All Forum Posts by: Brett McCurdy

I am not an expert on this market, but we would need more information.  

What area, whats your strategy, how do you want to structure the deal, have you looked at comps?

Can the supply of more condos easily be increased in the local market?  What are the restrictions?  Is it in a flood plain (additional insurance costs)?  etc. 

Those were the other aspects I was referring to yes but:

With the idea of the "principal being paid off":  You slowly begin losing more and more leverage in the property as you pay down the principal.    

       -Not only are you losing the leverage on the Bank's (or other type of lender) $ AND in the cases I see argued by paying it off you lose all of that leverage.

       -The capital-at-risk is also effected by "paying off the mortgage" or with that end goal in the mind of the investor.  If for some reason that area or market goes south you now have more equity in that one building to lose (relates to above leverage).

*How about a shorter hold period with the idea that once the leverage is lost the investment is sold and the process repeated.

The other thing about an indefinite hold period is that like you mentioned once the property is finally sold they will deal with a huge taxable amount that could have been prevented with a shorter period. Look at the tax benefits and depreciation numbers in the 5-8 year range and see what happens, this will probably look much better to you. This is for SFH but apartments and multi-units held longer.

The tax benefits are real and I would be very interested in the restrictions that you are speaking about.  Depreciation, Interest Expense, and amortization of loan fees are all writeoffs and can easily outweigh a "low cash flow property's" bottom line.  Capital gains will be taxed at 25% but this is recovered during the sale and NOT many years down the road when it would be so high.  Also the power of $1 tax saved today is much better than $1 reduction is basis 20years from now...(as long as that dollar is used wisely haha)

In regards to appreciation, many regions did get hit hard with local economies still recovering.  BUT this should also be a good indicator of which regions and economies can recover quickest after a housing market crash.  Many risky investments proved to be exactly that during the correction and might have wised many up to narrow their focus on areas that they are experts in only.  This is a major aspect and if an area is studied enough and enough due diligence is done then a buy/hold(medium term) should be very good.  Like with any investment the opportunistic buy is usually the riskier.   

thanks for sparking the conversation, interesting thoughts! 

I guess I should've elaborated.  I'm specifically referring to buy and holds.  This site is huge so I should keep searching but I thought maybe id get someone to point me in the right direction as to the forum and posting that's related. Thanks!

BP,

I understand everyone's goals are different (as they should be) and customized towards what they are trying to accomplish but why are so many people ignoring the other aspects of yield in RE investing and only focused on the popular cash-flow aspect?  Again, I am not saying that there aren't others structuring their investments differently but WHERE ARE THEY?

Thanks,

Brett 

I wanted to pose this question to find out if anyone has experience finding creative lenders for unique investment deals where the aspect of cash flow is NOT part of the equation.   Without going into the details of HOW these particular deals are structured does anyone have any advice on who to approach after having difficulties (only in last 5 years or so did this get very tough) with lenders previously used (before Dodd Frank).  These are good deals for all parties but since they don't necessarily look good on a cash flow point of view it scares the underwriters.  I read in another forum about someone putting together a very lengthy packet to answer all the questions for the bank as soon as you meet but this seem a bit obvious.  How do explain to lenders that a creative deal can be a sure-thing when it doesn't meet their "sketched in stone checklist"?