's interesting, because sure it happens, but really only once in a blue moon.

I only recently thought about this questions a few weeks back taking to an investor who won't get into business with anyone who doesn't dedicate at least an hour every day to educating themselves about specific markets and/or looking through financials or examining comps - just anything that would produce some kind of value to their portfolio or business in general.

Wanted to spur off a conversation: what do you think? Is an hour a day too much? Is it not enough?

Happy Monday everyone; I hope you all have a great week!

I've worked with a mobile home park firm the last few years and in my experience, most park investors don't like park-owned homes because of the high repair costs (even though you can usually rent them out 2-3 times higher than tenant-owned home spaces). Other investors prefer 50%+ POH units and have an array of strategies that justify a high POH/TOH ratio, commonly leasing them on contract to purchase to existing tenants. 

I think a large factor has to do with the age and condition of homes. Nobody wants a POS mobile built in 1951 that needs an extra $5k in capital repairs before you can rent it out, but obviously a 2005 DW that's at least B condition isn't something I would necessarily stray away from.

My question is for all the park investors out there: do you prefer a larger number of park-owned homes or tenant-owned homes? Be as general or as specific as you like, it's not a clean cut-and-dry answer for most people I think.

The formula for cash-on-cash is cash flow divided by total cash invested (aka down payment). To my knowledge, it's primarily a single-annual indicator meaning the cash flow is annualized and only for one year, whereas IRR takes values over several years (5-10 on average in my experience).

I use CoC all the time, rarely ever use IRR because it can be hard to predict income multiple years out but I recently met someone who is religious about NPV & IRR. He just got a finance degree and supposedly those are the most important, but I just haven't found better use of them. So I wanted to get a second opinion. What's your standard of practice? Do you think IRR is more important than Cash-on-Cash? Obviously this is a per-deal basis but it's an interesting question.

I've been hearing a lot lately about these new opportunity zones (from the most recent tax bill). Anybody want to help me wrap my head around it a little better?

One thing I've been curious is how the $1 trillion deficit will affect Americans and more specifically, the real estate market. Should the Treasury have to pull out a Federal Reserve loan to finance the debt, we can expect interest rates to rise. And obviously, with higher interest rates, borrowing power is reduced.

My question is: could higher interest rates lower property values and raise cap rates as well?

@William Glass makes perfect sense

I appreciate it gentlemen, thank you for the insight. @William Glass I absolutely agree with holding off until a clear winner unfolds and Warren Buffet's rule has been a personal favorite of mine for a while now. Now when it comes to real estate as you and @Account Closed I'm with you; I'm also lightly invested but not my life savings by any means. Speculation is the only thing I'm running on which is why I'm constantly looking for more information to help scope my strategies. Now, a question for you all, do you think that as time goes on, the "velocity" of cryptocurrencies, as Mike pointed out, will increase in the same manner that internet speed has or are they completely unrelated comparisons in this sense?

There is a lot of controversy on Bitcoin, Ethereum, Litecoin and other similar cryptocurrencies. Many experienced investors have come out and said that cryptocurrency is just a facade and there are other dangers involved that are not visible. On the other hand, we've seen several people make a ton of money on these investments and others lose the same.

I'm curious to see what some of you think on cryptocurrencies; whether they're good investments or just a waste of time. But more importantly, I want to know why. Thoughts?