All Forum Posts by: Allen S.

@Joshua Emmons

If you own the property free and clear you shouldn't have much of a problem putting an 70%-80% LTV loan on it. Being owned by an LLC is immaterial. You won't be able to get a sweet owner-occupant rate and low down payment, but it seems like that's not what you're after. We use First National Bank and while they're slammed with work right now, things are still moving and we are working with them on one of our rentals that we own free and clear.

As for your initial question, you can never write off the purchase price of a property.  You can write off the interest on a loan and you can depreciate the property itself (with or without debt attached to it).  We could get into a big tax strategy and philosophy discussion on that topic, but I think that's not what you're after with your question...

I think BP has a data product but I’m not terribly familiar with it... I would also look for any market reports or moving trends.  Figure out what metric you’re really after.  Maybe it’s rent/price ratio, maybe it’s job growth or population growth.  Whatever you decide to look for, I can almost guarantee there’s more information than you have time to digest.  But as you do, you’ll get faster at it and hone in on exactly what will fit your goals...

@Andrew Girgis

The coastal urban markets have chronically suffered from cap rate compression and low returns, partly due to an extremely high demand, and partly due to demand from foreign investors who look at US real estate like a lot of people look at gold. They don't need a return, they just need to not lose too much. This prices out actual investors and locals who aren't billionaires looking to do the same thing. You'll notice a similar but less exaggerated price inflation for residential properties with 4 units or less, as the increased demand is driven by owner occupants who are able to use an FHA or VA loan to buy with less of a down payment than an investor.

If you’re looking for returns with some potential upside, I would aim to be in from of the major demographic trends.   AZ/NV/ID... or pretty much anywhere in the south.   As much as I love my state, demographics are not on our side right now.   We are such a small population that could turn around in a heartbeat but with the current economic climate I have my concerns.  They just cancelled the cruise ships again this year and you can speculate as easily as I can about how the oil industry will fare under the new administration or how oil prices will holdup through another year of lower (global) demand.  These things are important to you because in Alaska they mean jobs, and those jobs provide the bulk of the tenants in the properties you’re looking for.

I would also recommend looking at industrial or retail and not just residential real estate.  If you’re truly about the returns, then your time and energy should seek the best fit for your goals.  Don’t undervalue your own time either... if you had family here or worked up here then that would somewhat mitigate the hassle of traveling to Alaska, but if you are location agnostic, then I hope you are also asking these same questions about Flagstaff and Omaha and Savannah.

@Andrew Girgis - What is it about Anchorage that appeals to you as an out of state investor?  If you’re looking at cash flow, there are many other regions that out perform us.  If you’re looking for appreciation, then I would gravitate towards the low tax warm weather states.  They have a major edge in population growth.  Anchorage has actually seen a population reduction over the past decade, which has not slowed in the past few years.  There are still some good investments to be had up here, but as long as you need to take a 4 hour plane ride to visit your investment you might as well look at the whole country and find the best return for your time and dollars.

If you’re still set on our market then @Chris S.’s summary was spot on...

@Sean Davis - with the amount you are prepared to put down and as passive as you want to be, you shouldn’t limit yourself to residential properties.  You can swing a 20%-30% down payment on a commercial building.  You might even consider industrial or out of state investments... there are much better cashflow returns elsewhere in the country, and you don’t have the benefit of being “local” to anchorage or mat-su, so you might as well behave like an out of state investor here too.

@Sean Davis - glad to hear it.  I thought you had already bought it.  Probably for the best, and you still have that big down payment to look for a different investment 

@Michael Morris

I would say that your experience isn’t uncommon here... our last flip went well over budget and timeline.  Half due to some decisions we made, half due to the volunteer involvement of some well-meaning government types.

@Keenan Fitzpatrick Call me... maybe?

Not a bad idea to wrap it.  Although I find it curious that they aren’t interested in a cash offer... In general I think simple is better because usually motivated sellers want the easy-button and to feel comfortable with their decision.  Too complicated of a structure defeats both of those goals.

I’ll second all of what @Keenan Fitzpatrick just said.  There is great value to simplifying your life so you can focus your efforts.  If you look at your total picture, I think that you’re actually going negative each month:

+$500 cashflow from your duplex 

-$500 credit card payment

-$200? Other debt payments

-$250 property management in AK since you don’t live there.

OR

Sell the duplex while the market is reasonably good, pay off all of your debts, and have $54k in savings for a down payment.  That should get you into striking distance for a triplex like you mentioned and significantly improve your debt to income ratio.  You’ll also reduce your personal stress enormously, which is important too.

Colorado is hot hot hot right now, so I think it’ll be difficult to cash flow unless it’s a house hack.  Even then, you’ll probably not be completely rent free.  I’m in the opposite situation as you are, we just helped a friend renovate a rental he’s owned for years in Westminster and I had the option to buy it at cost and keep it as a rental.  The initial offers all came in so far above asking price that it makes no sense to buy it.  It was on the market less than one day and should be a quick closing and we will do better investing back in Alaska.

Best of luck to you in whatever direction you decide to go!

@Warren Wolfe - I am actively looking at ICF for some of my upcoming projects.  They're not multi-family, but if the numbers make sense, I don't suppose it matters what asset class you're building.  I think that ICF offers benefits anywhere in the northern tier where heating costs are a significant part of your operational budget.  Whether or not your tenant would pay more rent to have lower utility bills depends on your local market.  Being green is trendy, but if your customer isn't willing to pay for that status then it doesn't make as much economic sense...