All Forum Posts by: Sam Yin

@Jim K.

Snappy Properties LLC

😉😎

@Colleen F.

Perfectly put! Thank you!!

Our kids are not clones of us. They will never have the same experiences that brought us here. Thus, they may likely never have the same passions and drives.

I'll do as much as I can to lay a foundation of wealth for future bloodlines, BUT not at the detriment of my retirement... EARLY RETIREMENT!!! They can have what's left after I enjoy it.

@Jason C.

I think that is the most important part... be OK with what ever the kids end up doing.

You have the choice to set up intricate trusts, or not. You just need to be OK with it. Because the other side is: how far do you want to force the next generations to conform to YOUR plan? Is that even fair?

@Jim K.

Brilliant! Lots to unpack and apply to each person's individual situation.

@Corey Conklin

I had always thought that is what we all think?? I did not think that very many, if any, on a forum like this would think any different.

In any case, it is a good reminder to look far beyond the material.

Thanks for starting the discussion.

@V.G Jason

I have had to call on my primary insurance on occasion, but never my umbrella. To me, the umbrella is almost the last resort, and also for peace of mind. All my properties carry primary insurance over $1M. There are standard coverages in there that I will never need, but its part of commercial insurance.

As for piercing the corporate veil issues, that is a whole other topic and I know for a fact that it has been hotly discussed on this forum. I will refrain from reigniting any flames since I know that people have strong opinions about it, either from experience or third-hand stories on the internet. I did not go through the hassles of containment, anonymity, multilayers, entity-owning entity, internally scrubbing the temporary manager on the operating agreement, etc... I am a small fish in this big pond. 

I MIGHT consider a more comprehensive structure when I surpass $50M in equity and cash flow of at least $300K/month. Until then, I am content with my structure as I currently have it now. I seriously believe in that.


@Allan C.

I have the umbrella for the investments because there are a lot of tenants and moving pieces, but mainly because I had an apartment building that I leased out to mentally ill patients.  I just sold it, but I think I'll keep the umbrella going. I MIGHT consider an umbrella on my personal assets later... but I do not own much. The only thing in my personal name is one motorcycle that I will register on Monday, and one bank account with under $500 in it. My other accounts and vehicles, RV, quads, bikes, etc, have been transferred out of my name. I know my thought process may be flawed to some. And I am sure some smarty pants attorneys will rip my structure apart. Like most things in life, there is more than one way people live.

For context, I have been sued in the past, multiple times. The latest one was 2 years ago from some frivolous mother and son that was settled by State Farm for 10K just to move them along. There was plenty of reason to fight it because State Farm knew it was a fraudulent claim, but the time cost just doesn't justify it. Right or wrong, it was cheaper to pay those people to make them go away. If you can't take it, or can't let it go, then that is a personal problem. This is our society and the American litigious culture. 

I don't take it personally. It was like all those people who that screamed they will move to Canada if Trump was elected. I did not see too many people move to Canada when Trump was elected. I was waiting to snatch up those homes but it never came to be.

sorry... couldn't help myself on the last few lines because I really was looking forward to buying some nice beach properties in a class A areas from crazy people that, for whatever reason, hated Trump.

Quote from @V.G Jason:

Quote from @Sam Yin:

Quote from @V.G Jason:

You guys have umbrella policies that cover your rentals, and separately your personal stuff? Or just all in one policy? For the one's with rentals, are they in an LLC or under your name?

My umbrella police does not discriminate whether it's in my name, a trust, or an LLC. It does how ever specify personal or investment. They are separate.

I only have an umbrella on my investments... for now. My oldest is 14, so may be I will need one for the vehicles once he starts driving.

NOTE: I got my policy before State Farm pulled out of CA. My most recent apts are not primarily covered by State Farm, although several are. However,  the umbrella does cover ALL the properties,  even the ones that do not have State Farm as the primary.  Any property I own now and in the future that is an investment will be covered.

I'm about to close on some more properties end of this month. As such, I may have to reevaluate and push up the policy closer to 10M. I shudder to think of what they will want to charge me. May be they will be kind enough to just bump it slightly as I am a long time customer. I swapped over from McGraw to State Farm for my motorcycle coverage over 25 years ago and have been using them for everything since.

I would assume the policy would go under what's insured. If you're rental is insured your name versus an LLC, then the policy would be different. I don't think your personal umbrella policy covers your LLC issues, so that was my question.

My umbrella is strictly for my investments as a whole. 

Quote from @V.G Jason:

You guys have umbrella policies that cover your rentals, and separately your personal stuff? Or just all in one policy? For the one's with rentals, are they in an LLC or under your name?

My umbrella police does not discriminate whether it's in my name, a trust, or an LLC. It does how ever specify personal or investment. They are separate.

I only have an umbrella on my investments... for now. My oldest is 14, so may be I will need one for the vehicles once he starts driving.

NOTE: I got my policy before State Farm pulled out of CA. My most recent apts are not primarily covered by State Farm, although several are. However,  the umbrella does cover ALL the properties,  even the ones that do not have State Farm as the primary.  Any property I own now and in the future that is an investment will be covered.

I'm about to close on some more properties end of this month. As such, I may have to reevaluate and push up the policy closer to 10M. I shudder to think of what they will want to charge me. May be they will be kind enough to just bump it slightly as I am a long time customer. I swapped over from McGraw to State Farm for my motorcycle coverage over 25 years ago and have been using them for everything since.

Quote from @Dan H.:

Quote from @Sam Yin:

@Travis B.

Ditto!!!

There are many approaches. There is no one perfect approach. This topic has been discussed often. It's nice to see more people thinking about it.

Travis said something profound... if you love your job, then it will be great for you to wait decades to achieve FI from your appreciation strategy. However, for those of us that want freedom quicker, the appreciation strategy that has been laid out is not the answer.

Then the question is: do you want your time freedom now at an able young age, or do you want it a few decades later when you are not as able and not as young?

Easy comparison, 2 to 5 years of investing intentionally for cash flow and be free of W2 OR 20 to 30 years of investing for appreciation while working W2? Which is more worth it to you, the cash flow investment strategy that allows you to have the freedom to transition to appreciation later WITH the freedom of time meanwhile? OR the W2 that you love for the next 20+ years to get to time freedom? Then at the end of the day, will your children (if that's your 'why' like mine) appreciate and be able to carry on the generational wealth??? If you were never free enough to fully influence them in their childhood years??? Or do you think that after 20+ years of sacrifice to build wealth you will have any influence on the adult they became as they were influenced by societal norms?

These are questions people may not have asked themselves. Only you know what the right answer is for YOU. As for me, and a few others that I have read from on BP, investing for cashflow now to get to FIRE sooner is the answer. When I made the conscious choice to go down this REI path, it took a few years to get to FIRE. I get to spend ALL DAY with my family if I want to and I'm still investing for generational wealth. But there is no W2 holding my time down. Had I gone the other way, I might likely create even more wealth because my W2 would have supported my investments longer. I chose the first path for my family legacy.

 Case Schiller reports top total return (appreciation plus cash flow) for large cities for residential real estate since 2000.  I am not sure when I first saw the data but my guess was it was 2013.  The top 3 cities when I first saw it, and I believe every year since, has been San Francisco, Los Angeles, and San Diego.  This implies in ~13 years not only did the the total return for San Francisco beat the average cash flow residential market, but it beat every cash flow residential market (larger cities only).  In addition, I do not know how many years before I saw it was a high appreciating market already the top return market. My point is this is a lot less than 20+ years.  Also in ~13 years (possibly less) it surpassed all of them, how many years to have surpassed the average (I suspect less than 10 years). 

I will go even further, my worse appreciating property has averaged over its hold more return from appreciation than high cash flow markets produce in cash flow.  This implies that on the average year, the high appreciation market will produce higher total return. My worse appreciating property has produced over $2.1k/month appreciation over its hold (current worth ~$950k, purchased $167k, 29.5 years). My best are near $10k/month of appreciation.  

I am not implying you cannot do well in cash flow markets (you can do great), but historically the appreciation markets do better and it takes far less than 20 years (likely less than 10 years).  

I do want to be leery about using history to forecast the future.  historical performance may have poor correlation to future performance.  

Good luck

I must agree ith you Dan that in high appreciation markets, the buy and hold strategy is solid. It seem to always make more on the appreciation than the cash flow. 

Although cash flow is not my primary focus/strategy,  it does play an important part in my game plan. For me, it needs to cash flow to keep the business running on it's own AND to buy my time back. I seek out undervalued and deferred properties for the opportunity to force the appreciation. I exchange as soon as I see the opportunity.  

My recent exchanges have been between 6 to 24 months. During that time, the appreciation took over the cash flow by 5 - 10X. If I have a property that might have longer legs, I may consider the long term hold and squeeze out the appreciation later. But for now, as a beginner, I'm in a growth phase. I plan to transition into a hold phase within the next 5 - 10 years. At that point, I hope to move the equities into major coastal areas.

If I can pick up about 50 - 100 rentals within 5 miles from the beach, at 50% LTV or less, near the coast of LA, San Diego, or San Francisco,  that would be golden. That many units, at 50% LTV or less, there should be adequate cash flow to sustain the properties AND live off of cash flow. That is an end game I would want to pass on to my kids, if they prove they can handle it.

I have mine through State Farm at $5M. This thread has made me dig into mine.

The rates also went up on my umbrella, but nothing compared to your numbers. My umbrella does NOT cover my personal home or vehicles, it is strictly for my investment properties. It was about $400/yr when I started. I just checked it right now... it's now over $500/yr as of my latest renewal.

That's roughly a 25% increase!!!