All Forum Posts by: Bryan H.

I'm considering a new build STR, seeking opinions on this strategy in current market and with my numbers attached (3 scenarios). My numbers are conservatively based on 3 STR's I already own in this market. I have no other income than from my 3 STR's.

I have been in the STR game 7 years and have built from scratch two times already, with unique architecture/ design forward STR specific builds as a hedge against the competition in my area. My goal is to be always be on the first page of airbnb listings. Winning so far. We have experienced the oversaturation here like most places, and a couple months this winter RevPar off by 20-30%, but picking up now, and expect peak season to be full as typical.

Building from scratch is a ton of work, I do most of it myself, and it's 9 months of climbing a big mountain. But then it should pay me back the rest  of my life, at least that's how I look at it. I self manage and for me, adding another here locally does not increase workload much.  Also starting with a brand new property is nice for the lack of capex for a while. But a lot has changed since the last one I completed in 2020 for an all-in cash price of $239k. Now I'll be at $350k financing 50% or so... yielding half the returns for all that work!  

So the alternative would be stepping out of my comfort zone and buying in another market where, theoretically I can get the same returns on an already built property including management fees. I see projections like this, but are they real? It would seem the property would have to do 20% better than mine (all things being equal) just to make the management fee. And then there's all the unknowns and lack of quality control etc...with out of town. 

Did I mention I need the income? Alternatively I could just put $300k savings into a notes fund and hope for the best - earn 10% ( about the same annual amount) without doing anything, but also without control.  But missing out on some levered real estate appreciation I guess. It's a tough call....Which is riskier? I don't know...

Quote from @Carlos Ptriawan:

Quote from @Chris Seveney:

Quote from @Carlos Ptriawan:

Quote from @Account Closed:

Anyone else getting notified this morning of paused Ashcroft distributions due to refinancing issues? 

We have been working on refinancing the asset in order to access the equity and create liquidity to earnestly restart the renovations. The new lender we initially signed up with for the refinance notified us that they would not be able to provide the new loan at the agreed upon terms due to current market volatility.

We continue to pursue alternative refinancing options and anticipate having a new loan closed within the next six months. To remain conservative with liquidity and continue increasing NOI through unit renovations, we are pausing distributions beginning this month. Your preferred return will continue to accrue and will be paid at the next capital event, or when cash flow allows.

While distributions are on pause, we are not collecting its asset management fee and Birchstone Residential is collecting a reduced property management fee.

 70/80%  of syndications are in trouble in 2024. Especially if they have multiple portfolio in asset structure.

You would lose money 100% for sure. What we don't know whether you lose 50% or lose 100%.

 actually you can lose MORE THAN 100% if they took accelerated depreciation, you may end up owing more than your investment. That happened I believe on those houston deals. 

 Another way they are doing it is by creating next series of fund , like ponzi, the next fund investor is subsidizing the asset of previous fund.

or the most brutal way is basically bankrupt the current LP, and buy again the same asset from the lender with new cap with the new lp

@Carlos Ptriawan 

Considering the current real estate environment and the frothy stock market, I’m considering taking a fairly large position in a diversified debt fund (notes) like offerings by PPR Capital (10% dividend, 1 year hold) https://pprcapitalmgmt.com/strategy/

and would like opinions on comparing risk for something like this vs syndications and other alt investments. To me the notes seem far less risky with the pretty large geographically diverse holdings, but am I wrong about that? What is the black swan event to worry about? How can I lose my money? 

Quote from @Stephanie Menard:

I invested in a 7 year note.  My monthly return is 15% with a 5% bonus at the end of the 7 years.  This is net since there aren't any monthly expenses.  Completely passive. You're not building equity like you would with a home, but with a note you don't have to do any work. I used my solo 401k to pull the cash out, and I have the interest going back into it.  

You mean you HOPE all that comes to pass over the 7 year period. It’s not so matter of fact as you make it. Notes are risky (even more likely so at 15%) and you are locked in for the duration. 

Quote from @Bernard Joseph S.:

1031 all day and twice on Sunday. Never pay something you don't have to. Invest out of state, sunbelt preferred. You're not selling it tomorrow so take some time and research the markets. Come up with a plan and execute. Sounds simple because it is. 

Is it simple though?
Did you see that I need to maintain the $20k income I’m currently netting in whatever I exchange into? I think most people are happy to just 1031 into a larger property and break even, so this adds to the complexity/difficulty. 
Also, if assuming a conservative 50-60% leverage  - I’ll be looking at $800-1m properties. That means basically multi-unit or multiple houses. Completing a multi house 1031 purchase out of state sounds impossible to me, but perhaps that’s just lack of experience. And multi-unit is so so competitive - doesn’t that realistically take an insider relationship/contact or off market deal to get a property that actually pens out? 
I have looked at the current popular investor markets like Ohio and Sunbelt cities and not seen anything remotely close to working for my situation, but I’m just scrolling zillow. 

Quote from @Andrew Syrios:

No, landlording is not passive at all. Even if you have a property manager there's still a decent amount of work

Depends on the property and location. I have a condo owned for 27 years. In the past 18 years it had been a rental,  I have been inside the property 2 times. Minimal  contact with my renters all that time.  It’s in a market that rents so easily to such high quality renters that when my previous tenants are leaving I pay them a $100 to have an open house for new renters. This has worked for me for about 5-6 turnovers over the 18 years it has been a rental and I’ve never had a bad tenant. So I have never even met most of my tenants. No major repairs in all that time either, though I did finally just have to remodel it after 27 years. Pretty passive for the most part.

Quote from @John Underwood:

Quote from @Nicholas L.:

@John Underwood

these are local deals you're finding because of your experience and network, yes?  I just want to point out that there's no Internet button for this type of deal =) 

 Absolutely.  Many of the properties we find the owners would never search in the internet for someone to buy their house. They have problems and they have their head in the sand.

We bought a house for 4k last week from 2 sisters that didn't know what to do and they thanked us for helping them with the situation. 

So basically something only you can do in your very specific area with presumably  long term knowledge and contacts. I mean, this is great for you but not really transferable to most people in most places I would imagine. Certainly not where I live and so then impossible to do this in some other market as an outsider, no matter how much research one does…

Quote from @Dave Tasset:

I can also vouch for Dave VanHorn and PPR.  I have been a PPR investor since 2019 getting anywhere between 8% to 12% return over the years with no payments ever missed.  I have found this much easier than being a private lender.  I also usually compound the return by reinvesting my payments, so the present 12% fund effectively returns 14.38% which is pretty awesome.  

I do have a fairly high percentage of my net worth (35%) in the PPR fund.  Does anyone have another good fund similar to PPR that I could get some diversification?   Please advise.  Thanks!

Check out Norada Capital with a simple no fees structure and 12-15% annual yield depending on how much you invest. 

 https://noradacapital.com

Been around 10-12 years and have great track record - never not paid apparently. I am considering them myself but have not invested yet. 

Quote from @John Morgan:

@Bryan Harvey

I would take that 200k and buy as many SFR with 20% down as you can. In my area (Dallas), I could buy 3 or 4 decent SFR homes in the 200k range that cash flow around $1700-$2000/month total with 4 houses. That might not be a lot, but as market rent and appreciation comes up good in 3-5 years, these properties will look like home

All sounds good, but…Does this still compute at today’s rates? Prior to last year was a whole ‘nother ballgame as I’m sure you know. Do you have a property manager? How do you handle vacancies? I think I know the answer, but doing this out of state is also a whole different ballgame in terms of cost/return viability. 

Quote from @John Morgan:

Quote from @Beck H.:

Quote from @Arthur Nogueira:

Let’s say I bought a house cash. I rehabbed the house and I’m the property is now rented. Can I do a cash out refinance? If so, how does happen? Thank you 

 I've had this same question the last few days as I figure out next steps.  Have done some Googling, but glad you asked.  Following!

@John Morgan  Sounds like you made it happen.  I'm still learning all the numbers and don't understand how you basically got the money free and clear.  Is it that the 1200/month original cash flow is now paying down the refi, and then tenants on the other 3 properties are paying down those loans?

Thanks!

I paid cash for a house with a 401k loan 4 years ago. The monthly cash flow was $1200 after all my expenses. Not bad, but I wanted to use the equity in this free and clear house to make more than just $1200/month. So I did a cash out refi on it to pull out equity to buy 3 more properties from the cash I pulled out tax free of course. I bought 3 rentals in the last 3 months from the cash I pulled out. My total cash flow went from $1200/month off that one ho Se to mow $3500/month by doing this. And I just gained an extra 3 houses that my new tenants are paying off for me. This is how I use good debt to scale up and bring more cash flow in. 

Does this strategy generally only work with relatively cheap houses - say less than $200k? Are you counting/saving for future capex out of that cashflow? Not saying you did, but often people love to quote the cashflow but conveniently leave out capex, which can be considerable on a bunch of individual houses. 

I’m just asking because I’m trying to do something similar with a paid off $400k condo property. At today’s rates I could get $200k out and the condo rent would pay for that new mortgage. 
So then where can I put the $200k and do better than what I was getting with no mortgage? Was netting $18k/year. 

Quote from @Bob Stevens:

Quote from @Travis Elliott:

Hi guys.

A little about myself. Some years back I sold a business. I got a lump sum of cash down and then I carried the contract for the remaining portion. More on that soon. 

I retired young and moved to Asia. I now have a beautiful wife and daughter here in Asia. Currently I have eleven rental properties. I am debt free so I figured that I would continue to live on the rentals and the loan payments. I bring in more than I spend each month so this woulnt be an issue.

The company that bought my business is now selling it. They will continue to pay me principal and interest for the next 50 months and then pay the remaining principal off at that time. Since the business is selling  we would collateralize the remaining loan with a commercial building that they own and have paid off. That would all work out fine but......I got that "real estate bug" again. 

The second option, the option that would help me to invest, is that they pay me everything that owe all at once. Currently that is 700,000. I consulted my cpa and he states that I will owe 100,000 in taxes leaving me with 600,000. This is the option that I will probably take.

So I would like to hear some investing suggestions..

We will probably move back to the states so I will need to buy a house for me and my family. I thought about putting 400,000 down on a 600,000 house. This would allow me to have smaller payments on my primary residence. I am looking at northern Idaho. Most of the houses are highly priced. I also want to be out in the country on some land so this increases home pries as well. With the remaining 200,00 I could use it to buy four houses in the three hundred price range. I may have to add some but it would be enough for down payment on the properties.

As far as what type of investing I want to do.... I would say Short term rentals (air bnb), Mid term rentals (renting to nurses), Fix and flip, mini storage, commercial buildings. I am open to other ideas as well.

Hopefully I explained my self well enough.

So any suggestions on the best way to invest the funds?

Any questions please ask..

 Buy rentals with 10% ish net caps, 

 Where are they?