All Forum Posts by: Arn Cenedella

@Jennifer Taylor

Small world, I live in Greenville SC also and invest in Multifamily properties via syndication.

We do cost segregation on all our deals and typically we find an investor gets depreciation equal to 35% to 40% of the amount invested.

So $300,000 invested might generate $100,000 to $120,000 in depreciation.

The big question is this depreciation loss is considered a passive loss and generally can only be used to offset passive income.

You need to find out whether withdrawal from an IRA is considered passive income.

You need to find out can the depreciation be used to offset the income from early withdrawal?

I don’t know the answer to that question. Ask your CPA.

If yes, then we can help.

We only invest in Greenville County which you as a resident know is BOOMING.

Let’s us know how we can help.

Arn

I’m a multifamily syndicator and could toot by own horn but won’t. 😀

Check into Left Field Investors.

This is a great group of LPs who share their experiences with GPS across the country. The cost to join is nominal but well worth it.

You might also check out the Best Conference in Salt Lake City starts April 10.

LFI has a one day full day LP presentation the day before the Conference on Tuesday April 9.

This would be a great place to start your search.

Good luck.

One word of advice is you come across a deal where the GP is promoting 8% cash on cash 20% IRR, I'd be very skeptical given the current debt market.

@Nik Frid

Short answer is YES but there are hoops Canadians must jump thru. 

I also have heard Canadian investors prefer an LLP set up as opposed to the more typical LLC set up.

@Justin Goodin

Good post. 

Property taxes and insurance are very location specific as you note. 

My rules of thumb for op ex ratio:

New product 40%
1990 2000 product 45%
1960 1970 1980 product 50%+

@Robert Mendenhall

A couple points:

Buying a 2 to 4 unit building with either FHA or VA financing and living in one of the units is a GREAT way to get started with home ownership and investing. You are on the right track.

My suggestion would be: DO NOT get bogged down in the numbers of some magic ratio. Given where you are at on your journey, the numbers aren’t as critical as getting started. 

I would look for a 2 to 4 unit property in a solid improving area of town. Not a war zone but not a Prime location either. Something that is solid and you can see improving over time. 

Putting no money down, forget about getting any cash flow. That’s not the win. 

The win would be living in a unit for less than it would cost you to rent that unit. If you don’t own you have to pay rent. The goal with this type of investment is to have your tenants pay most of the ownership cost. 

So here is what I would do. 

Let’s say it’s a duplex. But the methodology works for 3 or 4 units too. 

Calculate total monthly cost of ownership.
That’s loan payment, property taxes, insurance, maintenance, utilities etc etc. Everything. 

Let’s say that number is $2500. 

Let’s say you can rent one side for $1500. 

Your tenant is covering $1500 of ownership cost leaving you to pay $1000 a month. 

End result:

It only costs you $1000 a month to live in a unit worth $1500 a month. One can even say that’s $500 a month positive cash flow to you. You are paying $500 less for that unit than if you rented it. 

AND you now own an appreciating asset in a good market. 

That is a WIN and you have started your investing journey. 

Hope this makes sense. Good luck. 

@Evan Polaski

Thanks for the kind words. 

I have spent my entire adult life in the real estate industry. Had the good fortune to be trained by my father Hal who also had decades of REI experience.

It’s a great business to be in and if done properly, the odds are pretty high one will have success. 

But yes it’s not a get rich quick scheme. 

Think long term (10 to 15 years), educate yourself, gain experience, build one’s portfolio safely over time.  

@Ashley Wilson

Nice post.

The top or bottom of the market is only known 6 months after the fact. 

And once the market turns, it turns quickly. 

@Chris Webb

It’s a great question. 

Lots of syndicators got into the business in 2018 and 2019 and simply got lucky when cap rates dropped from 7% to 4%. 

Many of these now thump their chests on social media. 

I’ve been in real estate my entire adult life since 1978 - that’s 45 years. I don’t just jump in when the market was hot. I’ve been thru several economic cycles and have successfully invested thru it all over 4 decades. 

Like I said, great question. 

@Alex Clark

Congrats for accumulating $100K to invest at the age of 21. That’s typically way ahead of the curve. 

I would caution against the risky play with high cash flow. 

It seems to me you want to put that capital to work long term and start to learn the real estate investing business.  Gain experience and knowledge while not losing capital. 

$100K will be a down payment for a $400,000 property give or take. And if you can generate $10,000’a year cash flow on a $100,000 investment, you will be doing really well. 

Instead of trying to find the BEST market (assuming one exists and I don’t think it does), I would invest in a market easily accessible to you where you can keep an eye on things.  

One final thought, as I assume you are a first time investor, looking to invest out of area in “a risky high cash flow deal” sets the stage for you to be ripped off by a fast talker. The con artists will be on the look out for newbie investors like you. 

Someone will present you a deal that looks great on paper but will fail miserably.  Don’t be seduced by wonderful looking returns and sweet sounding promises, it is likely to be fool’s gold. 

Put that capital to work and double your money every 5 to 7 years in solid strong investments. 

The finish line of the race for you isn’t 2 years from now it’s 15 to 20 years from now. 

Line drive base hots not strikeouts swinging for the grand slam. 

Just advice from an old guy who has been investing 45 years. The fable of the tortoise and hare might be informative. 

Good luck on your investment. 

Arn

@April Birdsong

My understanding is the ability to deduct rental losses phases out from $100,000 to $150,000. 

AGI above $150,000 no ability to take deductions. 

Limit in any case is $25,000 per year. 

As AGI goes above $100,000, the $25,000 limit is reduced. Every dollar above $100,000 reduces $25,000 by 50 cents.