All Forum Posts by: Ryan Landis

Hey @Sasha Tetera looks like you are based in CA. If that is the case, the California State Franchise Board likes collecting their fees. If you ask 100 attorneys, you will get 100 different structures (Delaware, Ohio, California, Trusts, Insurance, etc). I would honestly try to find someone in CA that understands and knows your situation clearly. If you are able to figure that out, hopefully, they can point you in the right direction. For what it is worth, in other states the fees are a lot lower than CA, but it is just $800 if you do the one. You also might have to register it as a foreign entity in the state (so need to check on any fees there). Lastly, people forget this a lot but depending on what you are doing, you may need mailing addresses, etc. where you are doing business/or registered to.

@Renata Johnson it may be worth just trying to see if there was any other marketing/agreement/etc. that you might be able to rely on. If he can carry a note, maybe you can do a prepay penalty so that you ensure he gets the number he is looking for but it is through interest down the road. Agents/brokers can't provide legal advice, but someone local may be able to help you out a bit too.

@Account Closed as others have mentioned, living onsite should not be the issue. Given the situation, it might just be worth lowering the price so it fills ASAP. Then when you get a better grip of what to do/build up your reserves, you can explore trying to get a different rent, etc.

Vacancy hurts real bad - the rent amount can usually solve that.

@Trevor Aydelott it was a joke, but the sooner you realize that Realtors are professionals, just like every other field, the sooner you can come to terms with them behaving just like every other professional out there. Understand incentives and alignment. If you are calling someone up and saying "hey, I am going to make you $1M in the next year and I have the bankroll to prove it that I am going to close" people will probably step their game up. But, unfortunately, just like you have experienced with any Buyers you have ever worked with, talk is cheap and they probably run the math - out of state Buyer looking to purchase a ~$100-$200K house probably is a ~$5K commission pre-broker. You come with the logistical headache of not being able to see properties when they can personally show local buyers/coordinate coffees/etc. Maybe I have a bias, but in general, if you are not going to move the need for someone, it is the rare few that just give awesome service. Again, just my 2 cents. Good luck!

@Paul Johnson awesome congrats!

Forgot to include, from my experience most turnkey buyers are coastal buyers where they are looking for cash flow and thus invest in markets where it is a bit better. In the Bay Area for context, dual income $300K+ is pretty darn common. Not saying they take home $25K before all expenses, but that is who should be looking at this stuff (think of it almost like investing in a syndication/etc.)

@Jeff Piscioniere no I meant $25K a month. The reality is I would not go buy 1 turnkey property a year, I don't think that is the right approach (at least that is my take on it). The question was around the benefits of turnkey properties. I think they CAN be good for high-income earners. Figure your doctor/lawyer/pilot/business owner/etc. Good income earners that want to be able to go do well in their business are the ones this makes sense for. I personally don't do turnkey properties, but most prices are somewhere around $80-$150K I imagine in most of the markets. If that was the case I would only do it if I could buy 1 every month or every other month. After a year or two of doing that (what do people make - $150 to $200 a door a month) you would get some momentum and you would have a portfolio that is starting to become meaningful enough for the turnkey provider/vendors/etc. to value the business you are doing out there.

@Todd Dexheimer interesting way of putting it and I like that. I think the overall "value" on can really influence the comfort level. To your point, owning a retail center with 40% LTV still might be tough on DSCR right now with things going on. I would agree that I care more about what is coming in to cover the obligation than the size of the obligation, all things equal.

I would say sub 65% LTV though in general is getting on the lower side of things for purchase transactions. When you get under 50% LTV, you are pretty low leverage tbh (again on the purchase side). But hey, 5% down on a vacant apartment building that you are going to go turn around that ends up performing like crazy might be low leverage too...

Not sure if this would apply for you, but it allows scale to take place much quicker (possibly). If you are a solid income earner for example (lets say stacking away $25K a month after all expenses, etc. with your W2 or 1099) then you might go buy a house a month. You have someone that you are plugging into their system for and you try to ride the snowball. You also might be tapping into their lender (or network of lenders) that know the structure/model/business/etc. and are not capped on a number of loans, etc.

It is not completely "passive" when you invest in turn-key, but there is a lower barrier to entry and it might allow someone to get their feet wet in real estate.

@Lawrence Gillett I am not a business broker, but as others have mentioned you usually want to look at revenue (EBITDA/etc. can start getting involved with bigger transactions but just use revenue). You can see what comps are possibly selling for based on that revenue stream (might be 1x or 3x - just depends).

I will say that a value add business is probably a bit more time consuming than a value add real estate project (just my 2 cents) but I don't think value is only based on what a property (or business) is currently doing. You as a buyer need to understand potential. I get that most properties are bought based on cash flow, but there have been so many transactions that I have been involved in where the prices we paid, if based on cash flow alone, would have never gotten the deal done. If there is a sweet upside that you can bring to the table, and just consider that and assign it a probability. Not saying others will necessarily pay that price, but if you can pull it off then you are still going to end up better than not getting it. 

Take my thoughts here with a grain of salt as I have only seriously considered maybe buying 1 or two businesses and most of my experience is in real estate.