All Forum Posts by: Andrey Y.

Just received the JWB newsletter, yes they send one out. Pretty impressive, here are their stated, stats:

Current Properties Under Management - 1730

Total Rented houses in 2017 - 759

Average Duration of Leases signed in 2017 - 30 months

Percentage of Resigned Leases in 2017 - 71%

Current Occupancy Rate - 97%

Hi @Craig Oram,

I can see that there are still a number of issues that we’re just not on the same page about. I’d love to come to a meeting of the minds and a public forum probably isn’t the best place to do that. I’d be happy to jump on a call with you or chat over a private message if you’re open to that.

@Andrey Y.  You mentioned an interest in Opportunity Zone Funds. Let me know if there are any OZ questions that I can answer for you. Most funds multi-investor funds are limited to accreddited investors.  The typical mimimum investment is 100k though many are higher and a few are lower. Our mimimum is 100k as well, though we can waive the minimum at our discretion, especially for an investor who may also have future gains. It's really an issue of needing to put in the time to make sure each LP truly understands the risks and rewards of OZ investing.

John,

Man you still don't get it. Government doesn't produce anything, people do. In the course of history all of the most economically successful countries are those with the least government.

Pretty sure Hong Kong isn't rioting because they are looking forward to mainland China's gift of additional infrastructure. 

Huge wealth was earned in this country prior to much infrastructure and most of that was privately built.

As an example, I live in a neighborhood where the roads are private. All privately built and owned. I can tell you they are in far better shape then the surrounding public roads.

My point is this; Governments taxing it's populace to build roads is way more inefficient then the folks keeping their own money and building their own damn roads.

Sorry if this truth is inconvenient to your theory.

Respectfully, Gary

Hey, everybody,

I'm not quite sure if there are problems with my calcs, or if everything I find on market are simply bad deals. Please let me know if I'm doing anything wrong here? Here's the details...

I plan to use FHA loan on a multi. Initially, I will house hack, but I'm running numbers to see what it will do once I leave and it becomes solely an income property. I'm analyzing North shore homes, 2 & 3 families, on the outskirts of the city. I've worked out some kinks and THINK I am as accurate as I can get.

I'm using list prices from MLS and estimating rents from craigslist. I'm including closing costs into the mortgage ($7,500 generically, is there a good percentage to use?). 5% (each) for vacancies, repairs, and cap-ex. 10% for management. Local utilities have been estimated, and of course, PITI and PMI using a mortgage calculator.

With 2 families -($500k-$525k range)
What I'm finding is that they refuse to cash flow with 5% down. At 20% down they will cash flow but the COC ROI is under 4%, and also falls shy of the 1% rule. (I've also included a 1% "clean-up" cost for minor repairs/paint as a one-time cash expense, into the COC ROI)

With 3 families -($600k range)
At 5% down payment, they seem to cash flow nicely, over $200/door, although the 50% rule is pretty negative and I just meet the 1% rule. In this scenario, the COC ROI is suspiciously inflated at over 20%. (Also included the 1% clean-up fee).

3 fam- ($650k range)
The numbers are much more realistic. Cashflow just over $100/door. COC ROI 11%, but 50% rule is WAY negative (About $1k) and falls under 1% rule.

I'm aware the 20% vs. 5% down payment makes a world of difference, plus saving the PMI. I can't afford 20% on a 3 family, and the 20% on 2-family scenario just seems off to me at 4% COC ROI.

So...Is anything glaringly off with my numbers, or is this expected for the current market?

Thanks for reading!


 

"It seems as if the government is interfering with the natural order of things, "

------------------------------

Pandemic is the natural order of things?

This thread caught my eye because I just purchased an out of state turnkey property and I wish I hadn't.  I foolishly paid cash about $20k more than it was worth -- without an appraisal or third-party inspection.  It has been 2 months and still not rented.  I had to call to ask them to lower rents because their asking rent was at least $200 more than comps in a 1.5 mile radius.   I ordered a third-party inspection on my property after seeing the deplorable rehab quality on a second property I was considering.   Rotten plastic dryer vent exhausting into attic.  New HVAC with a crushed return duct (because the HVAC control panel was only accessible by crawling over the duct through low-headroom trusses)   Leaking faucets.  Leaking drains, rotten wood.... But beautiful granite countertops and LVT flooring.    Granted, I'm probably fussier than the average turnkey investor since I am a contractor and home inspector and have rehabbed several homes myself.   I thought I had done my due diligence and the turnkey company was highly recommended with a good reputation on BP.    I also believed that the house was in a "B-class" neighborhood -- I've been informed by 3 independent RE pro's that it is "C-class".

The moral of the story is "Trust but verify".   Companies change ownership.   Employee turnover can also change the culture of a company.   If I ever buy another turnkey property,  I will at least check for price and rent comps and hire my own 3rd party inspector.

I expect I will have to hold the property for 3 or 4 years for the value to climb high enough to break even on the sale.   This investment reminds me of the time I got on the Pennsylvania Turnpike going the wrong direction -- I had to pay to drive 14-bumpy miles to the next exit  and then pay again to drive the right direction.

@Andrey Y., congrats on the successful investment. I'm staring down the same hole--I have a couple of houses that I bought in the early 2000s and refinanced not long before the 2005 market peak. Got way more out of them than I had into them, then had to suffer through negative equity for about 6 or 7 years. Now I can sell them but with depreciation and the refinances I'll net just enough to pay my taxes. So I have essentially two choices--hold them for another ten years and let the debt amortize down more, or sell them and add outside cash to a 1031 to buy something else. But what else? Beats me...now that I buy mostly 150+ unit buildings, buying houses in my personal portfolio is about as exciting as a prostate exam. One thing is for sure, I have no plans to buy a DST nor a TK, so I guess that leaves me with option 2, sell, add some cash, and buy a 10-unit or something. I'm just not anxious to endure the exercise.

I wish I could guide you on what to do here--seems like Door #1 and Door #2 is a choice between two not-so-great alternatives.  Maybe Door #3 for you is to 1031 into a 4-plex or some other small income property and hire a property management company??

Based on the way things are worded above, just want to make sure that you actually made the decision to do a like-kind exchange before closing escrow and that your funds are currently being held with a QI as we speak?

BTW, congratulations on the awesome return you got on your property. Your story sounds similar to one my properties except mine was in Los Angeles and did a like-kind exchange at the end of 2018. No way in hell was I going to pay that kind of tax....both Federal and State.

I know based on reading some of your other posts that you are a fan of syndications for accredited investors. Do you have any interest in Opportunity zones? In order to get the max reduction in capital gains (15%), you would have needed to invest by 12/31/19. But you can still invest this year and get a 10% reduction. Either way, you'd be deferring ALL your tax liability till 2026. Of course, the downside is that this would only apply to federal tax and you would still be liable for depreciation recapture. 

Personally, turnkeys and DST's don't interest me at all. I especially would not want to exchange prime Oahu real estate for Midwest properties that aren't going to appreciate very much. As for DST's, when I did my 1031 exchange, I looked into them and concluded they were more of a last resort option for me. Maybe when I'm 65 and want to go on a permanent vacation, I'd consider DST's, but right now it's way too early for me to be investing in them.

Andrey,

First let me point out what a great investment you made in the original $150k condo in Hawaii.  I've read your posts on other forums, but this is the first time I've seen the detail on that particular property.  Congrats.  That was a fantastic investment that appears to have paid off multiple times for you.

As for the particular question you asked, I am familiar with both companies.  They both are well run and have very respectable teams in place.  I do not think that you will find issues with either company and certainly not like GEG.  If I were in your shoes today, I would lean toward Jacksonville, but only because of personal experience in lower price points.  I had to endure several very tough years from 2008-2010 due to being heavily invested in lower-price properties in very challenged parts of Memphis.  The JWB team is very good and I personally like some of their newly built inventory and some of their infill projects.  They have a big profile locally and an experienced team.  We've masterminded together multiple times and still connect to share on challenges and successes.  

However, I often speak with investors who want to invest in lower-priced properties in Memphis and some of these same challenged areas that I had experience with and Mid-South is a company I suggest they speak to.  I have a lot of respect for them and think they do an excellent job in these areas.  My past pushes me to personally invest in different properties and areas that are generally more expensive, but I recommend Mid-south without hesitation.  

I'm not sure that helps much, but I wanted you reassure you from someone who has been in the industry for almost 20 years that both of these companies are well-run and if they meet your investment criteria, should be good choices.  Again, congratulations on a successful investment and best of luck with your next moves.