All Forum Posts by: Varun Parkash

I would argue that where ever you park your assets has some risk. If I park my assets in an FDIC insured bank account the risk is that inflation outpaces the growth leaving me with less purchasing power. If I invest in RE the risk is that the RE depreciates. If I invest in stocks there is the risk of a market crash. If I invest in bonds there is a risk of default and bonds becoming worthless.

We have been investing in RE a long time and I believe we have done better on our RE investments than we would have achieved on any other investment option that we would have considered.

Also I do not feel that it was a stroke of luck for the purchases we have made including those between 2011 and 2013.  We know our market.  We know its history.  We understand the supply and demand and its impact to prices and rents.   

BP is a site largely dedicated to RE investors in its various forms. Are these investors hoping for luck?  I would hope by being on this site they are educating themselves and not relying mostly on luck.

BTW our most lucrative purchase was in 1999 but even our purchases that were made shortly before a market correction (purchases in 1993 and 2003) look like they were good investments today. 

These are garbage properties. You can buy them for $3,000 cash if you wanted to.

I owned 19 at one point.

 During the recession, there were some good properties in the auction. Now it's almost all garbage property. They do a lot of advertisers for the auction, so there is a lot of competition. I don't even bother looking anymore.

@Varun Parkash & @Christine Kankowski thanks for the tips. I understand I have to have set standards/rules when it comes to renting my units out. Where do you get these leases and addendums? Any outlines that are already premade or you wrote up your own? 

Not a CPA** An S Corp is only beneficial if you actively participate in real estate, something around +500 hrs/yr. Unless your primary line of work is in real estate, you don't have many other options to limit your tax burden from an entity standpoint. I would set up a trust and take ownership of the trust in an LLC. Trust to provide anonymity and an LLC for liability, otherwise in my opinion a good umbrella policy would do the trick.

Team,

Love all the responses. Here is how the deals went down: (sorry kind of long post)

First two purchases in Suffolk, VA, a two for one deal for 7 units total, a four unit and a three unit. All traditional financing for 135k, had to put 39k down on the project. Current all cash flowing.

I found these deals on Zillow, same owner so I asked how much for both, he came back with three different properties and 150k. I was off to the races to fund all three, a week later I had the money but he only had two properties left. Closed the same day, and turned over to a property manager. COC (20 percent once I evicted all the horrible tenants)

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Second purchase was in Norfolk, VA a six unit that was full and cash flowing. I had to sell our negative cash flowing property in Boston through @Charlie MacPherson. He got us a KILLER sell. Then we executed a 1031 in 84 days ask @Dave Foster about that one, got the property for 320 financed, and turned it over to my Norfolk PM. Had to create my second LLC to keep this one within the realm of the 1031 since I was not on the deed or the mortgage. COC (infinite) we put no money into this deal.

Unit count (14)

Third purchase I had to do some financial moves that drove my CPA insane. 1. Had to refinance OUT of a VA loan on my only SFR property. 2. Had to qualify for a VA loan with the zero down option. This deal closed this week, I found a duplex in DC for 16k down, the property is in a hot area and the final cost was 619k. I will house hack this for half of my mortgage. I have a plan to get out of this one in a year and fund another VA through my wife. She is a military member also. Expected cash flow at the end of the year 400 dollars a month, with very little CAP Ex, it was a fully rehabbed property. Also, I never stepped foot into the property until the day I bought it. Thank you @Russell Brazil for being patient and getting me through this challenging one!

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Fourth purchase I asked my lender to combine the Suffolk purchases under a portfolio loan, and if I could pull some money out. The appraisal came back for both properties at 255k, I bought the properties for a combine130k. My lender said go fetch and I came back with a 4 unit, but backed out of it, I did offer 90k when they asked for best offer. While I was in a "rut" I posted on Facebook that I had a lender that would lend me up to 1 million if the deal was right. Two weeks later, I got a hit, a FB message and I was off to the races. The deal was a 6 unit, 4550 in incoming rents. When I came back to the lender, he stated I had a solid 56k in money to buy, and I had to come up with the extra 24k. Granted this was when I though I was able to pull the full 200k (ish) out of my newly refinanced properties in Suffolk. The lender asked what could I do for the next three weeks to get approximately 40k until he settled a business loan for us to consolidate. That is where the credit cards came in. I pulled from my two business credit cards and one of my personal ones to come up with 40k for a down payment. This one closed on Wednesday. COC is about 30 percent when full, break even is 33 percent full.

Unit count (22)

Final purchase this year! Literally this year, closing is on the 29th. Everything is on track. I have the appraisal coming in on the 26th and the insurance is being bounded right now. Remember that four unit that I backed out of and fell into a rut. Well, I circled back to it. Seen that it was still on the market, and I asked if it was available. Obviously it was yes. My previous offer was 90k. Now, I am playing ball, the listing was 75k and I offered 65k. Sold!!!! The seller jumped on the deal. Upon inspection, I found the property was not a 4 unit but a 5 unit. Even better, I have a commercial lender and not a residential lender, I am in! I hope to close on the 29th as long as everything keeps tracking. This one I am going to have to do some work to the foundation, and the fifth unit was a storage unit. So, I have to get everything out of that one.

Unit count (27) 29 Dec!!!

Cheers,

Johnny