All Forum Posts by: Casity Kao

@Aziz Bangurah How many investments do you own and where are they?  If not in the same city that you are investing in do they know what is necessary to get rental certifications if needed, if not will they guide you to the answer or just tell you to call the city.  Do they give you advice on exit strategies and values adds.  If they say the property is a great investment, ask them why, and ask for a breakdown of the numbers.  It is always a red flag when realtors say a property would make a great investment but cannot clearly justify why.  I would be careful to use the listing realtor because there goal is to sell the property, not necessarily to help you get the best deal but that does not mean they are not the right person.  What type of support can they give you to invest more?  Contractors? Captial?

@Catherine Brennan Go on LoopNet or the MLS and look for properties that you think would fit the bill, and see who is listing all the spaces you want. Whomever that is who you should go with to start.

@Quamal Burton  I think my answer would change given more details but I think it would a great idea to quit your job now as you have plenty of time to go back to another job that gives you more fulfillment if you fail, so what do you have to lose?  The more you get paid the harder I personally feel it is to walk away from your job, which can somewhat be a trap of its own.  If you decide to pursue a career as a real estate agent I would also set aside a budget for your marketing to get clients as marketing is going to be the lifeblood of your business to get clients starting out.  Also when you say you have money saved up to cover your expenses have you actually spreadsheeted out how much you actually spend in an average month or is this just based off an estimate or a calculation.  I think a lot of people are surprised how much faster their funds actually go when they quit their job because they forget about the expenses that may not be monthly or the little pleasures you have to spend money on here and there.  I'm not trying to knock Scott's book as I think it's a good book that provides a positive mindset but I have read a lot better books that have provide a lot more mindset on the how to and I generally would want to take advice from somebody that is much closer to that 60 million a year than versus maybe 3-5k a year.  From my personal experience it will only get harder to quit your job as healthcare gets more expensive, you have other mouths to feed, your parents need your help as they age and so forth so now is as good as a time of many.  At a worst case scenario I would suggest a change in careers if you do not like your job and/or start real estate as a part time agent.  It is definitely possible to succeed as a part time agent.  I had three young kids all not even in preschool when I started so I just had to do it whenever I could, but the great thing about it is most people want to see homes after work or on weekends so you can work around your schedule.

@Adam Drummond  I laugh when I see that you want to get your youngest son involved in the real estate, because my husband and I joke around about the day we can utilize them for labor.  My husband's parent did the same with him when he was young and while he invests in real estate now he got as far away as possible from it the second he had a chance for a decade.  Early on I think it makes sense to do the deals but you can't really grow as a company if you are trying to manage everything.  At some point you will need to focus on finding the deals.  Now at times a contractor will no show that will show up your progress so, we definitely have picked up a paintbrush, or put on some gloves but you can still have the feeling of turning a house into something beautiful without building it by managing it.

@Bryan Pham

I am not an attorney or CPA but you cannot 1031 exchange your primary residence as far as I know but I did not look a the new tax code around this so for 2018 it is possible. However if your primary residence ceases to be your residence and becomes an investment you can. The homestead exemption was not changed with the new 2018 guidelines so if you have lived in your home 2 of the last 5 years why would you need a 1031. Even if you have not lived in your home 2 of the last 5 years there are many banks that will allow you to HELOC up to 100% so you could just use those funds for a downpayment on a multifamily. 1031 exchange is a great tool, but I can't really see when a 1031 on your primary residence would be beneficial unless it ceased to be your personal residence.

@James English Are you asking for legal advice on structuring the agreement or are you trying to find investors to finance the deals.  Also who do you mean by we? You and your buyer, or you and the capital investors?  Also before you shared that are you sure that is what your capital investor wants.  I ask these questions because you should have those questions answered so you can provide a value proposition to your capital investors.

@Heather Hopkins Good luck with that!

@Alan Neill You are able to prevent them from syndicating out with the click of a button, and what investor would complain about more exposure?  It is not their job to screen tenants, until you have the patient pay the application fee.  For a free service to put your listings out and find tenants, I think its ridiculous you expect that they prescreen the tenant because if you put it all over the listings tenants will still try to call and negotiate.  I am not sure why you were not able to get the reports but based off your observations are you sure you know how to use the platform? There will always be unqualified tenants that contact you on listings, that is unavoidable.  If you want a phone number to call, then you should pay for a service like Buildium to manage your tenants.

@Roy Gutierrez I would assume the worst on the tenants, and price into your model the cost to evict them, as for subject to redemption you will need to price into your model the cost to hold onto the property until the redemption period ends, because I would not start any work until that redemption period is over.  If you cannot afford to take a loss, I would not invest in auction because it's a numbers game where you need to have the ability to buy in some scale because you will hit some home runs at auction but because you can't always predict what you get you will get some duds as well.

@Ian Livaich  Your assumption is correct, but to give a little more detail I look at repairs as serving two reasons raising rents with a high cash on cash return, and forced appreciation.  By the numbers in general I think most "experts" would say kitchens and bathrooms get the most return on money invested, IF invested smartly and I would say I generally agree as well but lets use that same example of a $4500 kitchen for 100 more in rent.  Assuming I can get my money back out that would be roughly $21 more payment on a 30 year mortgage, so if I feel the forced appreciation would increase the value of the home then this is a no brainer because I begin cashflowing $79 a month the second I am able to refinance so I have infinite cash on cash return.  Assuming I cannot pull the cash back out then my annual cash on cash return on that 4500 is still 26% (assuming I self manage).  Either way the numbers look good.  Most of time we are buying 20% below market in addition to forcing appreciation, so we can cash out refinance most if not all the funds we put in for our down payment and renovations, so our goal is to cashflow positive with no money in so we can repeat the process.  So you are correct in your assessment but instead of doing a years to recoup I look at is as a function of 1st year or annualized return.