All Forum Posts by: Jared Smith

@Nathan Brown this answer will totally depend on goals, time of life / real estate journey, and many other characteristics, but I would look at one of two things. In my new job I am just too busy do a bunch of work on properties like I have in the past so I would look for a passive investment where I still own the asset, not a syndication, I am not ready for that route. I would likely look to leverage that safely over 3 +/- 1 properties and start building out an appreciation base. In 4-5 years I would looks to refinance and pull out the equity in the best performing homes and expand my portfolio if it makes sense at that time. 

I feel like home prices are going up either due to inflationary pressures from tariffs or when interest rates go down, it is going to unlock the floodgates of people that have been holding onto their homes with lower rates and now looking to upgrade. I guess only time will tell!

@Bruce King, determination of a good deal is very subjective. Someone looking for a safe haven for cash from the stock market may be fine with a deal that holds value against inflation while the craziness is happening with stocks, but someone who is just starting out may need a little more meat on the bone.are you looking to invest locally on a hands on project or are you looking for out os state options with a turn key company? I would recommend picking a strategy and focus your efforts on that one, maybe two things. Chasing to many different strategies at once will prevent you from being successful in real estate, in my opinion.

@Niranjan P Ghate I totally understand your dilemma and we work with investors just like you everyday and everyday we also work with investors that were like you are today, but 10 years ago and now how flourishing portfolios today. Just today I spoke with 3 different clients of mine that have had their resident in their rentaL home with us for 8+ years. 

Check us out. We have PM in Houston, Dallas/Ft. Worth and San Antonio in TX. 

@Bryon Gill would be happy to connect and see what type of investments may be a good fit for you. It's all about creating a long term plan and goal, you definitely don't want "wing-it" when it comes to real estate. I can help you find a tried and true method of investing depending on just how involved you want to be. If I can't help, I am sure that others on here will be ready to assist as well. 

I am a retired submarine officer (21 years), retired in 2023, and my wife and I have been investing in real estate for ~20 years. Flips, Brrrrs, buy-and-holds, residential and commercial. 

Would be happy to jump on a call sometime to chat if you want.

Have a good day!

@Krystan Menz Just as important as finding the right market is finding the right turnkey company and making sure that you are the right fit for one another. 

Some things to think about:

1. What markets and more importantly, what sub-markets in those markets does the company focus on/purchase in.

2. Does the company shift risk away from the investor? Do they provide the full list of renovations that were completed? Do they stand behind their repairs/renovations? 

3. Do they find residents for you before or after the sale? This is important because there is a big difference in knowing what the rents will be with a resident in a signed lease or already moved into a home vs. a prospectus on what the home should rent for. Often these feel good values do not come to fruition. 

4. Does the company provide PM services under their own company or do they have you off to another local company? Do they have a presence in the communities they are purchasing in? 

If the answer to any of these are no or you are not sure, they may leave you hanging when you most need them. 

There are lots of good markets out there that you can have positive income from day 1, but remember that all that is also a function of down payment and interest rate. Evaluate what the straight cash on cash return is for a cash purchase to understand if you want to get into that deal or not. 

@Steve Yount we work with lots of investors in your situation. We actually point you in the right direction to get your assets rolled over into a SDIRA vehicle and then we work with a lender that does non-recourse loans or you can purchase our turnkey options with cash from your SDIRA. 

Non-recourse loan rates are in the mid-7% range  currently with various amortization periods up to 30- year amortization periods.

@Dave Foster Great point about the depreciation of the repairs made. That is some higher level math there!

@Gp G. was this a rental property? I am assuming yes, but if not, you don't have to Worry about a 1031.

If it was a rental property you also need to consider how much depreciation you have taken on the property. Based on the purchase price of $140k I would make an assumption that you take between $4-$5k of depreciation per year, regardless of whether you did not not, the IRS makes that assumption for you. So that would be between $20k-$30k reduction to your tax basis, below your purchase so say you are starting at $110k-$120k. Now you add $30k of repairs x 6 years, you are stating you have put in $180k into repairs so add that on to your basis, now $290k-$300k. Your mortgage and CC debt are irrelevant to the discussion other than you won't be able to pay those off if you do a 1031 because you can touch that cash, it has to be handled by a qualified Intermediary (QI) and then put into a new property with equal or greater value. You can also add/subtract closing costs and fees from your transaction to reduce the taxable income.

If these assumptions are correct and you sell for $350k, you would be exposed to taxes on about $50k of the income at about 15-20% depending on the specific tax rate. That would be $7500-$10k of taxes you would owe. A decent rate for a 1031 is around $1250 +/- $250 for the full transaction for a single Property exchange.

If you want that money back free and clear and pay off all of your debt I would recommend foregoing the 1031. If you can't really justify $30k per year of expenses/improvements you would want to reconsider potentially.

1031 folks, does all that sound correct? @Dave Foster

@Bhavin Patel I have the benefit of being familiar with the model you are looking at and the model that @Jordan Ray is referring to. You two have completely different goals and passivity requirements. How do I know, I recently set Jordan up with a home that he is renovating to create a long term rental, but he and his team are doing all of the work and will have to find the residents and they happen to live right here in Memphis where they are doing the work where he lives and works in real estate full time. 

The moral of this story is that you have to be careful when comparing deals and % returns because most everyone has different metrics and evaluation criteria. If you were an active investor and shooting for 4% CoC return that would be nuts. But this is also dependent on how much month you put down and various other things. Are you considering the equity pay down that your resident will be providing for you which goes directly toward to your net worth, not your bank account.

The question is one aspect, who and how they answer is what you need to be weary of.