All Forum Posts by: Rick Albert

This is a great question. 

If your son's goal is investing, he doesn't have to be a real estate agent. I have successful clients who don't work as an agent. I just wanted to throw that out there. 

Generally, what people have said is right, knowing your numbers is important. But if he has passions, he should pursue them. I have investor clients who work in tech. It is their passion, make very good money, which allows them to easily qualify for loans going forward.

I will say that networking in college is extremely important. For example, I joined a nationwide fraternity and did student government. Through that fraternity network, I have been able to not only meet amazing people, but clients in the process. My business partner on the investing side I met in college. There is also opportunities to develop additional skillsets. When I volunteered as a mentor after I graduated, the treasurer of the local chapter manages an over $700,000 budget. Not too many people out of college can say that. Some even have housing and someone has to maintain the property, review leases, etc. 

When I thought about it I spoke with my mentor to get his thoughts. He said that every time he has been sued over the years, even though there is an LLC, he was always ALSO personally named, so he still had to deal with it.

There are two reasons why a property doesn't sell: Price or the Agent

It is an investment property, so the numbers have to work. You could consider posting on LoopNet as that is geared towards investors.

I would also look at the photos, description, etc. A poor presentation can make a difference. 

I would also reach out to agents who have represented buyers in more expensive markets. This can be perceived as a "deal" due to price point.

Alternatively, can the unit be delivered vacant? That might open your pool of buyers.

There are a couple of things to think about:

-Technically, if you have a loan in your name, the lender doesn't want it to be transferred into the LLC. The lender MAY call the loan.

-It is on my to-do list to look into an LLC for next year but in the meantime I have an umbrella policy for additional liability coverage. It is cheap in the big scheme of things and is an extra layer of protection. Keep in mind umbrella insurance only kicks in AFTER your main insurance runs out. If your main insurance won't cover the claim, then neither will your umbrella coverage. Talk to an insurance agent to confirm.

Keep in mind there is an affordability issue. So although the goal is increasing rental income, I would also focus on decreasing expenses. Nickel and diming tenants can come back to bite you.

-Passing through utilities to the tenants. This is either splitting it or a flat fee. I have an investor client (former house hacker) where she charged a flat utility fee but had solar panels. I charge a flat water fee to my ADU tenants.

-Fixing a property upfront can lower your maintenance costs down the road. 

-Insurance is becoming a scam. If you pull a claim, then other insurance carriers won't insure on future properties. Therefore, for some (including myself), have been upping our deductibles to lower our insurance costs. If there is a roof leak, you are likely to just repair it yourself rather than get insurance involved. 

-Depending on your location, I wonder if there is a market for bunk beds in primary suites. If the room rents for $800 on it's own, but you could charge $450 per bed, then tenants win if they are on a budget and you make more money. By doing it in the primary suite, they have their own bath and closet, so it isn't as much of an impact on your life. This is more of a theory and I think this would do well in college towns.

Good luck!

 7 years. I actually have money left over from our latest cash out refi to purchase another rental property. We are just waiting until our newest acquisitions are stabilized so we know how much cash we have left over.

I don't know Greg personally, but tends to be direct when I see him on the forums. To be honest, he's not wrong.

If your goal is to do charity work, it is noble. There are many organizations that can help with this.

If you are thinking as a business model, it is going to be a struggle. There are Section 8 programs where some do very well. Keep in mind you cannot discriminate Section 8 applications. The problem is with the high building regulations and high cost of construction, it is mathematically impossible to build "affordable" housing. I did a video on it on YT (not sure if I can post it here but send me a message and I'm happy to send it to you).

Hey Sam,

My understanding that once you close on the replacement property, you can do whatever you want.

Double check with a 1031 Expert. 

1) With rent control, it keeps inventory low, thus high appreciation for rents.

2) Higher dollar appreciation. 3% increase on a $1M value is higher than a 3% appreciation on a $100,000 value. 

3) Same as #2 but with rents.

4) Because of the above, you could argue that you are generating a higher net worth faster. 

5) Expensive markets like LA, NY, and SF can be great for house hackers.

6) Because I first bought in LA and then bought a second house hack, I have been able to leverage business partner, HELOCs, and a 1031 exchange and now have 15 doors between four states and I haven't had to put a down payment of my own money (or at least BRRRR and got my money back).

That is my understanding as well. It is all about intention. I had a client who refinanced their home and then I helped him buy a new house about 5 minutes away. When the lender brought up the issue, he just said that he needed more backyard space for his kid and it was a non-event.