All Forum Posts by: Andrey Y.

 Well said. Agree completely ^^

 Do you think Bob Bowling who payed $300K for an asset with $80K downpayment, now who cash out refinanced $750,000 at 4% ($1M valuation) is worried about a tenant not paying rent for 3 months?

Paid off properties is also a viable strategy. I would prefer no mortgage to a person with a 60% LTV mortgage, because there is too much equity and the bank can foreclose in a time of trouble.

A person with a 90% LTV mortgage, the bank has no incentive to foreclose. They (the bank) are taking all the risk and would lose money if they foreclosed.

 I am actually cash flowing AND profiting in Hawaii specifically because rental income growth goes hand in hand with appreciation.  I would STILL profit even if my rentals were unoccupied. You cannot say the same thing.

The reason I can cover missed rent payments is because I focus on profitable markets, not to be confused with "cash flow" markets on paper.

Landlords are freaking out all over this forum due to the anticipation of 1-2 missed rent payments.  But they purchased fantastic assets in cash flow markets with dreams of cash flow right. Why are these landlords getting so nervous, I thought "cash flow" would help them in times of trouble?

The chickens are now coming home to roost. We will see which investors understand the difference between cash flow and profit.

In light of all the recent threads about COVID-19, worrying about tenants not being able to pay rent, legislation that seems to screw over landlords month after month, and ethical dilemmas about where it is our obligation as landlords (or God's children) to cover the bills of tenants because of (fill in the blank)

Cash flow is for poor investors or investors that are poor (Apologize in advance to the BP / GRE / Turnkey advertisers)

Let me introduce to you a concept that is not often talk about, and probably frowned upon over the last 11 year bull market:

Big A** Mortgage (BAM)

Things most investors foolishly ignore..

1. - Historic rent growth
2. - Historic appreciation rate.
3. - NOI per square foot
4. - Operating expenses per sf
5. - Capex per sf

Cash flow is for poor investors or investors that are poor.

If you need or hoped for cash flow to pay your cable bill then you probably should not be investing in real estate. The only reason I'm not cash flowing is because of a BAM that I am paying down because I am in a high appreciation market vs. a market where the only reason I may get cash flow is because the prices are so cheap because sellers are trying to unload unprofitable properties, this is by design.

So-called cash flow gets eaten up by CapEx and by pesky critters like the coronavirus. EVERY. SINGLE. TIME. I know that "cash flow" has been shoved down our throats because it makes money for advertisers and those companies selling it.

Its time to wake up and start thinking like the big boys (family offices, hedge funds, and billionaires). They are buying 3.5 caps in NY, London, HK, LA, and SF.. FOR A REASON. That reason is not the dream of cash flow.

 Educated in America is not something we should brag about. 

I can say this, I have had 13 years of post high school higher education (college, medical school, residency) in the US. Other countries are miles ahead of us in all aspects of education.

California is okay, but being taxed to death doesn't justify living there IMO. Hawaii has better weather (best in the world many would say), world class hiking and scenery (often a 5-10 minute drive, as opposed to 1-2 hours from a city in CA), better beaches by far, better surfing, less taxes and less red tape, more landlord friendly in HI (can evict in 3 weeks), better travel hub to Asia, etc.

CA and NY residents suffer from the same fate. Most have never traveled overseas because they think its the best where they are. Well, I don't enjoy being taxed at 52% not to mention the random taxes they seem to dream up every year.

I believe its your patriotic duty to pay as little taxes as possible legally. There is ALWAYS leakage, beaurocracy, and red tape when you give you hard earned money to the government. Therefore its wasted in one way or another.

Its not the 60s or 70s anymore. All of the preconceived notions we were brought up on about "the rest of the world" as patently false once you step outside the US and take the time to travel.

 I mostly agree with Jay.

I have 3 tenants in 2 rentals in Hawaii. One of my units is already in escrow and will close shortly. I saw this coming from a mile away but unfortunately I could only sell the unit that was vacant. That rental has made me many times my DP already.

I could afford to pay the mortgage for 6 months lets say. But why should I? Terrible business model. So far, two out of the three tenants are telling me April is good, and the 3rd one is going to make partial payments hopefully. I will do this for 2 months. If it doesn't work, I will sell all the units and 1031 into a passive Delaware Statutory Trust (as I am already doing with the unit in escrow).

My tenants are working with me and I am working with them. I have never been so optimistic, carefree, and motivated as I am now (big part of this is daily gym/cardio)

Being a landlord is NOT the job for someone who wants to make everything out of their time in this life (fitness, travel freely on your terms all over the world, time with family and friends, meditation/time to reflect, learn languages). All of the landlords I know are lacking in most if not all of those things

I don't really see how this would work. As an example, the properties are already on a depreciation schedule (using the initial PP + other things). So, I am performing one or more cashout refis after the initial purchase event. I don't know where in the taxes (edit depreciating schedule, or put as an expense somewhere?) it would go.

Because loan related costs from the initial purchase (which I already have factored in), are different from loan related costs from future cash out refinances (which are different loans).

I mean, does the depreciation schedule get reset or depreciation just becomes higher?

Conceptually I understand what you are saying, I just don't know how to input it into the tax software. Seems like it should be fairly straightforward. Thanks for your input.

 The other thing is, sometime when I add an expense on a rental property, the amount I owe the IRS goes UP! {I am using H&R Block Premium desktop version} I mean, I do have carryover losses and carryover AMT from prior years, but how can increased rental EXPENSES worsen tax benefits? I would think it would either do nothing (too much losses already and I am not a real estate professional), OR decrease tax owed. So, this is rather bewildering to me.

 Yea, those are the crazy prices in Hawaii. Mileage? Seems odd.. ;) One of them I actually went with another lender towards the end but either way they were expenses out of my pocket for two difference properties. Still, not sure exactly where to put it? And since it was a refi and not an initial purchase, definitely these amounts are not being expensed or amortized anywhere on my taxes.

bumpp