All Forum Posts by: Account Closed

Hi, on top of the 1031 exchange or MSO, you could also consider a 'private annuity'. This is an agreement between you and the seller to make regular payments in exchange for the ownership of the property. This way, the seller will get a guaranteed income stream for the rest of their life, and you can get the property without paying a large sum of money upfront. You can convince him of the tax benefits of this method.

Also, you can try doing a lease option. This is similar to a master lease, but you will have the option to buy the property at a pre-determined price at the end of the lease term. This can provide the seller with a regular income stream and also give you(the buyer) time to come up with the funds to buy the property. However, you would need to provide information so that you can secure the financing to buy the property at the end of the lease. In the meantime, you can use Airbnb to make some cash flow.

There are a lot of options like 'Employee Stock Ownership Plan', 'Conservation Easement', 'Charitable Remainder Trust' and etc. However, if the owner doesn't want either an 'installment sale' or lump sum like you said, it might be best to try to convince the owner, maybe some negotiating techniques, and some other creative ways.

Try pitching the sale in the shoes of the seller. The owner doesn't want to pay capital gains tax, and thus think of ways to convince his mind, or a way that would be favorable for the seller and you as well. 

Just make sure you consult with an attorney or a CPA for any methods.

I hope you good luck with the deal!

So an LLC is a Limited Liability Company, and it's used by investors and entrepreneurs to protect their own assets, and tie the risks to the company itself. This means that even if your real estate loses money, or goes into debt, the bank won't take your own car, your personal money, and your private assets. It looks great because if you get sued for slippery stairs for 500,000 dollars but only have 200,000 for your house or cash reserves in the bank, the LLC would go bankrupt, but not you. If you get into a lawsuit, the tenants will sue the LLC, but not you. That's the benefit of the LLC. It will separate your real estate investing from your own.

However, although it sounds like a good idea to get an LLC, since you have a house with a pre-approved(or maybe approved) loan, if you decide to get an LLC, you will technically 'Move' the ownership to the LLC, and not you. This will be considered a 'sale' by the bank, and this allows banks to request all the remaining loans you have from the bank instantly. That's not good. For example, if you have a 200k loan on your condo, and you transfer that house to your LLC, the bank 'might' ask you to pay all the loans immediately due to the due on sale clause. This is probably included in your terms for the loan.

One alternative way to protect yourself is insurance. When a lot of investors are starting out, instead of having LLCs, insurance protects them as well such as umbrella insurance, liability insurance, title insurance, property insurance, etc. Most investors starting out don't need an LLC. Maybe later on when you scale and grow exponentially, you might get one. You'll have a CPA and an attorney to talk to about that.

One last thing to note about LLCs is that they aren't bulletproof. One mistake that new investors make if they get LLCs is that they combine their own bank account and use their personal bank account for real estate investing as well. For example, collecting rent straight to their bank account, taking out money, and taking in money for their real estate investing in the same account they used to buy groceries. That will ruin the purpose of the LLC, and if one gets sued, you might personally be liable for any money. Create another bank account for real estate investing if you're going to get an LLC.

I hope it helps!

Hi Josh! House Hacking is difficult but possible in NYC. However, since the prices of real estate are extremely high, I would try to look just outside the city. One possible way is to qualify for a loan, get a house with multiple bedrooms, and rent it out to multiple people. That way, you could break even, or perhaps generate cash flow. However, you should always do some market research, talk to an attorney, and be knowledgeable about the law in NYC. This is because the laws in New York are very pro-tenant, so if not cautious, an investment can go downhill. Eviction is very difficult to achieve. 

When investing in New York, be strict and strategic about your approach. Having bad tenants is not something you would like to have, thus make sure the tenant has sufficient income, credit, and who they are. You can also rent to college students. 

What you can also do is attend local or long-distance meetings and meet with people who are landlords in NYC. You can interact with them and learn more abu

That said, indeed it is difficult to house hack and scale up in NYC. If you share a house with multiple roommates, you could significantly reduce cash flow.

Good luck on your real estate journey, and keep us updated!

Hi Karen, glad to see that you're starting out in real estate. Since it looks like you did a lot of learning about rental property investing, but are new to investing, I would definitely recommend house hacking in Redmond. Buying a house in RTP and holding on to it will become a long-distance investment, which isn't usually recommended. Although there will be property managers, a lot of things can go wrong with them. Since they get more commission when there is a tenant turnover, they may have no incentive to look for good quality tenants, might not communicate with you, or take time to make sure you get the best ROI. Hence, although long-distance investing can be done, it's not recommended.

House hacking in Redmond sounds much better. Not only will it jumpstart your real estate journey, but help you cash flow. In doing so, you will gain more experience in real estate investing and exponentially grow your wealth. Just be sure to research the market and do some due diligence before you purchase your property. I'm sure you already know, but Brandon Turner's books are extremely helpful when starting out in real estate.

One more thing, if you don't plan on staying at Reymond forever, a 'Live and Flip' can also be an attractive option. It's where you essentially flip the house you will live in. If I read correctly, I read this in Josh Dorkin and Brandon Turner's book: How to Invest in Real Estate. When you flip your own house, live in it for 2 years, and sell, you wouldn't have to pay taxes when you sell the house. This is another incredibly attractive strategy that I would recommend especially if you don't plan on living in Redmond for a long time. You can do this again and again by just living in your house for 2 years. Just look out for getting attached to the property, as it's easy to go over budget when one decides to live in the house themself.

Lastly, good luck on your journey, and keep us updated! 

Hi, congratulations Corey! It's great that you're interested in real estate! Although a lot of people will recommend "inspirational books" like 'Rich dad poor dad', "Think and grow rich" and these self-help/motivational books, I have a slightly different approach. These books will inspire you, but not give you practical advice, so here are the best books that I've read so far that gave me insights, practical tactics, methods, and an understanding of the real estate world.

1. 'The Book on Rental Property Investing' by Brandon Turner (This will give you the specific tactics on Rental property investing.)

2. 'How to invest in real estate' by Joshua Dorkin & Brandon Turner (This book is about different strategies, and overall understanding as well as tactics.)

3. 'Investing in Real Estate with No (and Low) Money Down' by Brandon Turner (This is about how you can get started with little low money.)

4. 'The Book on Managing Rental Properties' by Brandon Turner & Heather Turner (This is about managing your real estate. You can read this later when you purchase your house.)

5. 'How I Lost Money in Real Estate Before It Was Fashionable: A Cautionary Tale' by JL Collins (This book is on how you can lose money in real estate)

These are some books that will help you set a basic backbone for real estate investing. It's always good to listen to podcasts like the Real Estate Podcast by BiggerPockets and The Dave Ramsey Show. These are trusted and verified podcasts that you can get advice from.

Be cautious about Gurus. They promise that they have a "Step by Step" method of investing and making millions. It almost never works out. Get your hands on free content. Gurus will tell you that they will have free seminars, only to lure you into paying thousands later for their specific courses. Watch out for those.

Lastly, as you read books and listen to podcasts, as always, take action! It's very important. Good luck on your real estate journey and keep me updated! :)

Currently, there is an oversupply in the market. That's why the whole "AirbnBust" is going around. People are getting empty calendars, and no future bookings, and thus some hosts are just quitting. It's true that a good majority of the people traveling to watch the Superbowl are rich people, but I agree with you that they aren't stupid. Some might be business people who are traveling with a corporate budget. Regardless, they will compare prices and options. Unfortunately, a lot of hosts fail to see the problem. 2k-3k a day sounds unreasonable, and thus no booking. 

However, keep in mind that a lot of people these days are getting last-minute bookings as well. Hence the reason why even extremely experienced hosts like Airbnb Automated are having empty calendars, but eventually around 70%-80% occupancy. With the oversupply in the market, it makes sense that a lot of hosts aren't getting future bookings as well.

I'm sure you know, but some methods that you can use to get more bookings are SEO, dynamic pricing, unique interior, figuring out the algorithm, market research, etc. Being knowledgeable about the local market rates will help hosts avoid getting extremely greedy and losing money. Since three major events are happening in Arizona, it's very easy to get greedy, as it is surely a HUGE opportunity to rake in cash. 

Something you can do is engage in the local hosts setting 2k-3k per night, and research what's the reason behind their pricing. If they can back it up with valid reasons like last-minute bookings, then go for it. However, if they're just being greedy, then you having a lower rate will surely help tourists flock to your listing.

Again, be sure to look out for last-minute bookings! I hope all goes well!

Hi, congratulations on buying your first investment property! Tampa is a great place to start. I visited Tampa 3 weeks ago, and it was amazing. Here is some advice that you would want to go over when meeting with your general contractor.

First, you need to make sure you and the contractor agree and know the scope of the work. Make sure they outline the scope of work, for example, electrical, plumbing, structure, cosmetics, etc.

Second, you and the contractor need to understand the budget. Get a precise and detailed list of where expenses will go. It's very easy for a rehab cost to cost way more than expected, thus you need to be prepared for that. Having a fairly large cash reserve would help.

Third, make sure the contractor outlines the timeline of construction. You need to make sure they follow their timeline. A lot of things can go wrong with mediocre or bad contractors. Everything might seem to go well, but when you have only a few weeks left, they may disappear! One trick that Brandon Turner implemented is paying them weekly, so they do their work if they want to get paid.

Fourth, ask the contractor if they have the licenses and insurance to perform their tasks.

Fifth, ask for references for the previous work the contractor has done. This will help you get an idea if the contractor you're doing business with is reliable or not. It's not guaranteed, but references do help.

Sixth, you would ask for their warranty policy. It's important that you ask them and you know their warranty policy since things break! Especially since you're doing a COMPLETE rehab, I would focus on this a lot more.

Seventh, ask them about their policy on changing orders. Things can change when in the process of complete rehab, so make sure your contractor tells you exactly how things will run, so you have an idea if you want to work with them or not.

Tampa is a more affordable place to start, especially for new investors. At least it's way less expensive than Fort Lauderdale. Lastly, good luck with your meeting, and keep me updated on how things are going!

Hi, it looks like you have a really complicated situation that's bothering you a lot. Here's something that I read that's a little different.

Instead of trying to figure out the complicated but legal ways to get rid of them, why don't you make a compromise with the tenant? If they're trying their best to attack you, why don't you try to talk nicely to them, and try to find middle ground? Tell them that your contract with them hasn't been working out, and it's causing both of them and you a lot of headaches and fights. You could offer them straight-up cash, then tell them to leave. No legal stuff attached, no evictions. Tell them that you don't want to give them more eviction records, and make her feel happy. The key point is your tenant being delighted, not getting the feeling of you trying to get rid of her and handing her some cash. Tell her you don't want to have to raise the rent by 20%. Make sure she gets the idea that leaving with cash is in 'her favor, and to the benefit of her.' This may calm things down a little and make the process go faster and a lot smoother.

Of course, it's always a good idea to consult with an attorney, but the fastest and easiest way is to make the tenant delighted, and with cash, they could leave your property. If this doesn't work out, then you could raise the rent, or do some other measures to make them leave. I hope it helps, and keep me updated! I hope you the best of luck!

If you know how to get reliable contractors and are an experienced investor, I would say you 'could' try to rehab the property. However, rehabbing is especially difficult if you're a long-distance investor. First and foremost, your contractors might screw your chances of making money on the property. They could not stick to the plan and be seriously behind schedule. Worse, if you're not there to check on them, things can go downhill very quickly. They might now show up at all.

Partnering up with somebody can also be an excellent chance to learn. If you do decide to partner up, they will have local knowledge, and navigate through the process of looking for a contractor. You will also be able to minimize your risk since you're partnering up. However, partnering up could be a dangerous move as well. They can have disagreements with you, and want to do things their own way. Even so, they're taking their share of the profit. If you're partnering up, be sure to pick your partner carefully!

If you decide to sell it as is, you might not get as good of a price, but you won't have the headache of dealing with partners, contractors, etc. If you're a beginner investor, I wouldn't recommend partnering up to do long-distance investing, especially if you don't have a large cash reserve. However, if you're an experienced investor, and feel relatively confident, partnering up sounds like a good choice as well.

Finally, do some research on "What could go wrong?"(What if the contractors are behind schedule? What if I find hidden costs? What if the rehabbing cost is much more than I anticipated?) Think of all the possibilities of your deal going bad, ask other people, and reinforce your plan. This will allow you to minimize your stress and risks. 

Keep us updated on your progress, and good luck on your journey!

Congrats! It's amazing that you got pre-approved for a loan today! Some advice that I have is to review the terms of your loan. Make sure you know the terms and conditions, like the interest rate, repayment period, and fees. Also, make sure you conduct a thorough inspection. Make sure you don't have any issues with the condo, so you don't find any hidden costs. Look for professional and reliable inspectors. You could also do a local market analysis, where you can research the amenities or local rent prices. You could also hire a real estate attorney to review the purchase agreement and make sure you're protected. Be sure to have a contingency plan. 

Additionally, I would recommend doing calculations on the cash flow for your property. Watch out for HOA fees for condos! They can eat up your cash flow quickly.

Although you plan to rent it out later for the long term, if you're interested in short-term rentals, like Airbnb, be sure to educate yourself on maximizing your profits! Some topics to learn are Dynamic Pricing, SEOs, local laws, Airbnb algorithms, and much more. Although there is an Airbnbust happening right now, as the housing correction and economy gets better, STR can be a massive cash flow to your property.

Congratulations again for getting your loan pre-approved! Keep me updated on your journey!