All Forum Posts by: Jeff Roth

Hi Hadar-

Great question. 

You are asking about markets where you can Buy, Rehab, Rent out, Refinance, and Repeat (BRRRR Method) where you can buy 70% of After Repair Value and under $150,000 with good cashflow.

This is my favorite strategy as well.

There are several markets in Michigan where you can do this but the market I prefer is Lansing, MI.

It is the State capitol, there is always a lot of economic development as a result which creates jobs and demand for housing which keeps rents up and appreciation steady.

To Your Success! 

Hi Jordyn-

Great question!

You have used home equity lines of credit to purchase investment rentals and want to know the best way to pay down the HELOCs.

Between the two properties you bought, after expenses, you have $250 a month positive cashflow to use.

What I like to do is pay down some principal every month with my positive cashflow.

I use my extra active income from real estate commissions helping other investors to pay down the principal even more which just frees up that credit for me to use again.

I know I can refinance the HELOC debt before it changes to principal and interest as it is just interest only payments as yours are.

One difference is the cashflow, I have greater positive cashflow and could make the principal and interest payment in the future with the extra cashflow I already enjoy.

I always get HELOCs on my income properties as well after purchasing them to pull out as much of my downpayment as possible. Pays to have extra dry powder on the sideline and infinite returns.

To Your Success!

Hi Nicholas-

Great question!

You are a teacher from California looking to invest in states that have a high demand for section 8 housing and asked some suggestions for good states to invest.

I am a retired teacher myself and all of my tenants are section 8.

I personally love section 8 tenants and proving safe and affordable housing for them.

I am in Michigan. There are many high demand section 8 communities in Michigan because not all landlords cater to section 8 so tenants are happy and stay if you provide attractive housing for them.

To Your Success!

Quote from @Steve K.:

Quote from @Jeff Roth:

Hi Drew-

The doctors document their hours actively working on their real estate. It helps that STRs are more actively managed than LTRs to qualify for being designated a Real Estate Professional.

They do this with their individual tax professionals.

I have nothing to do with that or the cost segregation studies. I help them acquire the STRs.

 In order to qualify for real estate professional status, you need to spend more than half of your work-related hours dealing in real estate directly, or more than 750 hours during the tax year. There would be no way to do this while working a full time W2 job. A doctor’s spouse may qualify if they work a job in real estate, but very few working doctors would qualify. 

Correct. For the Real Estate Professional the doctor usually works with their spouse and some doctors have flexible work arrangements with their office or clinic or own the office or clinics and have administrative staff.

Hi Drew-

The doctors document their hours actively working on their real estate. It helps that STRs are more actively managed than LTRs to qualify for being designated a Real Estate Professional.

They do this with their individual tax professionals.

I have nothing to do with that or the cost segregation studies. I help them acquire the STRs.

Hi Mohammad-

My pleasure and thank you for the follow-up question.

I think you are in a great position and wise to be thinking about real estate investing as one of the vehicles to not only create passive income streams but offset your W-2 income.

One of the strategies I see the doctors doing that I work with is purchasing short term rentals as they are more actively managed and it helps them be seen as a real estate professional for tax purposes based on the number of hours they are working in their real estate business which helps offset their W-2 income. Additionally, you can do a cost segregation of the property and take bonus depreciation creating additional tax savings.

Beyond short term rentals, I think buying a triplex or property every two years as a primary residence and then renting out the unit you lived in and repeating this every two years is one of the best ways to accumulate a portfolio of properties with little down with property tax savings while you live in the property.

Then, it will be surprising how quickly the equity builds up as other people pay for your asset that you then can pull equity out and buy a larger apartment building after you have learned about property management from owning the smaller rental properties.

To Your Success!

 You bet Jason. You are one of the few trusted real estate voices out there. Appreciate you and your thought leadership. 

Hi Mohammad-

Congratulations on being a young doctor in Texas!

You are interested in real estate investing and are looking for resources to develop your knowledge.

I work with a lot of doctors and busy, high income earners to help them build real estate portfolios to slow down at work and offset some of their W-2 or business income.

Some books to consider are Multi-Family Millions by David Lindahl, Investing in Real Estate with No and Low Money Down by Brandon Turner, and Equity Happens by Robert Helms & Russell Gray.

Some You tube channels to follow include Get Rich Education, Ken McElroy, Jason Hartman, and the Real Estate Guys Radio Show.

Yes, until you are making attending physician money, I would house hack the house you live in by renting rooms or buying a duplex as a primary residence with low money down.

To Your Success!

Hi Jack-

Congratulations and great question. 

You say you are 23 and have saved up enough to start your real estate investing portfolio.

You are considering having others help pay the mortgage by buying a duplex or triplex and living in part of it.

Alternatively, you are considering buying a section 8 income property for around 100K.

Since you state you are already paying $1,700 a month in rent, I would start there and buy the duplex or triplex to reduce your monthly housing costs while building equity. Then, after two years of living there, you can move to another duplex or triplex and rent out the space you were living in. One big advantage of this strategy is you can use conventional financing with a lower amount down as it will be your primary residence which also has a lower interest rate than an income property loan.

On your question about buying section 8 rentals, I think this is also a good strategy to add to your portfolio and you can buy section 8 duplexes in Lansing, MI for around 100K and its a great rental and investment market.

To your success!

Hi Matt-

Great question about whether Grand Rapids is a good market for multifamily rentals and if Michigan is a good place for an out-of-State investor to look at.

Grand Rapids is one of the best local economies in the State. There is lots of economic development in Grand Rapids and it has a diverse economy. It also has net positive population growth and mostly from younger people. 

Grand Rapids is definitely a good market for multifamily investment as it has also seen rent growth unlike other parts of the country for multifamily.

It is also a more affordable place to invest compared to other parts of the country and Grand Rapids is generally landlord friendly.

A quality property manager is essential for an out-of-State investor and there are some good ones locally.

To Your Success!