All Forum Posts by: David West

@Mike Dymski there have definitely been some “scared crapless” moments! On the bright side we have some options and we’ve managed to live comfortably below our means. I’m confident that I can get back in the workforce with a decent job, but I’ve been building this real estate business in my mind for a long time. I’m seeing this as a temporary downturn and a strong sign that I can’t afford to not be prepared for hard times. Hopefully I’ll look back on this one day as the time I got shocked into action.  

@Kenneth Donaghy Solid advice brother. Thank you! 

@Tom Kastorff Sorry about that. Shoot me a message and we can connect next week. Thursday or Friday would work. 

@Tom Kastorff What's up buddy?? Didn't we play Torrey with Marley a couple of years ago?!?!

Managing the cleaning crew is actually the biggest headache but it's tolerable. I have tried a couple companies but when I go spot check their work they do a poor job and they charge alot of money too. If I get a bad review because of the cleanliness it hurts the business in the long run. I want to grow and scale the business to be more passive, which is why OOS is attractive even with lower returns and appreciation. I could probably take on a couple more properties like this in SD but I think my time would be better used finding deals and growing the business. 

Let me know about that lender. I'd love to pull some cash if possible. I'll be down there next week, let's tee it up again and chat!  

@Kenneth Donaghy I love the area and the people around are awesome! I think given my situation and goals that a 1031 is not really the route on this one, and I'm not even really sold on selling! I've used some STR management companies in the past and I had negative experiences and honestly, it's not too hard to keep up on the communications and management of only 2 units just a little inconvenient. It's a small price to pay for the returns and flexibility. Is there a particular company you recommend? I've also used some corporate and government placement companies and those were a nightmare. They promised great returns upfront then basically pulled a bait and switch when it came time to pull the trigger.

Funny that you mention development, that was in my 5-year plan for the property and would be the next step if I keep it and can accumulate the funds. I can add another unit on top and it would be awesome with a view of SeaWorld. I never thought about partnering up with a developer though, that's intriguing.  
 

I really appreciate the feedback and I'll keep you in the loop moving forward. Have a great weekend. 

@Matthew Irish-Jones ya I wish it was easy! I talked to my cpa about the potential sale and since I don’t want to reinvest all of the gains it wouldn’t be worth it to 1031. Do you see a scenario where I can keep some cash and buy a cheaper place and still use the 1031?

@Donald E Appleberry Thanks for the feedback. I know, it's tough! I love SD though and plan on being back there in the next 2 years. My place is in Pt. Loma right on the border of OB. It's an awesome location and I hear there is a Midway revitalization project getting pushed through now. I know I can cash in right now but I feel like I'll be kicking myself sometime down the road for not keeping it. 

@Theresa Harris I was looking for a similar job, but I really think it's time to go all-in on real estate. The thought of going back to work just for the security of the paycheck sounds like torture to me! The idea of full time investing excites me! I am getting my real estate license now and I plan to amass cheaper rentals using the BRRRR strategy. Selling homes will supplement the rental income until I can live comfortably off of the investments.

Hi Friends,

Here's the sitch. I have a duplex in a prime location in San Diego. I run both units as an STR and make good cash flow (~$30k annually) but it is fairly labor intensive. I purchased the home for $720k w/ 20% down. I got the down payment from the proceeds from a successful live-in flip. The property has appreciated significantly due to sweat equity and standard growth in the neighborhood.

My master plan was to continue working my 9 to 5 and saving money for the next deal and continue to build my portfolio. I aimed to be financially free in 2 years and be able to focus solely on investment properties. Unfortunately, around 6 months ago I lost my good paying W2 job and have not yet replaced that income. My family and I have moved to a much more affordable area and we are just getting by for now. I've spent my severance and most of my savings at this point and I'm looking to right the ship. We are using the income from the rental to support our living expenses but some months we still need to put some expenses on credit cards which stresses me out. As the summer approaches, I know our income will increase and we'll pay off the cards and be fine but that doesn't get me closer to the goal of financial independence. 

The good news is we have options. 

1. We could sell. With approximately $400k equity, after closing costs and cap gains we'd probably walk with ~$300k. From there I would take $120k to start building my out-of-state BRRR empire. The remainder could be cash reserves and a new nest egg.

2. We could keep running it as STR. The returns are awesome, the appreciation has been great, and I anticipate that if I can hold on for at least a few more years I will be in a great position. I've learned a ton on this journey. The downside is it's been tough to find a lender that will recognize Airbnb earnings towards dti and now that I don't have W2 earnings it presents an additional challenge to pull money out. Also, as mentioned above, it is fairly labor-intensive.

3. We could rent it out long term. This would be much less labor once the tenants are placed but I cut my cash flow in half or more by going this route. The benefit is I've talked to many lenders that will recognize the rental income from a long term rental and they will give me 75% of that income towards DTI which would allow to pull out some cash. The other negative with a long term renter is I lose the flexibility that short term renting offers.

Currently, I'm in the process of obtaining my real estate license which I should have by this summer. My goal is to build $15k monthly passive income through real estate investments. I love real estate and to be honest, I'm a little attached to this property. If I sell it would be awesome to have that lump sum of cash, which I could really use right now and reinvest the proceeds. If I hold it I can easily see the property doubling (or more) in the long term.

Is it prudent to take my chips off the table and reinvest somewhere else? It's going to take so much hard work just to get back to $3k+ monthly income but I am down for the ride. Also, I love the idea of being able to use the same cash over and over again (BRRRR) to build the portfolio. Or am I being short-sighted by letting go of an income-generating asset in an awesome location?

What would you do if you were in my situation? Are there any other options besides the 3 above? Happy to provide any additional info you may need and I'm looking forward to your feedback. 

Cheers,

DW 

@Dave Foster, @Steve Smithy, & @Bill B. Thanks all. I'm looking to take some of the profit and begin building the BRRRR machine out of state, but I also want to save a portion for a rainy day. I appreciate the responses.