All Forum Posts by: Jeff Roth

Hi Stephanie-

Great question! You asked if you and your spouse can have two primary residences for tax purposes in California.

While I am not a tax expert and you should consult a local tax expert in California and/or real estate attorney; in Michigan, if a married couple files taxes separately, they can claim homestead exemption property taxes on two separate primary residences. While this lowers property taxes (which does help), it does not affect income taxes.

To Your Success!

Hi Avani from California-

Great question! You asked about out-of-state markets that cashflow as the properties in your area are too expensive. You are not the only one experiencing this where they live.

Fortunately, there are many markets that cashflow under your $500,000 budget in Michigan.

We have excellent property manager partners (including short term rental property managers), property inspectors that find everything, reliable investor friendly contractors, and have helped many investors from California and across the country.

The key to successful out-of-state investing is having a strong team that acts as your fiduciary including an investor friendly Realtor.

To Your Success!

Hi John-

Great Question! You asked where to find cash flowing properties as you are having a hard time finding properties that cashflow in your $200-300K budget.

Agree, finding cash flowing properties is tough these days.

However, Michigan has many cash flowing markets at or below your budget, with strong rental demand, rent growth, and appreciation.

We have excellent, local property managers in these markets who can maintain the property, increase the value of your property, and reduce tenant turnover which maximizes your return on investment.

To Your Success!

Hi Henry-

Great Question! You asked how do you manage contractors when you are investing out-of-state?

Recommend using a trusted, local property manager when investing out-of-state. They should be maintaining the property and looking for ways to add value, increase rents, and reduce tenant turnover. They also should have trusted contractors or in-house contractors they supervise.

If you do not want to go the property manager route, I would look for referrals from people locally on groups like this forum, Facebook, Nextdoor, or local real estate investor groups and ask for before and after pictures of work. Pay with a credit card in case you have a dispute and put as little down as possible until satisfied with work quality.

To Your Success!

Hi Jon-

You are a new real estate investor and concerned that finding opportunities is harder with prices and interest rates what they are currently.

Great question! You are not the only one concerned about this.

There are still markets that offer strong cashflow in landlord friendly communities.

As an out-of-state investor, you want to make sure you have a strong team in place that acts as your fiduciary and makes sure you buy well and the property is managed to increase value and reduce tenant turnover.

There are many markets in Michigan that cashflow with high renter demand.

We have helped and continue to help many out-of-state investors build portfolios of cash flowing properties.

To Your Success!

Hi Angela-

You asked about multifamily markets with strong cashflow especially for out-of-state investors.

Great question!

We help investors, from around the country, invest in high cashflow multifamily properties in Michigan.

Specifically, we like the Lansing market for several reasons. It is the state capital. There is a lot of economic development going on driving jobs which drives housing demand. The cost of living is lower so your labor costs on repairs are lower. It is generally a landlord friendly place to do business. You can buy a duplex for around $135K that rents for $2,000 a month/gross rents plus or minus for example.

We have a strong team in place there to handle property management, repairs, and property inspection.

There are other markets in Michigan too but we like Lansing.

To Your Success

Hi Daniel from Milwaukee, Wisconsin-

You bought a duplex last year with 5% down and conventional financing. You just graduated from your PhD program and are ready to get your next investment property but your debt to income ratio is skewed because of your student loans and ask how you might overcome this.

Great question! I would look into getting a Debt Service Coverage Ratio (DSCR) loan which uses the income from the property to qualify the loan and your credit score and less on you personally.

You may also be able to use a cash out refinance DSCR loan on your current duplex to get the cash you need for the downpayment on the next one.

To Your Success!

Hi Jacob-

Great question! You asked what is one thing you wish you would have done sooner, or what's one piece of advice you'd give to a young real estate investor?

I would say learn enough to get started. Limit your study time to 6 months and then go find a mentor who has done what you would like to do. An investor friendly Realtor with a teacher's heart can get you started and help you avoid costly mistakes. They can provide referrals to the rest of the team you will need to be successful. They should provide more value than what they receive in compensation and typically the team reflects the mentor so make sure you connect well with them.

To Your Success!

Hi Alex in Dallas, Texas-

You are wondering what to do in a declining rental rate market leading to negative cashflow.

I am sorry to hear you are facing this but you are not alone and I have faced this exact problem in the past.

The thing to do is get creative as pressure fuels creativity.

Basically, you have two levers if you want to keep the property-increase income and reduce expenses.

Unfortunately, most expenses are fixed and increasing for landlords.

I recommend focusing on the income side.

Here are some ideas to get through this situation.

1. Rent by the room, if you are able to locally, to increase cashflow.

2. Rent the garage separately or storage space like a shed or similar to existing tenants or others-make sure your insurance covers this.

3. Rent the basement for storage as well.

4. Turn the property into a mid-term or short-term rental if you are allowed locally.

5. Consider doing a lease option. Non-refundable option payment. Higher than market rents. You can offer a monthly rent credit toward purchase. A purchase price at the end equal to or higher than market for the risk. Use a local attorney to paper this up correctly.

To Your Success!

Hi Jon from Columbus, Georgia-

You have decided to hold onto a flip and turn it into a short-term rental.

You feel you can't effectively self-manage as you are out-of-state and wonder if you should use a co-host through AirBnB or a local property management company.

We encourage our short-term rental investors to use a property manager to keep it as passive as possible. A good one should be able to give you an idea on what the average nightly rate is, average monthly occupancy, average annual revenue, and if the area is already saturated with short-term rentals.

The property manager we recommend has a menu of services you can select so they can do everything or as little as you want. This is especially helpful for our investors who want to get their hours in to claim their property as an active investment and write off their W-2 and active income with depreciation.

To Your Success!