All Forum Posts by: William Collins

Quote from @Samuel Eddinger:

@William Collins - my perspective is always that you are always either cash or opportunity limited.  If the opportunities are limited and cash is plentiful, pay down debt, increase rents and make everything operate better.  If the cash is limited and opportunities are plentiful, re-leverage, get hard money debt, partner with someone like me, etc.

I would say to not force it.  Right now, I don't see that many true opportunities in the market.  If you find something, go hard money and then spend the next few months re-leveraging the existing debt.

You can have your cake and eat it too, just be patient my friend.

 Thank you Sam.  Part of this is a diversification play.  Right now I am concentrating on a single style (LTR small multi in CT) and a catastrophic event here would frankly put me out of business. 

@drago I am looking to get a better return on equity. I believe I can take the $500,000 and leverage it into 2-4 cash flow neutral- -positive STR units which would cover the net uptick in debt coverage.

@Drago Stanimirovic

Quote from @Chris Seveney:

@William Collins

If you sold the entire Portfolio how much cash could you walk away with ?

After splitting it up it would be $500,000 of cash which does not equate at all to the cash flow  the business generates.  I already have $1,000,000 in retirement accounts which based on the rule of 72 that should be $4,000,000 when I retire if I don't tap into it. The plan was to us real estate to bridge from here (almost 50) to 65.

Here is a progress update from a small-time investor in Connecticut who is trying to achieve financial freedom. The road has been acquisitions for the last seven years. This year is a stabilization and reflect year.

The questions that I am trying to work through are what to do with locked equity and where to go next. The support system I have set up is Connecticut based in the Hartford County area. I have built a portfolio that is reflected below. Some major wins for the year: I started with a rent role due to turnover of about 52,000 per month. I will exit the year. With a Rent roll total of about 74,000 per month. PITI Is approximately 43,000 per month. Needless to say, the year began stressfully but has turned the corner. Accounting for approximately $10,000 of repairs, maintenance, and capital expenses per month, this still leaves a passive stream of about 20,000 to split between two partners. The properties also have appreciated very well, and we currently sit at about 55%. debt to equity ratio. Most of the debt is on fixed 30-year notes.

Personally, I have a stable long term W2 job which can cover my family's expenses. I also have 401k/ IRA which put me on coast FI.

So here is the question for you:

Would you pull out 500,000 From the equity on the portfolio to do the following:

Invest in Short term rental properties, in long term residential rental properties that are more aligned to appreciation.

It would decrease cash flow by $2000 in the short term.

Manchester CT – 3duplexes, 1 quadruplex and 1 5 plex

Canton CT – 1 triplex, 1 five plex and 1 six-plex

Southington CT- 2 duplexes

Bristol CT- 1 duplex, 2 quadruplex, 1 six-plex

Berlin CT- 1 duplex, 1triplex

Total unit count: 54

Rent Role: $73 780 / month.

Alex the options are out there. for example this is under contract but there are out there: 

149 Bissell StManchester, CT 06040

• MLS# 24038611

$495,000Est. Pymt: $2,668

Your calculation: https://www.mortgagecalculator.org/?q=f8z5B-7KW

Mortgage Details

Home value:	$495,000
Down payment:	20.00%
Loan amount:	$396,000
Interest rate:	6.10%
Loan term:	30 years
Start date:	Aug, 2024
Property tax:	$6,000.00
PMI:	0.50%
Yearly Home Insurance:	$3,000
Monthly HOA Fee:	$0

BalancePaymentsTaxes & FeesInterestPrincipalBalance20242029203420392044204920540150k300k450k015k30k45k

Mortgage Repayment Summary

$3,149.74 Monthly Payment	PMI not required
$99,000.00 Down payment amount	20.00% Down payment %
Jul, 2054 Loan pay-off date	$467,906.17 Total Interest Paid
$500.00 Monthly Tax Paid	$180,000.00 Total Tax Paid
$250.00 Monthly Home Insurance	$90,000.00 Total Home Insurance
$37,796.87 Annual Payment Amount	$1,133,906.17 Total of 360 Payments

Though I self manage, @Samuel Eddinger is someone I find knowledgable and would be my first choice of management. 

149 Bissell St Manchester, CT 06040 under contract now  $495,000 

• MLS# 240386
• Owner occupied bought at list rate:

Your calculation: https://www.mortgagecalculator.org/?q=f8z5B-7KW


Mortgage Details

Home value:	$495,000
Down payment:	20.00%
Loan amount:	$396,000
Interest rate:	6.10%
Loan term:	30 years
Start date:	Aug, 2024
Property tax:	$6,000.00
PMI:	0.50%
Yearly Home Insurance:	$3,000
Monthly HOA Fee:	$0

BalancePaymentsTaxes & FeesInterestPrincipalBalance20242029203420392044204920540150k300k450k015k30k45k

Mortgage Repayment Summary

$3,149.74 Monthly Payment	PMI not required
$99,000.00 Down payment amount	20.00% Down payment %
Jul, 2054 Loan pay-off date	$467,906.17 Total Interest Paid
$500.00 Monthly Tax Paid	$180,000.00 Total Tax Paid
$250.00 Monthly Home Insurance	$90,000.00 Total Home Insurance
$37,796.87 Annual Payment Amount	$1,133,906.17 Total of 360 Payments

Jon

In Connecticut you really want to stick to C plus to b neighborhoods. Start running calculations on your numbers and you will see some areas which can work. Do you have to say that your analysis of house hacking fails to consider where you become a tenant in one of the units that has additional units that you rent to other occupants? For example, in the town of Manchester there is currently a quadplex for sale on Bissell St. This property is one that I have been considering buying. A 2 bedroom unit in the town of Manchester with parking is currently renting for between $1250 to $1500. This is per unit. Let us assume that you bought the fourplex and lived in one of the four units. You would then be able to rent out the remaining units for $3750 at the minimum up to $4500 at the Maxwell. You could pay for a property manager to manage the property while you are the owner. Please have the type of properties that you need to start looking at. Making some assumptions on this quadplex it would finance approximately $3000 per month including insurance and taxes.

Daniel, while Connecticut isn't the Airbnb capital of the world it is still a very viable place to do so. The question that comes in is the value of the houses and what town it is in. You'd be amazed that there are a lot of demands from just people who want to get out of the city or have work assignments that bring them to Connecticut. In this case, you might want to mix it up and be partially a mid-term and short-term rental. The best way to finance this would be to acquire this as your primary residence if at all possible. Especially with the in-law unit, you may be required by the town to occupy one of the two units, please look into your regulations.

The question I have is why would buy it at all? If your parents have a long-term mortgage on it already when offer to manage the property while they're in the Floridas for a split of profit?

Quote from @Alex Rivera Jr.:

Anyone invest in CT and know which markets in CT to look into and which to avoid? Any kind of help is much appreciated.

Let's talk about markets. I would recommend some and stay away from others. One strategy is to look for a premium town that does not have large amounts of rental houses. They potentially getting a rental in Glastonbury, Farmington, Avon or the like town would lead to more appreciation and higher rent. But let's also talk about Manchester or Bristol. I like both towns, especially compared to say- New Britain. Manchester and its neighborhoods feel more alive, and have great niches, and local employment. I currently own 4 duplexes in the town and have sold 2 off due to the appreciation and paydown I have done in the last 5 years. With today's interest rates you need to look at cash flow, and less at price. Price matters at three points in real estate. When you buy, when you sell, and when you refinance. If you are going to keep this CT property for a long period of time, and the fixed-rate loan lets you cashflow your target amount it will not matter 10 years from now you paid 10,000-20,000 over what you think it was worth. This is provided you realistically estimate and go towards cash flow.

I hope this was helpful. Feel free to DM met.

@Michael Doherty  The big thing which should make it easier to claim is what you said here: 

For context, I am a full time real estate agent and investor in Connecticut. I do wholesaling, flipping, and buy and hold rentals.

This is your primary  activity. There is not a second W2 or 1099 with more income coming in correct? For context, as I have not left my day job so I am disqualified. 

From: https://www.irs.gov/publications/p925#en_US_2022_publink1000...

Qualifications.

You qualified as a real estate professional for the year if you met both of the following requirements.

• More than half of the personal services you performed in all trades or businesses during the tax year were performed in real property trades or businesses in which you materially participated.
• You performed more than 750 hours of services during the tax year in real property trades or businesses in which you materially participated.

Don’t count personal services you performed as an employee in real property trades or businesses unless you were a 5% owner of your employer. You were a 5% owner if you owned (or are considered to have owned) more than 5% of your employer's outstanding stock, outstanding voting stock, or capital or profits interest.

If you file a joint return, don’t count your spouse's personal services to determine whether you met the preceding requirements. However, you can count your spouse's participation in an activity in determining if you materially participated.