All Forum Posts by: Ronan Donnelly

@Paul Ryan, 24% CoC return, in the form of cashflow will lead you to tertiary markets and risky assets. How about thinking about how you can scale the equity/capital side of the equation to allow you to get your desired dollar cashflow number from a lower cap rate, safer deal?

Other benefits of growing equity more than focusing on a high % cash flow number is that the tax treatment is much more favorable. Equity growth can be deferred via 1031, treated as LT capital gains if realized and cash can be accessed via a refinance. Cashflow is taxed as ordinary interest income and can only be offset by depreciation up to about 7%.

In summary, I would focus on finding investments that cashflow up to about 7% and where the rest of the gain will come from equity growth, likely from a value-add strategy. Good luck!

They do need a duct but they don’t need to be under a window  as for cost, you’d really have to get a quote for your specific building

Go for the multifamily unit, the economies of scale will pay off in the end and it's also less likely that you will receive zero rent in any month. With a SFH you can expect a month of vacancy every year or so and a broker/management company to charge you another month to find a new tenant.

I’m also a fan (no pun intended) of the mini split systems

@Joe Delgrosso, one important point to remember is that cashflow is expensive based on how it’s taxed, much better to focus on wealth via creating equity. Wealth creation is taxed much more favorably than cashflow.

@Ric Mittleider, from my perspective it can be dangerous to focus on an absolute return number. Higher returns are not necessarily better than lower returns, it's all about how much risk you are taking in order to get the return. Good luck!

@Lee Nestlerode, definitely run a background check as there is a high degree of variability in the quality of sponsors out there. Even the Sponsor's response to your request can be highly informative. Good luck!

Hi @Brian Boyd, great to see someone sharing what real estate investing really looks like. It is definitely work, it has risk and up's and down's and it won't make you rich quickly, but if you stick at it you will be materially better off over the long run. Good luck!

My favorite session was the Intellectual Debate: Will you have greater success over the next years if you sell more than you buy in 2020. Neal Bawa and John Sebree made some compelling arguments however Jamie Smith and Jilliene Helman made a stronger case for buying more than you sell. 

Force yourself to be as concise as possible and to limit the size of the pitch deck, investors will appreciate this and will likely view you as more credible if you include all of the key data i.e.

-Do the area demographics support occupancy and higher rents (population growth, low unemployment, low crime, increasing wages)?

-Does the business plan make sense and is it explained in plain English?

-Is the team credible? Sponsor has executed this strategy multiple times, management company specialize in this kind of asset

-Does the Asset support the business plan? e.g. if you plan to increase rents, do comparable properties command higher rents? Is there low CapEx, etc

Good luck!