All Forum Posts by: David Sisson

I think pretty much any beach community that also has student rentals can be full year-round. Example: Newport, RI. 

Keep reading and asking specific questions. Honestly, for a single family rental, you simply figure out your costs (initial costs, monthly costs, maintenance costs, etc) and then see if the rents you get can cover these costs and leave a bit more left over for you. 

Rental vs flip depends on your goals. I think a lot of people do flips when they are trying to build up cash fairly fast, and people do rentals when they want to build longer term wealth. Both have their place. Some homes won't make sense to rent, some won't make sense to flip. 

For example, a house that's "turn key" and ready to rent out, there's really nothing to flip. Flip homes are usually distressed in some way. Ideal flip homes need very little, but are still at a good discount. The BRRRR strategy sort of combines a flip with a rental.

One of my mentors said "always look for properties with an extra upside". He was excited when I found a single family with an extra lot that I could split off. I haven't split the lot yet, but I now have two potential income streams - the rent on the single family and the sale (or development) of the other lot. My commercial property has almost endless upside as I renovate more portions of it and make it nicer.

For your first deal, make it simple. Find a nice granny house that's about 1000-1300 square feet, that's in good condition, but maybe needs updating (interior finishes) and maybe a roof or some siding or landscape. Then, buy this home and either flip it, or BRRRR it. Just make sure you get it at a good discount, that the $ you put into it is low, and you can have multiple upsides (like flipping or renting). Make sure to be very careful when calculating expenses, and give yourself a lot of padding in your numbers.

I own a SFR on a double lot. I'd like to split the lot, keep the SFR, and sell the (new) empty lot.

After I pay expenses, I'd net something like $45K from the empty lot. 

I'd like to avoid capital gains on this $45K. I'd like to do a 1031 exchange, putting this $45K as a down payment on another property. 

Since I'm not selling the entire original property, can I do a 1031? If yes, how? 

If I can't do a 1031, can I use the $45K to pay down the mortgage on the SFR and avoid cap gains that way?

Talk to some local commercial agents in your area. In my area, the commercial agents aren't willing to do much on smaller projects, but they still might be a good source for affordable buildings. 

So, the first question is zoning - is the property zoned for a 3 family? 

Then, you'll need to deal with building code. 1 family and 2 family homes are "homes" and are governed by the residential code. 3+ family are apartment buildings and are governed by the building code, and therefore have more stringent requirements. Fire sprinklers are the first to come to mind, but also egress (stairs and doors) are the common ones. 

Yes, you can have a multi level unit. In Boston, we are converting a lot of double level 2 units into 4 level 2 units (1st floor gets the first floor and basement, 2nd floor get the 2nd floor and attic). Sometimes the units can share a level, depending on the layout. In this scenario you might still run into zoning code issues. Example: in many cities near me, a basement is not considered "space" unless it's finished. When you finish a basement, it becomes "square footage" which means you made the house bigger (even though you didn't). This may trigger various zoning issues such as FAR (Floor Area Ratio). 

I don't know of any auction sites, but we found our commercial building on loopnet.com

Your agent might not be trying very hard to do showings either. Mine took 2.5 months because it was winter, it's a weird layout, and because I'm picky about the tenants. I could have rented it in a week to a bad tenant, LOL. 

What feedback are you getting from potential tenants? Location? amenities? price? If no one is walking through, then either it's priced too high, or you aren't advertising it well. Get a good photographer to take good photos. I have an architectural photographer (in other words, he takes the BEST photos) and I'll have him shoot some "real estate" photos before I list. The difference between an 'architectural' photo and a "real estate" photo is that he doesn't really edit the RE photos, so they aren't quite as nice, but they still look great compared to the typical crap that you'll see. You might pay a few hundred for RE photos vs a few thousand for architectural. You might try listing on craigslist of course, and also on facebook marketplace. If you aren't getting anyone walking through, then there's something wrong with your ad, the price, or where you are listing it. Or there's something wrong with the house itself. It took me about 2-1/2 months to get a renter in my most recent single family - it was a bit of a weird house, and I was very picky about the tenant, but I did get tons of people walking through it. Pictures and ad was the key. 

This works. pretty much a BRRRR strategy. You'll need to improve the value of the property enough so refinance allows you to pull money back out.

I just did something similar - did a 10% down with another 10% as a HELOC on the property I was buying. Just paid down the HELOC, but I used $ from cash flow on other properties. I may use the HELOC again for a down payment on another property, if something comes up.

Rain can go sideways under the cap. I have 4 large metal chimneys on my commercial building, they all have rain caps, but in super heavy rains the rain will get in anyway. If your chimney isn't used for anything, you can completely cover the top- have a mason install a slab over the top of the chimney. if this doesn't solve the problem, then you either have bad flashing at the roof/chimney joint, or the brick itself is leaking. I'd put my money on water finding it's way under the cap. A leak like this shouldn't be a big deal, unless the basement is finished?