All Forum Posts by: Mark S.

@Jeff Chen

Do you still receive the tax benefits you would get in a syndication vs the typically non-favorable tax implications of owning a REIT?

Also, 15%+ IRR through disposition. The 6% is simply targeted distributable cash flow to investors during hold period.

There are multiple threads on the forums about Cardone Capital and it seems things have changed over time (i.e., investment minimums, preferred returns, etc.), so I thought it might be helpful to evaluate the newest/current fund open to non-accredited investors: Cardone Equity Fund VI, LLC.

It looks like:

- $5,000 minimum investment

- capital call of up to 10% of original investment can be requested

- no preferred return of 6%, although the TARGETED cash flow during the hold period is 6%

- 65% investors / 35% manager split of distributable cash

- (intended) monthly distributions can take 3-6 months to begin depending on when property(ies) acquired

- estimated 10 year hold

- same 65% / 35% split on the back end

- current cap rate of about 5% on 10X Panama City Living property

- 1% acquisition fee, 1% disposition fee, 1% asset management fee

Feel free to add/correct any info above along with comments on the syndication deal. I personally don’t have an issue with the acquisition, disposition, and asset management fee, but no pref, 10-year hold, possible capital call, and 65/35 split all make it seem not so desirable.

Thoughts?

@Arty Fresh

PITI = Principal, Interest, (property) Taxes, (property) Insurance.

When you get a mortgage to finance the property, your property taxes and property insurance are often escrowed.  This means your mortgage payment will include all four components: the principal & interest components of the loan itself, and the taxes and insurance on the property.  All four components are included in the one payment you make to your lender/loan servicer.  Your loan servicer then makes the property tax payments and insurance premium payments directly to the appropriate parties directly from your escrow account (where the taxes and insurance components are held; this builds up after each monthly mortgage payment).

@Arty Fresh

Liabilities are the opposite of assets and go on your balance sheet.  

Expenses are the opposite of income and go on your income statement.  

Example: You buy rental house for $73,000 that rents for $900/month.  You put 20% down and finance the rest (ignore closing costs for simplicity).  

BALANCE SHEET:

Assets

$73,000 4/1 SFR

Liabilities

$58,400 4/1 SFR Mortgage

INCOME (or CASH FLOW) STATEMENT:

Income

Gross Rental Income: +$900/month

Expenses

PITI Mortgage: -$443

8% Property Management Fee: -$72

18% Reserves (8% vacancy, 5% cap-ex, 5% maintenance): -$162 (transferred to property’s reserve account)

Total Expenses: -$677/month

Cash Flow (Income - Expenses): +$223/month

Some people might not treat property reserves as an expense, but that’s how I do it to arrive at a “true” cash flow number.  Others might say they “cash flow” $385/month instead of $223/month, but they’re not factoring in maintenance and repairs, turnover, etc.  

My definition of turnkey includes everything being fully rehabbed for you, so the roof is brand new, HVAC is new, plumbing and electrical are updated as needed, etc.  

I have 4 turnkeys from 2 different providers (3 with one provider, 1 with the other provider).  I can tell you their rehab standards seem to vary quite a bit as I’ve had more issues and  repairs with the 1 in five months than I’ve had with all 3 combined.

As others have stated, make sure you do your due diligence on the providers, their standards, and understand what will and will not be completed/replaced/updated/etc. 

Thanks, @Eric H.. I’m not sure on unit manufacturer or labor rate, but location is Memphis, TN. 

How much should it cost to replace the main control board for AC and heating system on a 1,141 sq ft SFR?

Property Management company is quoting $526.50, which comes with 1-year parts/labor warranty.

I asked to get 1-2 more quotes. Is this unreasonable?

Tenant stated the air isn’t working and I want this fixed ASAP for them, but I don’t want to drastically overpay and feel like I got taken. How much should this cost?

@Sharlene Burch

I started at 33 and my main theme is to keep it passive. I realize it’ll take me longer to reach my goals by not putting in the sweat equity up front, but I’m okay with that. Gotta know your skill set and put a value on your time.