All Forum Posts by: Dan G.

 I'm definitely willing to take risk. I just want to be sure I am taking every possible precaution I reasonably can so the risk is minimized. Regarding my wants, I actually have 4:

1. High cap rate/cash flow properties in decent neighborhoods (working class, not slums). If I can get an extra 4% per year in cap rate and lose 4% per year in appreciation, that is totally worth it to me. 

2. Preferably buy close to home in South Florida. Does anyone know cities/areas where high cap rate rental properties are available in decent neighborhoods within a 100 mile radius of Ft. Lauderdale? I think I would feel more at ease about all this if the properties I buy are within a two hour or so drive of my home. That way, it won't be a huge hassle to see the properties before buying and it won't be a total disaster if my property manager drops the ball since I can drive there and get something fixed. The only high cap rate properties typically available in Ft. Lauderdale are in bad neighborhoods, which is not what I want. 

3. Avoid areas where the economy is dependent on one company or industry. If the economy tanks and Disney World and other Orlando parks are half-empty due to a tourism crash, I would think there could be big layoffs affecting rental demand in the Orlando area (unemployed people who can't find work in the area will tend to leave town). 

4. Avoid areas with unusual and unnecessary risks such as sinkholes. 

Thanks! 

With hundreds of turn key companies out there, many probably are fly by night or aren't great to work with. Who are the big boys/major players who have good reputations? 

Unfortunately, my IRA doesn't have much money in it. The vast majority of the money I have came from the sale of a business several years ago and is taxable.

My biggest problem with hard money lending is the taxes. My understanding is that the HML returns are taxed as ordinary income with zero deductions, whereas if you own the houses, there are tons of write-offs to offset the income, giving you an overall much lower effective tax rate. Am I correct about this? Are there ways around the income tax issue with hard money lending?

Does that mean people buying high cap rate properties in the Midwest will have great cash flow in the short-term, but will have relatively poor cash flow many years down the road due to the inability to raise rents?

 Thanks Christopher.  Do you think being in an area where houses do not appreciate or even depreciate will hurt my cash flow in the long run, even if my plan is to buy-and-hold?  I'm concerned that if the houses never appreciate, then I will never be able to raise rents long-term.  One thing that I should probably be concerned with is the ability to gradually raise rents (such as by 3% per year) to keep up with inflation.  That way, if I am making $100K/year in net rental income today, 20 years from now, I'll be taking in $200K (or whatever it comes out to after 3% compounded increases each year).  If I'm making $100K/year in net income with high cap rate properties in the Midwest, will I be stuck making the same $100K/year 20 years from now, despite the fact that inflation has doubled the cost of everything I am buying?  $100K 20 years from now may only be worth around $50K in today's dollars, or less.  Or can I still increase rents by 3% each year in the Midwest, even if the properties don't appreciate or even depreciate?

 I am not super-knowledgeable about this stuff, but my concern with Las Vegas is similar to my concern with Orlando - these areas rely heavily on tourism, so in the event of a severe economic downturn in the future that greatly reduces tourism, I could take a huge hit with vacancies and declining demand.  I understand that in an economic recession or depression, rental properties all over the US can be affected, but my sense is that the first thing people cut from their budget in bad times is vacations, so Orlando and Las Vegas may be more sensitive to severe economic downturns than other areas since their economies appear to rely very heavily on tourism.  I am looking to minimize my risk, so this is a big concern.  Am I off-base on this issue?

 The three I came up with seem to be reputable and are operating on somewhat of a large scale.  I am looking for the "top" (most reputable) turn-key real estate companies that I can count on to provide good service and not screw me.

 I'm open-minded.  My only concern about that is in regards to minimizing risk, so if buying wood-framed houses in certain areas doesn't present extra risk, then I'm game!  When you say Kansas City, are you referring to Kansas or Missouri?  

Also, I've heard that some states will allow you to get around the taxes if you form an LLC, so if that's the case, then states like that would definitely work.

I am trying to compile a list of the best websites/companies where I can find turn-key single family homes as investment properties around the US.  So far, I have found these:  homeunion.com, nexgeninvest.com, memphisinvest.com

Are there any other good ones?  I want to find as many as possible so I can compare what they offer.

Thanks!

Dan