All Forum Posts by: Daniel Ahern

@Eric Dowling Thanks Eric.  Yes, this is exactly what I'm wrestling with now.  Stay local or venture out.  I'd definitely prefer to stay local and I want to believe what you're saying but I'm not seeing the opportunities locally at the moment.  Any advice on micro-areas & property type combo in LA to maximize cash flow?

@Alex Gaw  Hi Alex, good question, appreciate your input.  If I buy 4-plexes, I can put 20% down and use 30 year mortgages (locking in current low rates).  If I buy larger than 4-plex, now it's commercial and I need 30% or 35% down and can only use variable rate 7 year loans. 

I have about $600K to work with.  At 35% down, that extends to ~$1.7 Mil in properties.  At 20% down, that leads to ~$3 Mil in purchases. Huge difference right?  That along with being able to lock in low interest rates has me thinking it's the right path.

What are your thoughts?  Anything I'm not seeing or misunderstanding here?

How did I get so hooked on Real Estate?  I got CRAZY LUCKY on first deal!!!  Here's the story.

I was looking for a place to rent New York - working "upstate" in Ossining.  My mega smart uncle drove a cab while studying at Columbia University... told me to drive neighborhoods I liked, go to the building and ask for the superintendent.  Exactly what I did.  No joke... first place I went to - I spoke to the super & nothing was for rent but there was a place for sale!?!  $125K!  I was 25 and broke but making $50K so thought I'd try.  The bank would only loan me up to $85K.  I told the owner to my shock they went for it!  I really don't know why.  It was a co-op building in the very very north of Manhattan, area called Inwood.  This owner owned many properties in that building... maybe just needed some cash?  No idea.  This was 2001.

Called my pop for help with the down payment. Nope. I ended up getting a loan from my uncle for 7%. That was it. It took a few months for the cash from my uncle to "cure" in my bank and I bought it. A large 1 bedroom. I sectioned off the living and rented it out for $500 a month... they pretty much paid the mortgage leaving me with the "HOA".

I held it for 3 years. About 2 years later, I kept hearing stories of other places like mine selling for ridiculous amounts. In 2003 I heard in the elevator "$200K? What? That place is the same layout as mine!" I didn't believe it. It just kept going like that. "They sold for $250K?" Wow! It was so far north, I really wanted to live in downtown Manhattan. I finally decided to sell. Well, I tried renting first but it's really tough with a CO-OP. The CO-OP board has to approve the renters! There's a massive packet of info... serious pain. I was also advertising the place as a FSBO for like $250 or $275K. Serious as a heart attack. I never got an offer for purchase... the rentals didn't work for 9 months.

I finally hired a professional broker.  She did an open house in 2004.  The market was just insane.  Everything got so expensive in downtown Manhattan so people started moving further north...into areas like Inwood!!!  It had a double up impact.  First b/c the market was going way up... then b/c the high market drove buyers to my neighborhood. Sick.  The broker got a bunch offers which led to a bidding war.  The place ended up selling for $340K!!  From $85K to $340K in 3 years (2001 to 2004).  Changed my life and not surprisingly I've been very interested in real estate ever since. 

@Russell Brazil Structuring huh?  Sounds like Russell knows more than I on this one.  I'd take his advice as well as the others above.  Lump sum deposit.

@Michael Lee That makes good sense, appreciate the advice Michael!

Hi Kate, Appreciate your post. I'm investigating the same question now. Well, I've decided to focus on 4-plexes, now trying to nail down the local vs. out of area question. Being in LA, there appears to be less cash flow opportunities here than other markets. The challenge with out of area is lack of local knowledge & difficulty managing from a far. Which is more important? I'm not sure yet... little more research to do... Good luck on your journey! Daniel

Congrats on getting into action. I'm inspired and one step behind ya!!

Hey BP people! Trust question for yous. I'm getting ready to write up my first trust. I've taken a course to understand them and ready to put pen to paper. The teacher of the Trust course is very reputable but I'm still a little uncomfortable using them as a 3rd party LLC for the trustee (like a trustee-for-hire). The other option would be to create my own LLC and pay $800 a year and deal with all the paperwork (now & annually). The 3rd party only costs $125 a year. They recommend building in the below safeguards: - a "friendly" trust deed. This would stay on title and basically require that a title company alert me if any transactions on the property occur. - Reverse Deed (from a non- owner Trustee to the Trust's Beneficiary ... Myself Well, that's the deal. Is it very common practice to hire out the Trustee "job" or is that cause for concern? Thanks

When I was a bank teller several years ago, $10K was the number banks pay attention to. Same with travel out if the country. If it's over $10K, eyebrows are raised & questions asked. If it's already been taxed, should be no prob. Just depositing causes no harm and incur no tax. If you want to avoid the trouble of raised eye brows, perhaps make a few deposits - all less than $10K. Have the paperwork ready to prove it's all legitimately earned & taxed just in case.

Hahahaha.  I'm laughing reading everyone's comments about the car.  Same thing was stuck in my head as I was reading your post.  I'll say the same thing with slightly different words:

Building wealth means putting your $$ and effort towards APPRECIATING assets (smart RE purchases), not DEPRECIATING assets (cars, boats, etc.).

I'm sure you got the point by now.  Good luck in achieving your goal!!! (and selling your car =D)