All Forum Posts by: Lane Kawaoka

Birmingham, Atlanta, Indianapolis, Gary (IN), St Louis, Huntsville, Phoenix/Tempe/Mesa, Kansas City, Memphis, Little Rock, Indianapolis, Harrisburg (PA), Greenville, Jacksonville, Tampa, Houston, San Antonio, Little Rock, Milwaukee, Cincinnati, Dayton, Cleveland, Ohio, or other secondary or tertiary markets.

Huntsville, AL: Population has surpassed Birmingham for top population in state. Known for its growing economy due to government and tech sector jobs, Huntsville offers a stable rental market with potential for appreciation. The city's real estate market benefits from the presence of large employers like NASA and the U.S. Army, attracting a steady influx of PHD education people.

Houston, TX: Houston's diverse economy spanning oil (used to be just this), healthcare, and technology provides a robust job market that supports housing demand. Its size and economic diversity make it a prime location for investment properties, offering both cash flow and the potential for property value increases.

BOLD is where I owned

Hi Trevor, I started this way from 2012-2015 when my net worth was 200k-1M. Great way to get started. When considering your first turnkey rental property, it's crucial to start with a thorough understanding of the market. Research the economic conditions, local job market, and future area developments to ensure strong rental demand and potential property value appreciation. Financial due diligence is also key; calculate all potential costs and expected income, including mortgage, taxes, management fees, and maintenance. Use a rental property analyzer to assess cash flow and return on investment. Additionally, select a reputable turnkey provider who manages the property post-purchase, ensuring they have a solid track record and offer quality renovations.

Always conduct a detailed property inspection, regardless of the turnkey label, to ensure the property's condition matches expectations. Understanding the management terms, including fees and tenant handling procedures, is also vital. Consulting with a real estate attorney and a tax professional will help navigate the legalities and optimize tax impacts of owning a rental property in your chosen location.

You can do that with a subscription of Yardi or CoStar... trouble is it costs 5-20K. A lot higher than your BP subscription and a turnkey rental property downpayment.

@Chris Holmes 

Obviously this community is heavy on REI and group think issues. Speaking from experience in the real estate sector, I'm increasingly inclined toward a diversified strategy - 25-75% REI to be broad. This seems especially prudent in an era marked by rising interest rates, a departure from the previously free access to capital.

Real estate, inherently, isn't known for its rapid fluctuations; it generally stabile. However, especially when considering the 20 to 30% dip seen in commercial real estate in recent times. Yet, the advantage lies in the potential for leverage and debt to amplify returns. A notable benefit of real estate investment is the accessibility of substantial bank financing.

Not saying one way or the other is that they pose a problem for the local community so there is political battle in the long term viability of these. No one wants a bunch of random people coming in their area with vagrant tenants. In Europe as cities enact bylaws for regulation and taxation, or in some cases, ban them entirely. Toronto is the latest to join this trend, driven by a scarcity of affordable housing. It has specifically banned STRs of secondary suites, though renting out primary residences or rooms within them is still allowed, subject to licensing fees and a nightly tax. 

I saw many people 2019-2024 jump on the STR bandwagon because numbers for LTRs got worse and worse. Plus a lot of general public started doing that which is the signal for the end... kinda like a good night club going down hill.

Moreover, the tax implications for vacation home rentals vary based on how often the property is rented out and used personally. Properties rented for less than 15 days a year enjoy simple tax rules, while those rented more frequently face a complex set of tax obligations. These include reporting rental income, allocating expenses between personal and rental use, and navigating new limits on mortgage interest and property tax deductions under the Tax Cuts and Jobs Act of 2017.

In places like Hawaii, STRs are subject to additional taxes, emphasizing the importance of understanding the local tax landscape. Despite the allure of STRs, the market's complexities and regulatory environment suggest a cautious approach. Investors are advised to consider more traditional real estate investments and to educate themselves thoroughly before diving into the STR market.

@Andrew O.

Hey, sorry you're going through this. I totally get it. Back in 2015, I had 11 rental properties myself.

(5 in Atlanta, 1 in Indy, 4 in Birmingham, and one in PA)

And yeah, the same issues here. Every time a tenant moved out 3 out of 8 evictions or so, it felt like a gamble, with someone leaving the place in ruins. The cost to fix everything? Could easily hit $30,000. It's enough to make you question everything, not just about people, but about the whole rental game. It certainly made me rethink my strategy, after seeing my profits disappear.

If you're an accredited investor, I'd say it's time to change course. It's what I did and what I've seen many in our circle do to move up to syndications and private placements is the way to go.

As a limited partner in these deals, you're not dealing with the day-to-day. No debt in your name. No legal headaches. And definitely none of that BS.

I would sell the properties on roof stock to a new investor.

This is a crucial consideration for managing legal liability and optimizing asset protection but that said consider what you have to lose, if you are under 1M in net worth you are not really a big target. That said I am not a lawyer haha, if you need referral let me know these are just my thoughts as an investor...

Reflecting on my experience purchasing rental properties in 2015, where I had a diverse portfolio across Birmingham, Atlanta, and Indianapolis totaling 11 properties, I opted for a middle-ground approach in terms of protection. I established a parent LLC that held two subsidiary LLCs—one for the properties in Georgia and Indianapolis and another for those in Alabama. This structure provided a balanced level of protection without being overly cumbersome - that said 3 LLCs was a pain.

If you're inclined towards maximizing legal liability protection, you might consider creating individual LLCs for each property. However, this can be seen as overkill by most and you will likely fudge the handling of each paperwork/banks/entity essentially bricking your entities - that said it will help in settlement if sued. A more streamlined approach, which still offers a significant degree of protection, would involve grouping properties by state under separate LLCs, as I did.

As you delve deeper into real estate investment, you may also want to explore syndications and private placements. Moving away from direct property ownership to becoming a limited partner (LP) in larger syndication deals can drastically reduce your liability and improve scalability. This transition allowed me to shift focus from managing numerous high-liability rentals to more strategic, high-value investments with limited liability.

To respond to your inquiries, Helen:

1. 1) The interest rates for bars are expected to vary slightly, yet they will be substantially more stable compared to the current fluctuations in the capital markets which is why people would do it. Remember to back it out as a business expense too which should make the real rate a point or two lower depending on your tax bracket.
2. 2) For securing loans, I incorporate the value stated on balance sheets within my personal financial statements. We buy apartments will commercial debt.
3. 3) Depending on the lender, this valuation can be utilized as proof of funds; however, not all lenders accept it so its a bit hit and miss. I never had to do it but I would assume you could just cash the money in a bank if they asked pre-closing.
4. 4) If you're considering reaching out for more information, feel free to let me know.

Lastly, regarding the policy with Mass Mutual (or NW Mutual too), it may not be advisable to use them for your intended purpose. Their setup does not ideally support frequent transactions in and out of your account, especially if you're looking to employ the infinite banking strategy.

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It's been a while since we last gathered, I believe the last occasion was back in 2022. We're thrilled to announce a new Investor Mixer event, providing a unique opportunity to connect with myself, fellow investors, including many new faces in our group. This gathering might also offer the chance to reunite with old acquaintances, be it a former colleague or a high school friend, adding a touch of nostalgia to our meetup in Hawaii where everyone knows you.

Event Details:

1. Date: April 19 (Friday)
2. Time: Evening after 6PM (Specifics to be confirmed)
3. Venue: Honolulu, To be announced shortly
4. Cost: $79 per attendee, to increase on April10th

Agenda Highlights:

1. Networking with fellow investors and industry peers
2. Breakout sessions and mini-workshops focused on topics such as accredited investor banking and exclusive off-market opportunities