All Forum Posts by: Rick Wang

Practically everything prior to 1980 had asbestos. Its not just pipe wrap. 

Most everyone is correct here, but your all playing by different rules for your calculations.

If you use full cash (no liabilities) and make 5%, that is one way.

You can then take out equity loans  or 2nd mortgages- but you have to deduct the cost of the loan. Then if you use the loan to buy something else, you  have to add back the net income from that operation. 

You can calculate appreciation, but not as cash flow. Its an asset, though not necessarily realized.

Taking out an equity loan or 2nd mortgage makes it realized however- for example, you buy for 100 dollars, the property is worth 100000 as appraised. While it is an asset on paper of 100000, it isn't realized until you turn it into money- either by selling or by taking a loan against it.

The problem comes with market fluctuation. Ford leveraged against its properties before the real estate recession, and had the equity cash on hand. It didn't need a bail out. However, had they tried to leverage during the recession, they would have gotten significantly less.

This is the issue of appraised valuation- it means nothing until money is transacted.

Your rate of return is directly correlated to the cost of your purchase and your overhead. 

The northeast new england coastal areas are mostly 2-3% at best. Your not buying as a cash return investment. If your not buying free and clear, your mortgage will often and most likely exceed your returns. Its hard to argue with the 500/month nets on a 30k property in middle america, where your making 6k a year on 30k investment. Scaled up to 100k, your making roughly 18-20k (in other words, 18-20%).  However, your 30k property will probably stay a 30k property. In my areas, we see more like 3% return, but easily 20-30% property valuation increases. Homes that were 400k are now north of 600k. And that is the norm in almost every "A" neighborhood here, in 5 years time.  Its a pretty inverse equation. 

You can check on Zillow for recent sold properties, and see the price of the previous sale in the last 10 years. Even places like buffalo have appreciated 20-30%. 

However, all this is a bit misleading- inflation also has a part in this equation- getrification, foreign investment money, etc. etc.

Every strategy is good- just depends on what works for you. Managing a 100 unit apartment making 100 net a month would net you 10k, or 120k a year. However,that is the hassle of 100 units.  You could also manage a 4 story townhouse in NYC- which would also net you the same, meanwhile your only dealing with 4 leaky sinks, 4 tenants, and 4 toilets. (ok, maybe 8 toilets).

Ya, I'd do it. Unless you have money invested already in existing window shades. If you have el cheapo window shades in place, and they want it, split the cost, but the window shades stay in place after they move out, and it has to be installed professionally (or by someone who knows screws don't stay in dry wall by themselves). Don't forget to insist on neutral colors.

Thank you for you insight. Do you recommend a LLC or other corporation type?

Answer is... maybe. 

Here's where I notice some interesting bits; (and its not just specific to you, a lot of people post similar things)

Your math is fine, 250*32=8000.  The part that I rarely see if just how much capital is required to generate that amount. 

My recommendation on 1031's are only if there's additional leverage or advantage to be had. For example, you upsize to take advantage of significant maintenance (i.e. heat/heating systems/property manager) cost savings.

There's the "right deal"- the "ok deal" and "bad deal"- the unicorn is the "too good to pass up deal" which I won't really ever consider because its not likely to happen, at least to me. I have heard of quite a few people who it did happen to however.

I don't know what a good rate of return is in your area. But if you get 10% returns, and you make 250/net per unit/month=3000/yr, means that your unit cannot cost more than $30k each. 

If you make a great day job living (which it sounds like you do) use it to your advantage now to get loans. Becomes much more difficult when you dont have a regular "full time" job.  You can really leverage your income by taking out mortgages, but also by paying down those apts.

Im in talks to purchase a mixed use commercial/residential building. 

Any advice with regards to creating a LLC (or other corp type) or to just personally add it to my own portfolio? My personal portfolio is getting a little too large; with this purchase my umbrella policy will probably drop me.

Anyone else deal with this?

Only you can decide on location- that is based upon your clients, or the willingness of your clients to go "out of the way". 

You will get all manner of quotes, depending on materials and other factors- will you have xray machines, do you need center run power /water (i.e. dentist office) or do you do day surgery (will require automated backup generators IIRC), are your clients physically disabled, do you need chair lift, if you change an old building do you have to make it ADA compliant. 

Even the surfaces, whether it be stainless, hose-able walls, etc etc. Lots of factors.

The nature of your Dr's office will dictate the style and overall cost.

Always go to the top. 

You think people don't use it, but EVERYONE uses it.  

Holiday mugs, holiday plates, how often do you really need that spring form pan or that ebelskivers maker?

Also it is the best place to put extra paper towel rolls, kitchen towels, etc. etc. You'd be surprised only many things you can take out of the pantry, or closet.

Just ask em if they know what a cabinet screw is. 

Not a lot of details here. 

If the gun was legally owned, there isn't a problem with the law there, its not the same as drugs.

If its your tenants gun and the visitor shot it, then there's a big issue of securing that firearm. 

Accidents do happen, but its not criminally negligent. 

If the gun was not legally owned, then I'd evict. Thats just a gateway to bigger issues.

If it is legally owned, I'd be more likely to evict for smoking in the apt.

I'm a landlord; I rent space. You pay me rent, you don't destroy my space. Once someone smokes in the apt, non smokers won't want it. It will cost me lots of money to fix it.