All Forum Posts by: Matthew Trotter

Great episode! I love Tim's ideas about putting down lots of earnest money to improve your odds of winning the deal. 

I was wondering how Tim structured his ownership of his properties. Does he use LLCs, trusts, or sole proprietorship? If he uses LLCs or trusts, how does he get his financing after the deals are done?

Thanks @Robert Melcher and @Lance Lvovsky! I googled the de minimis safe harbor rule and was relieved to see the IRS allows us something like this. I found that Turbotax handles this and keeps track of your original de minimis declaration from year to year. That's easy enough for me. Thanks guys.

@Darius Hollis, what do you think of all the railroads in West Midtown? Personally, I've turned down many rentals just because of the train noise. I've seen the new developments there, so I'm curious about that area too.

@Chad H., welcome to ATL potentially. Around the Cumberland area, you can find a lot of condos and townhouses for sale:

• A-class 3/2+ going for $300K and up, HOAs at $400 per month
• B-class 2/2 going for $150K and up, HOAs at $200 per month

I believe Cumberland will grow over the coming years, and these values should rise. As for Edgewood, you'll find mostly single-family homes (that yuppies tend to rent out with roommates):

• A-class 3/2 going for $600K and up
• B-class 3/2 going for $350K and up

Growth-wise, Edgewood home prices have grown about 150% over the last 5 years. That far outpaces Cumberland's growth of about 75% over the same period. I interpret this data to mean that Cumberland is undervalued, given all the improvements that will finish in the next 5 years.

In Cumberland, they're constructing more highway lanes, more road lanes, Google Fiber, more apartment buildings, more office buildings, a big live/work/play (The Battery Atlanta), and last, but not least, an iFly. If Whole Foods decides to move in, then watch out. :-D

ATL investors, what do you think are the next growth areas of the Atlanta area? What areas will be seen as a destination area in 4-5 years from now? My guesstimate is the expanding Cumberland area thanks to the new Braves stadium and expanding highway and roads. Currently, Cumberland is cheap, but that could change in 5 years...

I'd say Edgewood has grown the most over the past 4-5 years for similar reasons. Beltline development mixed with affordability made it grow so much. And, rent in that area has boomed since then! It's every yuppie's fantasy right now. Thoughts?

@Vincent Crane, I chuckled at "without living in a war zone". It can feel like that, I know!! I'm house hacking in Smyrna, just barely outside the perimeter. It's not too expensive, and I'm excited about the new Braves Stadium, expanded highways, and expanded roads. Increased infrastructure usually precedes growth in an area.

As for inside the perimeter, I like the area around I-75 and Moore's Mill. It's a no-mans-land between Midtown/Buckhead/Vinings. It's not a destination area like Edgewood, but that's a good thing. It's not expensive, and lots of renters flock to that area because it's close to everything. I think it's a good house-hacking area.

I have a few small renovations I want to make to one of my rentals. Each renovation is inexpensive, and it would be so much simpler to treat them as deductions for the 2016 tax year rather than depreciate them over several years. Landlords, have you come across this situation before? What did you do? Did you just let Turbotax or your tax guy figure it out? 

Here is my list of tiny renovations and their approximate costs:

• Add automatic ice maker to the freezer ($100)
• Upgrade all door handles ($350)
• Upgrade a few light fixtures ($200)
• Upgrade doorbell ($30)

These are not repairs in the strict sense; the freezer, door handles, light fixtures, and doorbell all work. I'm just upgrading them.

@Curt Smith, great stuff. I love the idea of direct marketing, but I'm not in love with actually doing it - very tedious as you know. I've done direct mailings to East Atlanta and have gotten 3% to 5% responses just like you mention. 

I really liked one idea I read in a book (forgot which book) that goes like this:

1. Record a very long voice message (3-5 minutes) that converts desperate homeowners into interested sellers. For example, "I know how hard it is to miss mortgage payments... What if you could make that stress disappear?... I can offer CASH... After the beep, tell me more about your situation and how you'd like me to help today!"
2. Make bandit signs that get distressed homeowners to call a phone number. "Relieve yourself of those high mortgage payments! Call XXX-XXX-XXXX!"
3. Set up an automatic voice message answering system that plays the message when people call and then records a response.
4. Set up bandit signs on busy intersections around my neighborhoods of interest.
5. Listen to the messages and call back the leads that sound interesting.

I think I will just save up cash now and wait until I have $100K or so make a deal. Then, I'll try something like this.

Thanks guys. There were a few different opinions, and I appreciate them all. I'll be okay, for sure. I think I was excited to go from 0 to 1 and then 1 to 2 properties. And now, I'll wait until I find 3 and 4. I might speed up and purchase more than originally planned or keep to the plan. I don't know yet, but life is a journey and it's okay for me to not know. I've gotten into golf lately, so I'll be at the driving range more often now. :-)

Hard money sounds interesting. It would be great to raise cash before making an offer in order to get a better price and faster close. I won't borrow from family, and I've considered it before... too much strain on the relationship for me.