All Forum Posts by: Will Fraser

Keep going @Nathan Gesner!!

Good points with Theresa above.

I'll contend that the better thing overall IF you can scrape that kind of equity right now would be to take as much leverage as you can take (while numbers still make sense) on a replacement property.

If you scraped $200k in equity from this sale and could use 75% leverage, then you'd replace with around an $800k home.

Assuming your numbers work out to a breakeven, this should put you doubling your asset value (assuming the midwest) getting a newer construction home.

I'd do that deal all day BUT check your assumptions and make sure that in today's market you can still actually scrape that much equity.

Quote from @Nick Leamon:

Hey guys,

As always looking to keep my education going, looking for some good (bigger pockets endorsed) real estate books on buy and hold SFH rentals, or just general Real estate. I saw the 2 in the BP store, and while they look interesting, not really my niche. What books did yall find informative and helpful in your real estate education?

Ken McIlroy's book ABCs of Real Estate Investing is a must, as is The Millionaire Real Estate Investor

The former illustrates the mechanics of the numbers within real estate investing better than anything else I've read, and the latter presents a beautifully simple path to wealth through real estate that is inspiring due to the approachability of it.

Quote from @Sherry Sabbah:

Looking for dedicated and responsive property management that do not have 
“one-size-fits-all” approach to manage the rental properties and have great references for properties they manage. 

Thanks, Sherry

Hi @Sherry Sabbah, out of curiosity, what do you mean by a "one size fits all" approach?

Hey @Wilder Fuentes,

You're overthinking it here, and this is quite common.

HOW you purchase something is largely irrelevant in this determination (i.e. a $100k home is $100k whether you purchase it all cash or using leverage).

We'll use nice round numbers here.

If you sold the home for $200k and had 8% costs of sale (agent commissions, title fees, HOA transfer fees, etc) then your net from sale would be $184,000

If you bought this home for $100k and had $2k in costs of sale here, then your basis for the property is $102k.  

So, you netted $184k from the sale and your basis is $102k, thus your rough taxable proceeds are $82,000.

The sticky wicket here comes when the home has been depreciated.  Let's say you've depreciated 50% of the home (i.e. you've owned it about 13.5 years and you've taken the depreciation loss each year).  Now your basis in the home is somewhere around $50k and when you go to sell the equation looks like this:

$184k - $50k = $134k of potential taxable profits

Thus the usefulness of the 1031 exchange!

Buy if you see a good deal AND be leery of properties that only have one viable use.  That means if that one thing goes away you're SOL.

Play the whack-a-mole game instead. 

You want a STR that can function, at least somewhat, as a LTR.

You want a lease-purchase-option property that can function as a LTR or STR.

You want a flip that could function as a LTR

That way if some pesky government farmer comes and jams up your hole, you just pop up one of the others and survive.

Quote from @Simon W.:

I can do it, but why not just reach out to Yardi support? Do you have the premier or the regular Breeze?

 Right on!  What all PM systems do you work with?  What all work does your company provide at the intersection of property management and accounting?

I will:

purchase 15 units in partnerships

purchase 3 more units as a household

flip 5 homes for at least $15k profit each

@Robert Olinick this is a prudent question, and one I asked for two years and got the same answer OVER. AND. OVER.

"Well, people just discover you."

It's true at times, but what none of the sage and retired PMs told me was that there are two basic groups of humans out there in the investment world:

- Those that use professional management (approx 30% in US)

- Those who self-manage (approx 70% in US)

You can build a business off of either strategy or both -- statistically most PM company clients are dissatisfied and once a year their business is poachable.  Also for every 100 rental owners in your market something like 70 of them are spending their time earning $2-7/hour and getting sub-par results.  

The clearer you are on exactly what value you provide (real, honest clarity not the typical woo woo hype that gets peddled all to often) . . . the clearer you can be in your approach to your target.

Well said by Joseph above.

I'll add here that I personally dislike collecting Last Month's rent upfront because it seems more prone to creating "coasting" tenants at the end of a lease AND disputes over who owes what in the move-out and repairs discussion.

Also, it would be prudent of you to take a dynamite PM in your area out to a nice lunch and learn from them.  Our industry exists to help protect folks like you and improve returns and I'm thinking you and your wife would get some gold from that.

Remi Emerson Residential is a stellar resource and anyone on their team could be an asset to you.