All Forum Posts by: Kyle Wells

@Kyle Wells you would be lucky to buy 2 duplexes in AZ for $350k.  Prices here have SKYROCKETED.  Cap rates have been smashed as more and more money chase smaller returns.  :-(

Most renters are finding stuff unaffordable, just like the coasts.  The only difference is we don't have nice weather in the summer.  Unless you call 'nice & hot', nice.  ;-)

@Keith Gilbert, there are a NUMBER of things to consider that make your friends' comments invalid.  I'll name a few:

• As you stated, the difference in property taxes is HUGE! 
• Per your own words, you are not sure if you will go back or not.
• CA Prop 60, transfer of property tax for seniors.  Let's say you move BACK to Long Beach for a year and then buy your dream place in Seal Beach.  Your taxes are now lower.  Look it up.  One time exemption, so you better make it good.  ;-)
• If you 'leave' and sell, the appreciation in Cali might be as such as you might not EVER be able to buy back in.  

For ALL these reasons, and a few more, I keep my property in San Diego.  

What I would do is get it back on a 30 year term (you don't want to pay it off anyway, you will owe tons to STATE of California), and strip it for $100k when I want to invest elsewhere.  Or pay off your primary residence since you probably can't itemize anyway.  Paying off a rental completely in Cali is a bad idea, but that's another story.  ;-)

I visited AZ a LOT before living here.  I've been here 10 years now.  It has LOTS of both 'good and bad', like any place does.  But the heat becomes unbearable year after year after year.

And that is why I STILL have a 'foothold' in San Diego.

In your case I would Re-Fi as is on a 30 yr term. Your PITI would be around 2600, based on 4% interest rate.

If your rents are 3400 a month, the numbers work as follows:

Income:  40,000

PITI: 31,200

Cashflow:  8,800

Tax liability

Income:   40,000

Interest:  17,472

Prop Tax: 6,800

Insurance: 1000 

Depreciation:  14,500

Tax Deductions:  39,772

Net Tax Liability:  $228.00

So, you can basically put $8,800 in  

your pocket every year and pay no tax on it.  All except $228.  Where/how else can do that?

Now add 3-5% annually to the income line.  What does that look like after 5 years, 10 years?  

In your case you have already made the investment/hard part.  If you want to have a chance to go back someday AND make money in the meantime, this is it.

If you need/want $100k, go strip it for $100k and invest it elsewhere.

If your rents are more that 3400 a month, you will pay some tax.  But MAYBE you can find some expenses or upgrades that can write off the difference?  ;-)

In any event, I hope I have given you a few things to think about.

We are moving from Long Beach, CA to Chandler, AZ.  We are trying to decide what to do with our current house.  

I asked a friend and he posed an interesting question.  Imagine you had $350k (which is the cash our equity in our home) would you use that money to invest in a single family home in Long Beach?  Our plan was to rent it out, but we have the house on a 3% 15-year note and it would only break even or be a slightly negative cash flow (not counting debt reduction or appreciation).  I don’t see our house appreciating much more given it’s one of the nicer houses in a very blue collar neighborhood.

Should we hold onto it?  I’ve always believed in never selling.  If we do sell it, how would you recommend investing the $350k.  We don’t need the money for our AZ house.  However if we did put it into our AZ house we would have an extra $4k per month to invest.

I have 11k saved for my first investment property. I am going to house hack this prop for a couple years (with an FHA loan). I can save up a little more while on my journey of searching but I need a little confidence boost. Has anyone started out in this situation before? Was it worth it? Does anyone have stories, suggestions or ideas that can give me the boost I need before I pull the trigger on a prop? If you do.. PLEASE SHARE. It would be much appreciated.

(Don't try to scare me out of buying a property.. this is a confidence booster post!)

@Kyle Wells you bank on appreciation? One thing I would never do for a property! How do you put a number to that? Or how do you calculate the investment?

Hi everybody!

I thought I’d turn to the forums because I saw an interesting deal, but there’s some red flags.

Since I’m relatively new to real estate, I’m hoping some more experienced people can guide me in the right direction.

I found a deal for a 4-plex out of state listed at $39,900. It’s been on the market since January 2019 so I feel like it could easily be bought it for around $25-$30,000 or even less. The property details list that each unit rents for $475/mo. It sounded too good to be true.

Here come the red flags. It’s in a class D neighborhood and supposedly one of the most dangerous areas in the state and the property is in “distressed condition.” I know that it’s highly advised against investing in class D neighborhoods.

If somebody could give me some advice on what to do I’d highly appreciate that! Thanks so much!!

In today's markets, do you find yourself still shooting for the 2% rule? Do you focus on a 5, 7, or even a 10% cap after all expenses? Do you focus on $200 a door? 

As investors, what deals/numbers are striking you to eagerly pursue a deal? 

What numbers turn you away from a property?

I understand all markets are different, but I would like to see what today's investors shoot for! Please provide your goal-driven number as well as the market those numbers apply to!

So I just signed the title documents today for a SFH in Kansas city for 70k. I was caught off guard by two things; Property taxes a lot higher than expected, It went from 950 all the way to 1370$. Due to the recent appraisal. I imagined they might go up a bit but that was higher than I expected. Then there was n HOA for 25$ that was slapped on there, I asked the notary if it was monthly or yearly but she didn't know. I called my agent ( I am in California, her in KC) but she was out of the office for the day (she had told me previously).

I ended up signing anyway as I am just praying it is a yearly amount since it was not disclosed ANYWHERE. It's only 25$ but that's supposed to be MY 25$. The deal is not as great as i'd hoped as my CoC is 9% with about 150$ monthly. Lesson learned here is do my due diligence on taxes more in determining what they will be. As far as the HOA my agent will have some explaining to do.

There are many schools of thought out there regarding asset allocation... There are hardcore Real Estate Investors that will only invest in Real Estate and hold cash reserves, and there is a substantial part of the FI (Financial Independence) community that advocates for Index Fund investing (a la J.L Collins' "Simple Path to Wealth"). Leaving alone the whole stocks vs. bonds discussion, I'm really curious what are some "seasoned" investors thoughts on holistic asset allocation?

Currently, my portfolio (net worth) is 85% Real Estate Equity, 10% Cash, 5% Stocks/Bonds. This is primarily due to a focus on aggressively growing my real estate portfolio in my 20's. Now into my 30's I feel compelled to rebalance a bit, though I'm really interested to hear what others have to say about asset allocation?

Specifically, what are your thoughts on the "ideal" (let's pretend one exists) asset allocation? Looking forward to hearing some thoughts. 

@Kyle Wells I do own the property outright clear deed and title comfortable homes are selling between 65 at 75000