All Forum Posts by: Clint Galliano

@Jeremy H. Your ire should not be directed at rental property investing, but increases in your expenses. Insurance in Louisiana has been ridiculous over the last three years. My personal home and my portfolio insurances have tripled since 2021. It is something that happens and if your deals did not have enough meat on the bone to accommodate those increases, then maybe it is time to consider a transfer of your equity to better deals by selling the property or properties.

Now, I am not familiar with the Lafayette rental market, but I would think that it is at least as active as the Houma/Thibodaux MSA due to a wider economic diversification. As an example, my gross rents have increased by approximately 16% and that is with mostly long-term tenants. Not the same as the tripling of my insurances, but I am still cash flowing. 

I do have the occasional turnover and just did some major rehab in one unit, but that unit had not been touched for almost 12 years other than some minor paint touchups. 

Let's look at your list of issues:

+Escrow increases - Your "note" keeps going up. This is, as you and others have agreed, because of the insane insurance environment in Louisiana post-Ida. On top of that, the parish assessors typically reassess the majority of the parish every 2 years, thus increasing your property taxes. Additionally, don't hesitate to review your insurance every year and shop for a new policy. If you haven't done that recently, you can change policies mid-term, but you will need to make sure your bank or loan servicer know if you do change.

+Maintenance/Repairs - It sounds like you have may regular turnover in your property or properties or tenants that are rough on your property(ies). This is a management issue. I'm not sure what type of property you have, but I find having long-term tenants cuts down on the amount of repairs and definitely will reduce the number of turnovers needed in a given time period. This needs to work in conjunction with a strong lease and thorough tenant on-boarding. 

+Property Manager - You mentioned having a property manager. Are they doing what you need them to do? Are you using their lease or your own? Are they following your rules for your portfolio or theirs? Are they constantly turning over tenants? Having tenants default? Charging you for constant repairs? It may be time to look for another property manager. 

These are all some suggestions that may improve your current situation. Feel free to reach out if you have any questions.

The investment property is a candidate for a 1031 exchange. If you go that route, ensure to use a Qualified Intermediary to handle the sale/purchase otherwise there will be no 1031 exchange. 

As far as your primary residence, if you have lived in it 2 out of the last 5 years, you should not have to pay taxes on capital gains (difference between what you paid for it & what you sold it for) up to $250,000 if you file your taxes as an individual and $500,000 if you file jointly with a spouse.

Just a disclaimer, I am not a tax professional. Please verify this with your own tax professional.

It's probably up to the individual parishes. I'm familiar with Terrebonne and Lafourche parishes. While they both list auction prospects on Auction.com, the actual auctions are still in-person.

 While Louisiana does have lots of swamp areas, the areas most people invest in are not "swamps". FYI 

Not an attorney, nor a CPA, and I don't play one on the internet, BUT, things to consider if you would want to run revenue through your LLC...The LLC would need to be tied to the property in some way, either as the owner or manager. AND, if the LTRs are out of state, you will need to register your LLC as a foreign entity in the state you are operating in if you are being paid from that state. That amount varies from state to state. For tax purposes, all LLC earnings pass through to your personal tax returns, so there is no practical tax benefit.

If your goal is to grow your LLC, consider arranging all of your properties under an agreement with your LLC to manage them & take all of the legal steps to ensure that the structure is correct. this may involve creating LLCs in the state(s) your LTRs are in to own the property and your PM LLC managing those properties, so that you don't have a concentration of all of your portfolio in one entity. The caveat is that it is dependent on the value of the properties and your tolerance for risk. Ideally, you don't want to concentrate all of your properties into a single entity in the event of a lawsuit against one because it exposes the rest of the properties to that lawsuit. 

Ultimately, it's a lot of hoops to jump through and the cost may not necessarily be aligned with your plans. 

In summary, it may be better to keep getting paid through your SS, unless you plan to scale your portfolio dramatically.

@Pran Bhavsar We provide property management in the general area. I also have a personal SFR in Morgan City. I would love to help you evaluate anything you are considering.

I invest in Louisiana, but mainly because I live here.

Welcome to BP. Where are you located?

My question is what kind of debt do you have? If it's consumer debt, that's one thing, but if it's debt on your rentals, that shouldn't matter (or at least as much). 

Make sure your advisor has a full picture of the contributions your rentals make to your finances and will make to your future finances. The proposed purchase sounds like a solid deal.

Hey @Andrew Martinez,

I am a real estate agent based in Houma, but cover the Cut Off  area also. I can do transactional paperwork for you.