All Forum Posts by: J. Martin

 I'm definitely trying! It's good a lot of it was left on forums, so I could go back and find them..
Here's a few quotes from yourself over the years!

"J, thank you again for setting up such an awesome event. It's the best I've been to and am looking forward to the next one. I can write a long list of why I like this event, I tried to summarize it in the Group Reviews page.."

" This was an awesome event, honestly the best RE networking event I've been to. The whole atmosphere was just great - the "No Guru" promise was definitely over-delivered, everyone was on the same level, didn't matter whether you were totally new or had millions of dollars in deals behind you. The content was great as well. I wish there was more time for networking because I felt like every person in the room had something to add to the group. I can go on and on, but in summary, this was definitely worth driving for from Southern CA. Huge thanks to J. Martin for putting so much time into the organization!!! Looking forward to the next one :) ”

- Sergey Tkachev

OG-3 Sergey! You and @Elijah Artman are probably the best fan club a person could ask for!! :)
And btw, we will be doing more networking this year, break out sessions, and I just signed up for a networking app so attendees can get better connected before and after the event.. :)

 Katie,
I just sent it out, along with a link to your new meetup group. You have 85 members right now, so we'll see how high we can get it!! ;) Wish I could join, but doesn't really make sense to fly back for one day.. I'll see you all in October for the Summit! :)

Katie, @Account Closed, @Account Closed, @Chris Mason, Have an extra IPA for me! Wish I could be there to say hello..

@Meredith L.,

Welcome out for your first time!  It's been a blast at the last two, a lot to learn, and even more people to meet!
We'll be rolling out a networking app to get people even better connected this year too :) Glad you can make it down with @Al Williamson and the Greater Sacramento / Roseville / Davis crew.  (Al, yes, I have learned many more songs on the ukulele, and will play one or two. Not just education and networking. You get a full entertainment extravaganza!! lol

**** WINE TASTING AND GREAT WHITE SHARK DIVING******
These are NOT included in the price of your conference ticket, but a fun way to connect the Thursday and Friday before the event. @Brie Schmidt will be spear-heading (get it!?) a great white shark cage dive on Thursday, and a wine trip to Napa/Sonoma Valley for wine tasting on Friday, before our Friday night happy hour. I will get some more details together and send out an email as we get closer, but contact Brie now if you're interested in diving with great whites... 

@Alice K.,

You seemed like an adventurous person, no?! The wine tasting should be much safer, and made Brie promise nothing broken for this conference. She's got a bad history.. 

@Bill Exeter, 
Thanks for coming out again this year! Like @Johnson H., you'll be in the "OG-3" club for coming out to each of the 3 Summits we've had so far (as long as Johnson makes it..). Hope to see some other folks from the Greater San Diego area, Chula Vista, Carlsbad, Oceanside. Bill, I got a table at Bruce Norris' "I Survived Real Estate" event in Sept, and you and Hiba are welcome to join us if you'd like :)

@Erin A., you were MIA last time! I know you've been busy, and got some property after the first Summit. Can you make it back? Care to share what you did in RE after the first one..? 

 https://www.meetup.com/Real-Estate-Networking-Summ...

Your memory may be a little fuzzy b/c you said it all the way back in November, 2014 after our first Summit! ;)

Hopefully you'll be one of our "OG" attendees that attend every year! You have the "2yr OG" badge so far! ;)
Definitely at least make one day!

 I'm only buying bridges. No magic beans for now!!! ;)
Where do you start Saj?
Care to "spill the beans?!" ha! pun! ;)

@Jason Monroe,
I said "Jason, I don't disagree with your general advice on addressing common objections." I still don't disagree with your general advice in setting up the transaction. I was just trying to find out why you started at $20K, but still couldn't quite figure it out from your response.. 

Either way, congrats on finding something that worked. 
We are collectively advising that you may want to start at a lower number next time, for your and our own bank accounts' sake.. 

(e.g., some might take $5k, some might take $10k, $15k, $20K, etc. But on average, if you start with $20K, your average will be $20K or higher per door. If you start with $2-5K, some might take that. Some might take higher. But you have opportunity for your average to be much lower. On the other side, how many will not take $20K, because you started with $5k? )

 I'm only buying bridges. No magic beans for now!!! ;)
Where do you start Saj?
Care to "spill the beans?!" ha! pun! ;)

Barry,

What you are saying is inconsistent with what my partner's CPA told her. 
Based on what her CPA said, whether the interest on a HELOC can be deducted relates to what you DO WITH THE FUNDS. Not what property the HELOC is secured by.

Example 1: Use a HELOC secured by your primary residence to buy an investment property. Per IRS rules, you can write off "ordinary and necessary expenses" that you incur in owning your rental property. That is deductible.

Example 2: Use a HELOC secured by any property (Primary or investment) to pay off personal credit card debt, take a vacation, or other non-investment activity is not deductible. Doesn't matter which property secures the HELOC. It matters what it's used for. Not deductible.

In fact, the interest from the HELOC is allocated as an interest expense in the Schedule E for the investment property, even though the investment property does not secure the loan.

This is not professional guidance, but basically says the same thing that came from this other CPA: 
http://finance.zacks.com/deduct-interest-equity-li...

This is how one of my partners files her taxes, based on advice directly from her tax accountant. It is not my opinion. Seek professional guidance. 
(But also don't pay more in taxes than you're legally obligated to take based on the law!)

@Jason Monroe,

You're pushing up buyout prices for all of us!!! lol

How far was the rent below market? And if you don't mind me asking, why did you decide to START at $20K? 

@Account Closed, make sure no one sees Jason's post!!

Jason, I don't disagree with your general advice on addressing common objections. I believe some people have been doing low 4-digit buyouts on tenants in Oakland, although it does depend on the person and how far below market..

 Michael, 
My buddy Arlen is right. It's a dual-edged sword. 
Many people in the Bay Area use HELOC's on their primary residence. But many also have the cushion to do so.
And finding the right investment is key. It's an arbitrage between low borrowing costs and your investment yield/risk. 

#1) TALK TO YOUR WIFE/PARTNER/CO-OWNER ABOUT IT! What does she think? Is she comfortable with that debt hanging over the family house? Discussed it already? 

Besides that, keep in mind most HELOCS are 10 years interest only, then a full amortization on 15 years. So know the payment at the 10yr period when you switch from I/O to the heavy amortization. (And what kind of interest rate change can you afford?) 2017 is still a rough year for a lot of the people that got big HELOC's back in 2007. Don't wait until you get there to burn that bridge, and I generally don't recommend on being able to always refinance later, because banks change their standards over economic cycles (unless you're pretty golden on LTV, credit, & DTI/DSCR ratios, you're safer.) Not to say next time will be anything like last time, but just a general thing to think about. (and as @Account Closed likes to say, history doesn't repeat, but it rhymes.)

Also, I think Brandon Turner or Josh had some wise words on a podcast by saying something like
"Just because the money is available, doesn't mean you should take it." Some lenders are offering something like 90% LTV HELOCs on jumbo loans in the SF Bay. If prices or rents dropped from this seemingly cyclical peak, how would that impact you? How would you refi? Or are you good either way? Not trying to discourage you by any means. Just to look at both sides of the sword ;)

About 4 years ago, back when there were more deals around, I wrote my only blog post on BP, called:

"If cash is king, then leverage is God" 
- this was based on the quote I heard from @Johnson H. even earlier, if I remember correctly. 
Those were the haydays. 
Like Arlen is saying, it's a dual-edged sword. The lord giveth, and the lord taketh away. 

Here are a few questions I asked myself about leverage during that time.. 

"The risk of leverage also changes over the economic cycle.. Having heavy debt loads going into economic downturns can produce disastrous results, while leverage with increasing prices magnifies gains dramatically. As an investor with fairly high leverage right now, I take several factors into consideration to assess the risk of this leverage, and get a level of comfort with what the risk mitigants I have in place:

- How much excess cash flow do I have to cover vacancies, potential decreases in rents, to catch up re-filling reserves, etc..

- How secure are my cash flows? How much comes from a salary job and how stable is that job/salary? How high-quality are my tenants? And my rents relative to market?

- How much liquidity do I have? And how fast can I replenish it?

- How much access to credit do I have? How fast can I get it if I need it? Can it be cut off at the lender’s choice? Will the rate change? How fast do I have to pay it back?

- What do I have coming due? Balloon payments on loans? Interest rate resets in the next year or two? Am I relying on price appreciation to be able to finance or refinance future debt or principally payments?

- Can I sleep well at night with the debt that I have?

- When should I reduce my leverage and/or sell? How should the price of real estate, yield/ROE of assets, or the economic cycle play into that decision?"

You don't need to answer any of this to us on the forums, but just some things to think about w/ leverage/HELOC, since you asked, and the same things I was thinking about years ago, with the expectation that we would be in a different place today.. (and we are!)

 $245 was the super early bird pricing for 2-day tickets. About 100 investors bought in at this price. The prices at the door will be about $75-100 more, and go up over time. (to get people off their asses.) The whole event is priced too low relative to similar events (and hasn't made me any real money), but I didn't want to raise prices too quickly to the $400+ level.. (where the organizers are not splitting revenue with speaker sales to cram crap down attendees' throats)

You should be able to make back tens, hundreds, or thousands of multiples by coming away with an idea or making a connection that gets you 1 tiny deal. More importantly, it's worth your time to make those connections! ;)

@Johnson H., you're gonna be able to make it out again at least one day, right?