All Forum Posts by: Lu Kang

 I was certainly guilty of this for a few properties. Focused on the allure of cash flow, without looking for good bones of a property. Duct Tape repairs may make you money upfront, but that luck runs out .

Cosmetically using cheaper materials based on the class of property is one thing, but the bigger repairs ie. roofing , plumbing, electric, hvac, All the bigger updates as Stuart mentioned, cost the same. I feel from 2012 to 2020, you could get away with shortcuts, since loans were around 4% and housing prices allowed closer to meeting the 1% rule. 

Now that we have the data, it's important to have the systems in place and focus more on the value add. 

Hi @Benjamin Boyle congrats on the journey. 

One thing is consider since you have limited time, would your wife be open to "professional real estate designation" for tax purposes.

As a new investor you will most likely incur losses (Active / passive) based on your first purchase, especially today's high cost environment. Option 2 seems to be the best situation. 

Keep in mind usually you can writeoff 25K real estate losses (Usually due to first year fees, mortgage interest / and depreciation). But if your W2 is too high, there is also a phase out, meaning you won't qualify and still have to pay back depreciation at sale unless you 1031. 

It's also one of those deals where you don't know your threshold of being a landlord, until you become a landlord. The next step really is just get a calculator and determine how much it would cost to buy a duplex / triplex and how much you the tenants pay down vs your present situation. 

Depending on that it might make sense to buy or just keep the status quo and keep making 4% on your cash. 

Thanks for sharing, saw some of the webinar from the wallstreetoasis link.

Curious how they communciated this to the original investors, cause them seemed to infur on the webinar that the 18% is such a great deal and better then what we would have offered the original investors. With most of the investors buying in 2021/ 2022, doesn't seem like a consistent message. 

 Hi Christopher,

Thanks for the update. Best of luck with the appeals, while PPMG handles all the day to day, we can do we can to limit expenses on our end. It's also nice that they have their own recommended insurer, those rates are much lower then what I would pay up in the northeast. 

I agree with your approach in aiming for better locations, seems that texas (dallas /FT worth) fits the bill. Until the rates come down to refinance, the key for us is to limit the amount of turnover at the properties. 5K to 10K in rehab basically eats away at several years of cashflow. If anything, when we plug in the details per the calculator we def have to put in higher then the estimiated 3% maintenance costs. 

I also did notice the REI had some newer builds in Ward, AR but those seemed be sold quickly. If recall the prices and rent out were a bit challenging too. Hopefully with the upcoming rental market you will get better vetted tenants in AR.

Hi Christopher,

Now that you are approaching one year with your Dallas property, have you gotten updates on new insurance / property tax rates.

I had a similar experience with my place down in Ark. The carrying costs are low, but tenant was making partial payments by month 2. That's the other challenge that i've learned, with only one month as SD, if the tenant leaves even in a relatively new build the fees add up. 

@Jay Hinrichs

100%. 

These days all investors need to have more realistic expectations. Gone are the days prior to 2019 where I as a complete newbie could buy and get instant equity, use financing at sub 5% and still cash flow while maintaining a reserve balance. If anything it just means that initial newbie tax / buffer is going away. 

@David B. Glad you have had success and continue to do well with your portfolio

@Chris Lin  Sorry to hear about your place, hoping you get resolution to your issues.

I bought two places with REI in 2024, one in Huntsville and one in Little Rock. The process of buying, getting a loan and settling to closing was extremely smooth. They also have blanket insurance coverage which is much lower then policies in Philadelphia. Part of the allure was the holding fees (insurance / property were several thousand less then up north)

After one year, my Huntsville tenant had to move out early for a job relocation. They ended their lease early. REI has processes in place so portion of the Security Deposit/ missing rent had to be covered by tenant. Even with that, I had vacancy for 3 months, turnover expenses (rekeying, deep cleaning, etc), paying the one month lease to find a new tenant and also the new tenants are in at a lower rental rate then the prior tenants. (1500 to 1350)

My Little Rock tenant has been paying but already slightly behind. I'll have to reach out to my advisor to get an further update. Was told initially it was a banking issue, but we will see what the latest is . I have been getting updates / communcation on my properties, but also after one year I'm on my third service advisor due to internal org changes. 

My conclusion is that take the provided ROI calculations from REI as purely estimates. Having a problem tenant and dealing with eviction could happen in any market. Know the reason why you are investing. I knew for me this wasn't going to have instant cashflow especially when buying a turnkey and in 2024. Longterm I believe this will work out, but also can't provide a full picture after only holding for one year.

 I actually looked at quite a few of these around temple. Also curious based on the rent rolls, but as you stated, when new the rents were high but as your multi gets older the rents drop due to more competition. Those really made more sense for someone who could be more local and then find own tenants, cause college students / young professionals seem to turnover more quickly. 

If you are remote, tenant turnover is a killer. When I was starting in 2010's, Philly had the advantage vs the suburbs due to the lower property tax vs the suburb tax. But now the taxes are also higher as without good schools, you don't get the super appreciation vs having a suburban house. 

Insurance companies have any begun to charge more for Philly row homes, and the property assessment continues to increase year after year. 

It really depends if you can get a great deal on the purchase price, and yes adding value seems to be the smartest play. 

Back in the late 2010's, Philly had potentially due to the low tax vs the comparable rent. But now it seems taxes have increased, additional government fees, ie lead testing for any property built prior to 2017, and also increases in sewer / water rates. Philly also has 2% transfer tax, vs 1% across the other parts of PA

Other factors like the current investor loans charging at 8%. Not to say it can't be done, but it will be a uphill battle. 

Thanks for the vote of confidence in my investments :) . 

Hoping to keep things cordial and keep away from the personal attacks but I estimated wrong.