All Forum Posts by: Max Ferguson

If @Nathan Grabau 's math is correct, there is sure a lot you could do. Half a million can open a lot of doors for financing large apt complexes or just better returns on other avenues. You are thinking in the correct vein with 1031, definitely something that is non-negotiable for the selling scenario. A good starting point would be to reach out to some investors of larger complexes and see what kind of returns you could expect/what their strategies are. I worked for an apt acquisition firm that would buy a C+ complex, hold for 10 years while upping rents and making the units nicer for cheap, then sell for huge profits at the end of the cycle. This is just one example of a way you could 10x your money in 5-10 years. Depending on how much work you intend to do (flipping/holding/whatever), the world is your oyster and the sky is the limit for returns! Good luck and keep us updated. 

Sounds like a great play! The thing I love about this style "Row Home" so to speak, is that if you want to make some serious cash on the next hot market cycle, you could sell each individually. This was the plan for a quad that fell through for me but something to keep in mind. Awesome job!!

Definitely need to talk to local investors in the area, find someone at an RE meetup/on BP that has already done this and ask how they went about it. Agents are paid via the selling side commission, and in a deal like this most sellers don't want to pay a large commission upfront (with no lump sum to detract from). You may want to find an investment oriented agent in the area that is willing to put in offers for you for a fee from the buyer's (your) side.

Make sure to convey that the tax basis for his income will be much lower by taking payments from you, this is a huge upside as the seller. If you can also pay a large interest rate for a couple of years to him before you refinance, this may be very attractive. The only problem is if he was intending to 1031 exchange the proceeds, then he would want the lump sum up front. Keep us updated! Good luck!

Not to kill the dream but the return on investment would not be worth it. I have taught tennis for 5 years, teach pickleball every once in a while when my club needs a fill in. The build out would be 20-50k to say the least. You would need to target executive rentals/country clubs/whatever to fill the space with people that will play.

The only way this is viable as well is if you do not have neighbors. Not a lot of people understand how truly loud pickleball is. I also would like to highlight the fact that while pickleball is the "rage" right now, could you imagine if it goes the way of ALL other subsidiaries of tennis throughout the years? Historically every 15 years a new racquet sport pops up and is very hot for a little while. Examples of this are squash, badminton, table tennis, and racquetball. It would stink to get stuck with a pickleball court no one touches in ten years. 

If you are dead set on it, there are ways to create cash, but you would need to find a way to market to pickleball players that would be willing to stay together for a weekend to play. If you have any questions/need recommendations for the process I am happy to help. I am very involved with racquet sports and could give you some resources for builders/clubs to market to/etc.... 

Good luck!!

It is a little confusing to wrap your head around! Each new owner is able to depreciate for 27.5 years (could be slightly different, this is what I saw when doing my taxes last week.) and that is recovered upon sale by the IRS. Here is a quote from the stessa site:

"Real estate investors use the depreciation expense to reduce taxable net income during the time they own a rental property.When the property is sold, the total depreciation expense claimed is taxed as regular income up to a rate of 25%."

After sale, the new owner is free to claim another 30 years or however of depreciation. 

"On first thought, it seems there would be a lot of drama with no agreed upon set of rules between the roommates in this sort of situation? On second thought, I might be able to get significantly more total rent in a situation like this."

You're answering it for yourself here. Renting by the room equals more cashflow, but far more work input than a singular lease. I personally wouldn't touch it unless you are near a college, army base, or hospital. If you are able to add the time needed to your plate, it could be a great way to make some more cash. You also make and outline in each individual lease of the rules of the house, not something to worry about. You can't help if the tenants don't get along.

Vetting tenants is key here, and always key for that matter. But 1 vacancy could literally kill the cash flow and make the extra headache not worth it for the month or even YEAR. 

The way I think of it is unless you get 4 gold star tenants, you are doing 4x the work for nowhere near 4x the cash flow. If you can swing another property that cash flows nicely, your time would be better spent there. 

I could be completely wrong about your market, so someone may chime in to correct me here. Good luck with the journey and reach out with any questions. Keep us updated!

Was going to say, just look at it as a roommate type situation instead of them needing their own unit lease/etc... But in california I know it could be a lot different. I have no clue as to the laws in San Diego, I couldn't imagine it would be illegal to rent out a space like that though, but laws are odd. Good luck and let us know!

 Right? You can tell this post was hastily put together. Why Does rental arbitrage attract you? What experience do you have? Done any research on your own yet? 

First of all, great job! You are on a great path and by the time your graduate college you will have a fantastic springboard. House hacking in a high price market is easier than you think, anyone I know my age in the Denver/Colorado Springs market house hacks. It will be a headache at times but allows you to put an asset in your name and vastly increase your net worth while others pay rent in college. (HEAVILY VET YOUR TENANTS/ROOMMATES)

I would say start renting by the room as Matt said. Not sure what the local market looks like but you should be able to snag enough to cover or almost cover the mortgage. If you do the calculations correctly, that shouldn't matter though. Say you calculate a $200 loss for cash flow for the first year. Just make sure to have $2400 in reserves. The year after won't matter as you can push rents up, cover the full mortgage, and you made money on the back end with the appreciation. 

Maybe think about the first year or two of negative cash flow as you are "Paying" rent. The best part about it though is that all of that money will come full circle back to you at sale or refinance. Reach out with any questions/advice needed/etc. Good luck!

Such a big need for this in Co Springs! At least half of my clients are veterans, I'll try to get them all to go!