All Forum Posts by: Ray Johnson

@Jeremy Able If you're looking to passively invest, you don't have to limit yourself to the San Antonio / Central TX area, the best deals to be Syndicated may not be in your neighborhood but will still allow for you to passively invest.

You didn't specify what size of commercial Multi-family you're looking to pursue as a passive investment. There is a difference between the small under 100 Unit deals, the 100-250 Unit deals, and the over 250 Unit deals. The strategies are different at the various levels, the competition is different at the various levels, and the exit goals tend to be different as well.   

There are some very smart people here on BP who can provide information on the best ways to get into a deal, @Brian Burke is very well informed and may have some ideas if you're looking into the commercial multi-family arena. 

@Jimmy Klein I agree with you regarding the competition. I've looked at but never used AirBnB or any of the other STR platforms because I like a better quality lodging experience for my personal preference. I've spent my whole life growing up in Southern California either 5 blocks from Santa Monica beach, then Newport Beach, and now 5 miles from Laguna Beach, all Class A, or B+ neighborhoods, If I'm leaving home and seeking lodging, I'm not looking to pay someone to downgrade my lifestyle on a STR location. I prefer to be catered to at top tier hotels, not someone else house serving myself so in that sense STR's will never compete with hotels for my busines.

Like you, I posted earlier that if STR's are going to operate in a hospitality business action, then they should be licensed, regulated, and taxed like a hospitality business. I think that's the point that is missing from most of these post, people are responding from a personal preference position not a logical business position. The compliance requirements you've outlined are some of what people are looking beyond when defending some of these STR's. Some of these responses are along the lines of yes I'm operating an unlicensed, unregulated, noncompliant business, but the people have demonstrated that they want it by booking it on AirBnB so it should be OK, these noncompliant ADA STR's probably don't know or don't care that they're violating U.S. Department of Justice ADA regulations and neglecting to provide a service for a protected class of people

@Curtis Robbins You didn't mention a range of what you consider to be "large capital", depending on your interpretation of large capital the journey will be different. For me  "large capital" would be a minimum of $5 million or more in cash allowing you to have nationwide options versus $1 million in cash limiting you to certain areas of the US (Midwest and South) and certain classifications of Assets to pursue within those areas if you're targeting commercial Multi-family.

It seems like you're set on Indiana based on your reference in your post. I would take the approach that @Mike Krieg uses since once you're into the commercial arena things are a lot different than when you had your SFR generating $600 a month in Cash Flow.

@Charlie MacPherson These types of bans are taking place all over the US in major metropolitan areas. At the core of the issue is you have a highly regulated licensed and taxed Hospitality industry losing business to the unlicensed, non-regulated, everyday people renting a property to earn extra income and operating in a hospitality capacity without having to pay their industry standard cost of doing business or having to abide by the same regulations, taxes, licensing, etc.

When I've looked at the legislation for the cities/counties where I have properties, it's all the same, the municipalities are looking to collect missed revenue for all of the business licenses not being issued and paying a license fee, the various regulation authorities not fining vendors who are out of compliance, or enforcing codes, additional taxes assessed for the hospitality industry not assessed to the every day person.

 @Wayne Brooks you will not find any lawsuit from the STR platforms claiming illegality, what they are protesting is how the municipalities are holding them accountable for the everyday persons actions of running an unlicensed business or misclassified business for those with a business but not a hospitality business entity.

An example of this is in one municipality they allow a maximum of 90 days per year of use on STR's, if a home owner rents more than 90 days it's considered a hospitality business and required to operate like one with all the regulation, taxes, etc.. AirBNB must report it's homeowner/landlords renter information to ensure compliance, AirBnB doesn't want to do this because they have to limit the number of rentals a property can have, or pay the fine for going over the 90 days per year.

@Frank Wong I agree with you 100%, I will also add that I believe the mentality that things can always be worst contributes to the lack of growth and success in many people. With so many people wanting the path of least resistance in life, it's easy to become complacent with life when looking at society as a whole and where you fit in.   

My thoughts are partially on the same page as  @Omar Khan  I do feel that it's part simple math in a sense that most people really don't know how money works and the associated cost of purchases with that money, the other part is information and education.

1) Person buys a new car expecting a monthly payment of $300, didn't have the vision/understanding to factor in beforehand his increased insurance payment on a new car, higher annual DMV licensing tax for a new car, desire to want to show off that car, i.e. more, increased fuel cost. That simple math Omar is talking about also requires vision and understanding on how to use it, that $300 car payment is really $450-$500 a month.

Four years ago I told one of my brothers who was looking to buy a new car and was going to pay cash because he didn't want a car note. I first explained to him when the cost of debt is very cheap, never use your own cash, use the banks money, they have more money than you do. I told him to wait 12+ months to buy the car and take these steps which he did.

A) use his cash for a OO HUD property at a discount, and he gets to purchase without investor competition since owner occupants get priority. He purchased with 5% down and below value.

B) He stayed in the property almost 19 months, then turned property #1 into a rental and purchased a different property #2.

C) After moving into his 2nd property, he then used a small down payment on the new car purchase and then just used the  monthly income from property #1 to pay the monthly car payment.

D) After 5 years the car will be paid off, he'll have his car and he'll also have monthly Cash Flow going forward.

In a life filled with additions and subtractions, always have more additions on your personal income statement.

Simple math on the two scenarios yield completely different life changing results, the only caveat is most people don't have the information, vision, or discipline to execute the better scenario which is what @Thomas S. was getting at with the bad credit, no money crowd chasing the "Get rich quick" deals, they tend to lack several or all of these skills.    

@Bill Goodland I wouldn't use any of the sites you listed, the most accurate numbers are going to be the Tax rate the Assessors office post. Take that rate, set your formula and drop in your purchase price for every property you analyze, quick and easy and no need to guess or rely on unreliable numbers.

@Kevin Polite I'm hoping they'll include the Apartments.com postings as a part of our listings similar to the Realtor.com and Doorsteps postings, the more connected listings the less work doing them separately. 

@Russell Brazil  That's so true! Because of the low purchase price points in Ward 7 and 8, I can see OOS investors buying in neighborhoods like Congress Heights, Barry Farms, and Deanwood expecting the HQ2 masses to show up only to be disappointed. 

@Russell Brazil I'm assuming the nicer neighborhoods prices are much higher and heading into the millions?