All Forum Posts by: Account Closed

As someone who has been through the OOS cycle what I can tell you that based on todays rent/price ratios there are probably easier ways to make the same return. For a B/C class rental with rents around 1k/month, you need something like 1.2-1.5% to get a consistent positive return. Thats based on 20-25% down and 4% interest rates. That means you need to buy at 80K all in. In todays market that is near impossible, especially turnkey. There are exceptions. If you are on the ground, self managed or have a large portfolio where you have strong control on income and expense you can get away with 1%  returns and still make a profit.  But if you are going to be "passive" and depend on a PM I can assure you your cash flow will be spotty at best. You may make some return on pay down of mortgage and if lucky you may get appreciation to boot but that's not what you should count on in an OOS cash flow play.  

You would likely do better in a syndication where if well managed you may get 15% IRR completely passive. Or buy a A class property in the Bay Area and sit on it for a long time. You would still do okay. Yes CA tenant laws suck but a 3K plus rent will get you professional tech employees as tenants and you won't have those issues. I have a townhouse in San Jose Ive rented since 2014 and Ive had great tenants and no issues at all.

I dont understand why you need an LLC to own rentals. I have owned as many as 12 rentals in my personal name and never felt the need for an LLC. Good insurance including umbrella coverage is a simpler and cheaper solution. The only exception is if there are multiple partners and then of course you need some legal structure.

How can discrimination be proved against a Mom and Pop landlord with a single property? To prove discrimination you would have to show proof that tenancy was denied specifically because of a protected class (race, gender, national origin etc etc). Unless you are stupid enough to send a written message saying "Im not renting to you cause your are ____" how can one prove discrimination? Now for apartment buildings or large landlords you can look at statistics. If 90% of black applicants are rejected and only 5% of whites are then you have a case.

Im no lawyer so just curious...

So you want to take something that's been working well, is a well oiled machine, appreciating nicely and throwing off cash flow at the same time. You are thousands of miles away and want to reposition into other houses in another metro where you dont have the team and you are still thousands of miles away. 

WHY?!

The only reason to sell is if you decide you have had enough of rentals and want to reallocate your funds to a different asset class. No point at all selling these and buying another market. All markets are running hot now. You may get a good price in Austin but over pay elsewhere. Then add in transaction costs on both ends and there is no point to it at all.

If you want to buy in San Antonio just start buying there with other funds and see how it goes.

So you can buy a personal residence with debt right (even DR allows it on a 15 year term I believe). If you buy the right property and say it appreciates fast you can then sell that one, trade down and buy an investment property with the profit. But even then that's a one time deal. And only works if you buy in a high appreciation market like CA and then move away.

DR is good for the average Joe in debt and is absolutely right on about getting out of consumer debt. However his investing advice is just nonsense. His advice on load mutual funds, his ELPs suggest,  etc goes against everything any prudent financial advisor would suggest. His average returns of 12 % is fictional. He doesn't even understand the difference between average and cumulative returns. His advice on real estate with cash only works for people with very high incomes but nobody else. And dont get me started about his politics and religious views! I still like the guy and listen to him for entertainment sometimes but nobody knows everything about everything and following DR on investing is not good for the average person.

It depends on your personal situation. If no one ever sold there would be no market would there? 

Keeping a mortgage to not pay taxes is ridiculous. You pay $1 to the bank to avoid paying $0.3 to the IRS. Doesn't make any sense. Leverage is okay but not for that reason. Its true at higher tax brackets though that you want to try and get future income in as tax efficient a manner as possible. I am no tax pro but struggle with the same issues in managing my portfolio. 

Stocks is not a bad way to manage taxable income. If you buy an index fund it will generate almost no taxable income until you sell at which time its capital gains rates. Owning rentals is ok because you still get depreciation which shelters a large portion of the rental income.

At $2.6M debt and 200-400K income you are probably as leveraged as you should be, probably more than I would be comfortable with. Paying off loans may not be a bad idea. 

Of course not. Political posts are not allowed on BP :-) :-)

I get them daily. Slimy broke wholesalers. Ask them to send a recent bank statement for proof of funds and see how fast they hang up. Or tell them sure Ill sell for "one meeeelion dollars" (in your best Austin Powers voice). 

In California, cluster mailboxes are controlled by USPS. Changing locks if you lose a key has to be done by the USPS. We recently had the cluster box vandalized and its taken weeks to get it replaced and installed. I am lucky that my tenants have another local property nearby and use that as their mailing address so havent complained. The other residents have to go to the post office to pick up their mail. Very annoying for them Im sure.