All Forum Posts by: Matthew McNeil
Matthew McNeil has started 31 posts and replied 686 times.
Post: Turn Key. Why all the hate?

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I looked at TKs carefully over the past 6 months and determined they aren’t for me. I realize they work for some people and I may get a little blowback for writing this, but my feeling is that buying TKs are a few degrees separate from true real estate investing. The TK providers are doing all the work and you’re buying your appreciation up front by paying the provider.
Post: Equity shifting to balance portfolio LTV

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We all know about Cash Out REFIs or HELOCs used to purchase other RE assets. However, has anyone done either to balance out their portfolios LTVs? A recast would be the best mechanism to accomplish such. Cash-Out is used for a principal paydown on another asset within the portfolio resulting in re-amortization of that asset at a lower mortgage payment.
Example, I have a handful of assets some of which I've paid off (resulting in high CF) while others maintain an 80% LTV (with low CF). Has anyone heard of moving equity from a paid-off asset and using it to lower the LTV on another asset for the purpose of preparing for a possible downturn in the economy that might result in a lowering of rental prices?
My question relates to balancing a portfolio. People may write how dumb it would be to cash out a paid off asset to re-amortize another asset carrying a 4% loan. I get all that. However, I’m looking for making some adjustments to better position the debts of each asset within the portfolio.
Any thoughts?
Post: No one builds Small Multi, So I Build My Own!

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Show us the money! (pictures) and you'll convince every other BP member to follow your lead. We're intrigued. I'm ready to do the same thing. The current market needs tweaking and this may be a viable option.
Post: Waco Multifamily Investing Advice

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Originally posted by @Roy Gamiz:
I've been investing in Waco for 5 years now specifically in student rentals. The large apartment complexes have had a negative impact on SFH and small MFH properties by stunting the growth of rents. Students still want to live in non-apartment style properties but age of the property and proximity to the university are huge factors.
As far as management, make sure you speak with all companies available and that their goals align with yours. Also if they have their own properties caution as they may be renting their own first before others. It's hard to prove so good luck.
Final comment is to make sure you account for higher property taxes. Waco has been very aggressive the last 3 years in overvaluing properties to pump up their revenue.
I researched Waco yesterday. Then I saw the taxes. Then I looked elsewhere. Wow.
Post: Christian Investors - How do you tithe?

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Tithing, worshiping, loving your neighbor, helping the poor, etc. are all outward expressions of an internal witness. Its really that simple.
Post: Cash flow reinvest or save for down payment

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Before I clicked on this post I knew that @Joe Villeneuve would have most likely already replied.
My advice.... What Joe said.
Post: Best state to file an LLC for investments?

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Originally posted by @Frank Maratta:
@Stephanie Choi i would definitely set up an LLC. You can still get a residential loan with an LLC, you just need to close on the property in your personal name (as someone else stated residential loans are hard to obtain in an LLC) and then quit-claim the property to the LLC. While this technically may violate the due on sale clause of your loan, I've never heard of a bank enforcing it.
One thing to keep in mind is If you plan on acquiring more properties in the future and place them all in that same LLC, all of those assets in that same LLC are exposed if you were to ever get sued. So, something worth looking into is a "series LLC". This type of LLC compartamentalizes every asset held under the same (parent) LLC, so each asset is not exposed in case of litigation. From what I've heard, you can create one bank account for this LLC and multiple properties and it won't be considered co-mingling funds. I wish I had more info on this type of series LLC and if someone reading this does, feel free to chime in, because it's something I myself am looking into setting up. I believe you can even take it a step further and set it up as an Anonymous trust, which would allow others to have to dig a bit deeper in case of a lawsuit (if they don't know you own an asset or other assets then the less likely they may be to move forward with litigation).
I'd concur with the advice Frank offered. I'd add this; if you used a conventional loan sourced from Fannie Mae they allow you to Quitclaim the property without violating the due on clause sale, which would be a very rare action taken by the lender because a Quitclaim doesn't transfer the mortgage. Additionally, check with the title company to make sure the insurance remains intact before doing any type of conveyance.
Post: Why I dislike arbitrage

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Originally posted by @Ken Latchers:
Why I dislike Arbitrage. Keeping simple. Arbitrage a $200,000 house in average area. You supply furnishings, maintenance and upgrade. Both need STR insurance.
Arbitrage is all the work for part of the money.
If landlord changes mind, you have a furnished place to deal with.
Any upgrades don't belong to you
You build up no equity. In 15 years, house belongs to me ($200,000)
Average price rise is 3-5%. You make none of that. In 15 years, that a lot of money. If house now worth $300,000 I make simple $20,000 a year on owning house plus appreciation.
It ain't yours.
A property is a great inflation hedge.
You can borrow against equity and get more properties
Most markets are flooding with airbnb's driving down rates. If mine, I can always rent long term or even do the travel nurse thing.
When you put down 20%, you are using OPM. You are getting good cash on cash.
In many areas, local regulations are making harder for non-owners
In many markets, it is a lot of work for not that much extra money
I agree, BUT you dropped the word "equity" and took it down a side trail. REI is about building equity and passive income, and arbitrage can provide an additional source of passive income. Its a revenue engine.
Post: Cash flow on a $500,000 home - Experiment in scaling SFR

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Originally posted by @Joe Kim:
Alright its late for me and gotta get up early for Mothers day tomorrow.
Here is the quick and dirty of why it went wrong.
#1 Finding a long term tenant is difficult in any rental. But there are special challenges at this higher price point like $3000/month rent in Atlanta suburbs. $3000/month rent is like $6000-7000/rent in places like SF bay area - this is higher end rent and the target individuals are different from your traditional renters.
The tenants tend to be very short lived. Nearly every good tenant wanted to leave shortly after 1 year renting due to desire to buy their own property. I even had 2 different tenants who paid me higher rent to just rent for 2-3 months in transition (UNFURNISHED) while they look to buy their own home.
High turnover is bad, very bad for rentals
#2 Self-managing a property was not as easy as I thought - How to deal with problems when it happens. Evictions? These are things that professional property managers should be dealing with. My model of self-management did not work out well when there were issues - That's another LONG post which I have no time for.
Could this rental have worked out and made positive cash flow around $400-600/month - Sure. But given the issues I faced, there was no way it was going to make $1000/month.
That being said, people forget that with more expensive homes you get
#1 More equity in my pocket each month with pay down of principle of almost $1000/month vs $100/month on a $100,000 home.
#2 HIGHER leverage so interest deduction is great
#3 HIGHER depreciation losses to use to offset income
#4 HIGHER or more rapid appreciation since 3% appreciation on a 500,000 = $15,000 vs. 3% appreciation on 100,000 = $3000 only.
So it's not a complete LOSS but certainly not what I expected nor what met the planned SCALING.
But I found something NEW that did help me scale. Read my posts on Airbnb/STR (short term rentals). I have an update on my progress soon.
Joe, not every BP member does this, but I've oftentimes read their "spin" on an asset to make it appear a little better than the real numbers show. Maybe we're all guilty of that from time to time. Anyway, thanks for being real and sharing the "ugly" with us - if I can use that term. I didn't write anything in my previous post and just wrote that I was looking forward to your update, as you promised would be forthcoming. If I was to have written something previously, I would have guessed about 90% of what you provided in your update. I'm glad you found something new that's helping you scale. I'm personally in a crux right now trying to find a way to scale myself. I just need to pull the trigger after looking at multiple options during the past 6 months. Thanks again!
Post: Cash flow on a $500,000 home - Experiment in scaling SFR

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So you bought a $500K home for a SFH rental? I'm looking forward to reading how it all went wrong.