Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here
Pick markets, find deals, analyze and manage properties. Try BiggerPockets PRO.
x
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Allan Tualla

Allan Tualla has started 7 posts and replied 41 times.

Hello Everyone,

I was just wondering what are things that can be done to a property that my ultimately increase value of a property. I know this can be many things, but I was hoping to have some ideas thrown out there that I may not of even thought of (especially being a new investor). thanks!

Hello everyone,

Im excited to say I am in motion to close on my first investment property. With that being said, a whole new chapter begins and I am looking forward to gaining more knowledge. My question is, what are tax strategies that I could use that will ultimately keep or get more money in my pocket and ultimately lead to buying the next property more quickly. Ive heard of the concept of bonus depreciation and cost segregation and was wondering if anyone can elaborate more on this. I also want to hear your thoughts about other strategies as well so I can formulate questions / strategies before speaking with a CPA. Thanks again!

Quote from @Alecia Loveless:

@Allan Tualla I think 2-4 units are a great place to start. If you live in one unit the down payment will be significantly lower. Otherwise you’ll be paying 20-25% down which is what I’ve been doing.

Personally I’ve been doing my loans with my local bank where I’ve had my business and personal accounts for years. It’s worked out well. I always recommend this option first for investors if they have a relationship with a bank to try that one first.

I’ve just started doing commercial properties, 5-10 units this past spring starting in April and am about to close my second the first week of August. It’s only been a bit more difficult than the 2-4 units properties because of the fact that there’s been more units to renovate.

I tend to look for deals that are bargains in some way that I can add value to, so sometimes there’s a bit more work on those types of buildings. And inheriting more tenants has come with inheriting a few needier tenants than perhaps I’ve had in the past.

I quickly realized it’s easier to scale with more units, and prefer 3+ units. If any appropriately priced deal comes along I wouldn’t turn it down of course. The saying goes “You make your money when you buy” so be sure to analyze those deals carefully. You can still get great deals in today’s market. Just keep analyzing lots and lots of deals.

 @Alecia Loveless Hey Alecia! Thanks you for your post and congrats on your commercial REI journey! thats awesome to hear! I look forward to joining the ranks of commercial REI shortly after completing and managing a few small multi-family homes.

What would you say is the most difficult part of getting financed for a commercial building? What are some key things you look for when looking at commercial properties that may be a bargain? what difficulties do you see in commercial REI that differ from smaller multifamily REI. Thank you so much for your post!

Quote from @Michael Smythe:

Where are you going to find these types of properties?

What property Class are you going to invest in?


 i will be looking around the Sacramento, Ca area in class B neighborhoods 

Quote from @Eric Fernwood:

Hello  @Allan Tualla,

Rather than focusing on property type, I recommend prioritizing your financial objective, which I assume is achieving financial independence. To become and remain financially independent, it's essential that your property is always occupied by what I refer to as a reliable tenant. Such a tenant will stay for many years, always pay rent on schedule, and take good care of the property. However, reliable tenants are the exception, not the norm, and since you're planning to hold the property for many years, you will need to have multiple reliable tenants over the holding period.

The only way I know to maximize your odds of always having a reliable tenant is:

  • Select a tenant segment with a high concentration of reliable tenants.
  • Work with a property that is skilled at selecting reliable tenants. This is a rare skill. I only know of two property managers in Las Vegas who have this skill.

To find a segment with a high concentration of reliable tenants, start by interviewing multiple property managers. Once you identify a segment that will provide the reliable income you need, determine what and where they currently rent. Then, buy similar properties.

I did not create this process; this is simply how the commercial world operates. When a business wants to select a location, they do not base the decision on someone's opinion and hope that things will work out. Instead, they first identify their target demographic and choose a location that best matches it. Selecting the location or property type first is unlikely to yield the best results.

To target a specific tenant segment, you need to choose the appropriate property in the right location.

How Tenants Select a Place to Live

When someone is searching for a rental property, they typically begin by browsing one of the many real estate websites. They then proceed to eliminate unsuitable options, usually in the following order:

  • Rent Range - If the person can afford $1,800 per month, they will eliminate properties with an asking rent that exceeds this amount.
  • Property type - If a person has a wife and two children, they are unlikely to consider one-bedroom properties.
  • Configuration
  • Location

Even if there are hundreds of available properties, after applying the above housing requirement filters, only a few properties will remain. Below is an example of a segment’s housing requirements.

  • Rent range: $1,600/Mo. to $1,800/Mo.
  • Property Type: Single-Family
  • Location: Northwest, within 5 to 10 miles of the central business district.
  • Configuration: Three bedrooms, two car garage, one story or two stories, built after 1990, with a lot size between 4000 ft.² and 8000 ft.²

It's unlikely for people to rent properties that do not meet all of their housing requirements. You can leverage this fact to choose properties that appeal to a specific tenant segment.

Each property has specific characteristics. The characteristics of an example property are below.

  • Rent: $1,750/Mo.
  • Property Type: Single-Family
  • Location: Southeast, 12 miles from the central business district.
  • Configuration: Three bedrooms, two car garage, one story, built 2000, with a lot size of 5000 ft.²

This property aligns with the housing requirements of the tenant pool segment that I previously mentioned, so most applicants will come from that segment. However, if a property does not meet all the requirements of a certain tenant segment, that segment will be excluded from your potential tenant pool.

Does buying a property to attract a specific tenant segment work? We have successfully delivered over 480 investment properties targeting a single-tenant segment in Las Vegas. Our results have been excellent due to the tenant segment we target and the property manager we work with.

Alan, be cautious of general advice. Real estate is a local market, so you should make investment decisions based on the specific area where you want to invest, and not based on other locations.

 @Eric Fernwood very informative! thank you for your post! ill definitely keep this in mind!

Quote from @Benjamin Aaker:

Small multifamily can be great with little money down if you plan to live in one unit and house hack. If not, you should consider going up to larger due to better economy of scale. An 8 plex is a nice way to get started as you can still self-manage if you wish. If you aren't going to house hack small multifamily, then you'll have to put down 20-25% or more either way.

 @Benjamin Aaker

Thanks so much for your reply! Yes, I definitely plan to house hack for my first REI but I do plan on scaling to a 6 plex or larger in the future and hoping to use a 1031 exchange assuming all go as plan. At least this way I could put little down using the FHA my only concern with using the FHA is how can I maximize return or if I can even make profit during the house hacking portion (1 year) of the investment.

Quote from @Trevor Richardson:

Start with 2-4 units. The most difficult thing right now with small MF is financing. You are going to need 30% or more to just cash flow positive.

Get prepared to improve the property.


 @Trevor Richardson

Thanks for your reply! Any tips when getting financing? I was looking to house hack, would I see any type of return going that route? thanks!

Quote from @Zachary Ware:

I would recommend starting with reading Volumes I and II of The Multifamily Millionaire. I thought these were a great overview of multifamily investing and a great place to start learning. Beyond that, I agree with @Doug Smith that networking and finding experienced people to learn from and bring in on deals is very important. 

Goodluck with the journey! 


Yes, Definitely! Ive completed the first vol since that is primarily where I am focusing my goals right now. Im in the middle of "Estimating Rehab Cost" hoping to get some insight on that portion or REI

Post: getting out of analysis paralysis

Allan TuallaPosted
  • Posts 41
  • Votes 15
Quote from @Jerome Morelos:

@Allan Tualla

Hey man, I was in your exact situation a little over a year ago. Acquired my first deal and I have to say, it’s not as bad as you think. We get too caught up in the “What ifs”. The truth is, the more we focus on the things that worry us, the more it magnifies. So, take a leap of faith. Like others have said, you learn the most by doing.

As Michal Jordan said: There are 3 types of people. “Some people who want it to happen. Some wish it would happen. And others that make it happen.”

So take a look at the person in the mirror and ask yourself, “Who do I want to be?”

-Jerome

 @Jerome Morelos 

This definitely helps my anxiety and I'm diggin' the Jordan quote! jumping in this forum has definitely put a lot of things into perspective and everyone here is helpful and have a positive outlook on things! thanks for your response!

Post: getting out of analysis paralysis

Allan TuallaPosted
  • Posts 41
  • Votes 15
Quote from @Todd Jones:

WhenI mention that I need to analyze the issue further to determine the cause of the situation, my previous manager used to say: “analysis is paralysis “.

My reply was:

“No. You need to do some analysis so you don’t make assumptions or perform uninformed decisions. But when you get your answer, move on to define and execute action items. Now, Over analysis and paralysis are both simply symptoms of fear of the unknown.”…glad he’s my previous manager.

So the main problem is fear and understandably so! A home is a huge investment. One mistake and you’re in major debt for years. Fear of what could happen, the unknown.

The over analysis is the art of to trying to increase your confidence by identifying every possible use case to relinquish concerns. You keep going because it doesn’t lessen, hence paralysis.

What to do then?

- Attend a local meetup. You’ll meet some nice folks and there is no risk here.

- Get a pre approval from your bank. Call this a win when you get it. Now, I know you can get better rates by looking further but the point of this action is to see “yea, this is possible!”

-Look at Zillow, trulia, Xome, and/or realtor.con. Get to see how different neighborhoods sell. No risk here and it’s fun!

- Look up a realtor that specializes in REI via google. Tell them your goals. Again, low risk as you don't have to pay them.

- Use the realtor to visit some homes. Attend open houses. Get used to the customs of Don’t this. Only cost is the travel but it’s pretty fun (at least for me it is).

Trust me, I know the MLS listings and off-market/wholesaling deals are better. But the goal here is to reduce anxiety but looking at the homes.

You may even find a great deal. Look at what these forums say are the next steps and ask the realtor questions. 

Don’t worry. You can do this!!

 @Todd Jones

This was awesome! thank you so much for this post!