All Forum Posts by: Dennis Bragg

Hey Keith..

Congrats on your recent house hack-bringing your portfolio to five doors is a big step! Your question about LLCs is something many investors wrestle with, and the answer really depends on your long-term goals and how much risk you're comfortable taking on.

For smaller portfolios like yours, setting up separate LLCs for each property can provide additional liability protection, but it also comes with added complexity and costs. Think about filing fees, separate bank accounts, and maintaining compliance for multiple entities. In Vermont, LLC formation fees and annual report costs can add up.

A good friend of mine, Jason, started with five doors and used a single LLC for his properties initially. He liked the simplicity but later switched to multiple LLCs once he expanded to 15 doors. One hiccup he faced was forgetting to update his umbrella insurance policy, which left one property exposed for a short time. It's things like that which make this decision more than just a legal one-it's about how organized you can be.

Something else to consider: lenders often want you to personally guarantee loans, even if the property is in an LLC. This means the liability protection might not fully shield you from risks. Speaking of loans, refinancing or selling properties inside an LLC can sometimes complicate things.

Since you’re house hacking, also think about your tax strategy. LLCs can help streamline bookkeeping, but they don’t offer tax advantags unless structured as an S-Corp. Have you talked to a CPA about this? That’d be my next move-they can tailor advice based on your portfolio and Vermont's specific laws.

By the way, if anyone here has experience juggling multiple LLCs at the 5-10 door stage, how have you handled the balance between liability protection and administrative overhead?

Let’s hear what others think.

Hey @Ricky Hernandez

Great question, and it’s awesome to see you thinking ahead about the potential for turning your new-build home into a rental. As someone who’s spent a couple of decades in real estate investing, here are a few things I’d keep in mind:

1. HOA Restrictions: You're absolutely right to check the HOA documents. Look for any clauses about rental caps, short-term rentals, or owner-occupancy requirements. Even if the HOA currently allows rentals, it's worth attending HOA meetings or reviewing their amendment history. Rules can change, and it's better to anticipate potential restrictions down the road.
2. Builder Restrictions: Builders sometimes place restrictions on rentals to maintain the "character" of the community, especially when they’re still selling units. Ask the builder or their legal representative for a copy of the CC&Rs (Covenants, Conditions, and Restrictions) or any supplemental documents specific to the development.
3. Financing Considerations: If you’re financing the property, some loan types have limitations on renting out a home within the first year. Check with your lender about any owner-occupancy requirements tied to your mortgage.
4. Market Analysis: If you plan to rent it out in the future, take a close look at rental market trends in your area. Phoenix has been a hot market for rentals recently, but consider how long-term trends, interest rates, or construction projects might impact demand.

Here's a quick story: A friend of mine bought a new-build in a suburban development a few years back. Everything seemed great until the HOA implemented a cap on rental properties due to complaints about absentee landlord's. He ended up having to sell the home instead of renting it out, which wasn't part of his original plan. Lesson learned: Always think of a Plan B in case renting isn't an option anymore. @Pat Aboukhalen was the agent there sorting it all out for him there after his previous agent missed it - so if you don' already have an investor-friendly agent there that's who I would use. 

Lastly, I’d recommend running the numbers for your long-term goals. Is this a cash-flow play or an apprecation play? In markets like Phoenix, you might find a mix of both, but it’s always better to invest with clarity.

Have you looked into whether the builder is still selling homes in the same community? Builders often adjust pricing based on rental saturation, which could impact future appreciation.

Hi @Jen Hoang

I came across this post while researching how investors are navigating 1031 exchanges today, and I think your questions are still super relevant.. especially given how much the real estate market has shifted over the past year. Let me break it down based on your scenario and the updated market landscape.

Replacement Property and Mortgage
You're correct that your replacement property must be equal to or greater than the value of the property sold ($440k in this case) to fully defer taxes. However, the mortgage part has some flexibility. You don't necessarily need to replace it with exactly $140k in debt, as long as the total purchase price meets or exceeds your sale price and all the proceeds are reinvested.

Using Proceeds as a Down Payment
Yes, your $300k could absolutely serve as a down payment on a larger property, like a $1.5M asset, depending on your financing. This strategy can allow you to scale into a bigger or better-quality property while maximizing your equity.

When to Start Looking for Properties
Starting your search before listing your current property is a smart move. Many investors underestimate how competitive the market can be, especially in areas like Texas, where demand for multifamly and single-family rentals has been high. Just remember, you can't close on the replacement property before selling your current one.

Qualified Intermediary Recommendations
For intermediaries, I'd recommend starting with some highly-rated national firms. From what I’ve seen, firms like Exeter 1031 Exchange or Asset Preservation, Inc. have solid reputations for guiding investors through the process efficiently. It's always worth checking recent reviews to ensure you're getting someone who can move at the speed you need.

A quick Anecdote: I had a friend who went through a similar process recently. They sold a duplex in Austin and exchanged into a small portfolio of properties in the Dallas-Fort Worth area. By carefully timing their sales and purchases, they not only deferred taxes but also increased their cash flow significantly. They swore by starting their search early-it gave them confidence and options.

One final thought.. Texas remains an exciting market, and you've got some excellent opportunities to diversify or even consolidate into a single high-quality asset. What kind of property did you end up doing as your next step? Multifamily? Commercial?

It sounds like you’re dialing into that deeper layer of investing where trust and a sense of community become as important as the numbers on a spreadsheet. It reminds me of a buddy of mine in San Diego who realized early on that the investors who stuck around longest weren’t just chasing the best cap rate..they were sticking with him because he made them feel like they were part of something that actually mattered. He started doing small, low-key investor dinners where everyone could swap stories and insights, no hard pitches, just good conversation. Over time, that approach created a core group of loyal investors who’d call him first whenever a new opportunity popped up. From what I read in Bloomberg recently, investors gravitate towards platforms they trust on a personal level.

I’ve found that blending personal touches with strategic growth means knowing your audience and what makes them tick. Maybe it’s hosting a casual weekend walkthrough of a recent rehab project so investors can see how their money is being put to work. I’ve even seen a friend in Austin organize a simple field trip to another city..from what I’ve heard that kind of trip can spark interest in fresh markets. It’s that kind of authentcity that makes people lean in a little closer.

You’re already thinking about monthly meetups and a coaching program, which is great. Just keep it real, keep it accessible, and make sure the value feels genuine rather than forced. If you had to pick one relationship-building tactic that you believe would really set the tone for your brand’s culture, what would it be? 

Jorge, that first sale feeling really is something special, isn’t it? I remember early in my career, years back, a friend of mine closed his very first multifamily deal in a part of Chicago that, at the time, was just staritng to buzz with interest. He didn’t just make a decent profit; he sudenly saw himself as part of a network where trust and reputation were the real currency. The thing is, once you’ve proven you can deliver on a promise..whether that’s a strong return, a well-managed property, or even just a handshake that means something..people don’t forget it.

You’ve hit on a crucial point: great returns aren’t just numbers on a sheet; they’re invitations. When investors see that you’re looking out for them, that you treat them like partners rather than just capital sources, they start spreading the word. In my experience..from what I read in Forbes..it’s not unlike discovering a great local coffee spot: once you find one that nails the roast and atmosphere, you tell everyone who’ll listen. Real estate can feel big and impersonal at times, but at its core, it’s a relationship business. Your partners become your advocates, your network grows naturally, and your opportunities multiply.

As you keep scaling up, think about how to maintain those personal touches. Sometimes it’s straightforward, like keeping investors updated in a way that’s candid and transparent, or celebrating their milestones alongside your own. Other times, it might mean looking beyond your immediate market—maybe considering places like San Antonio or Omaha if the right deal appears..from what I’ve heard those markets have their own circles of trust. But always keep your core values front and center.

I’m curious... now that you’ve got this momentum, what’s the next step you’re considering to deepen those relationships and keep the positive energy flowing?

Alan, I’ve got to say, taking on a major construction project like this in Ardmore is a bold move, and I admire the ambition. That area’s known for its classic charm and high-quality homes, and if you handle this right, you’ll be tapping into a buyer pool that values both style and substance. Years ago, a friend of mine took on a similar challenge in an older neighborhood near Chicago..he opened up the top floor to create a master suite that felt less like a converted attic and more like a boutique hotel room. That project taught him that buyers in these well-established neighborhoods pay close attention to the details..things like making sure the ceiling lines are clean, storage is intuitive, and every inch feels purposeful rather than tacked on.

For your project, thinking about the functionality of the added space is key. Consider the family who’ll eventually live there..maybe they’ll appreciate a second-floor deck accessible from a common hallway, where everyone can enjoy it, rather than limiting it to a single bedroom. On the other hand, giving one of the bedrooms its own private outdoor escape might appeal to a buyer looking for a luxury retreat. Bay windows or built-ins can be a subtle way of blending modern convenience with the character of Ardmore’s older architecture. It’s like giving the home a sense of place..a nod to local design traditions while still making it feel fresh. When you’re done, think about final touches that signal quality: well-placed mudrooms, logical spots for washer/dryer units (maybe near bedrooms for convenience), and closets that don’t feel like afterthoughts.

The biggest hurdles I’ve seen often come down to hitting that sweet spot between cost and perceived value. Overbuilding certain features can lead to diminishing returns, especially if they don’t resonate with local buyers. It might be worth talking to a local architect or designer who’s done similar projects in the Main Line area..from what I’ve heard, they can steer you toward features that buyers here find irresistible. Another consideration is the permitting process and local zoning quirks, which can slow you down or force design changes mid-stream. That said, the right team on your side can make the permitting process and inspections far less painful.

I’m curious... as you refine your plans, how do you see yourself balancing the home’s original character with these modern upgrades, and which element of the design do you think will win over the pickiest buyers?

Diego, looking at your Dallas new construction numbers, it’s hard not to appreciate the ambiton here. You jumped in at a $515k purchase and poured in close to a million in cash, then brought it all the way up to a nearly $1.85M sale. That’s a serious swing, and I’ve seen something a bit like this before with a friend of mine who tackled a teardown project in a quieter part of Austin. The key difference, though, was he spent months carefully getting to know the local architecs, reputable builders, and even a couple of niche design firms that specialize in modern builds for mid- to high-end buyers. In Dallas, you’ve got a range of local outfits who focus on new construction..firms that, from what I’ve heard, know how to blend contemporary style with the Texan vibe buyers love. I’ve noticed that in places like San Antonio or even Omaha, from what I read in Forbes, the best projects come from really tapping into that local network.

What you did..approaching the owner, closing fast, scraping the old structure..shows guts and a willingness to get your hands dirty. Numbers aside, what I really like is how you learned something as human and local as introducing yourself to the neighbors. That’s the stuff people gloss over in spreadsheets but makes a real difference in how smoothly a project runs. It’s not just about the profit margin or the cap rate; it’s also about building trust in the community. Sometimes those small gestures can save you headaches when construction dust starts flying.

I’m curious... now that you’ve pulled off this deal, how would you approach finding your next project differently, and what kind of local contacts would you prioritize connecting with first?

Ryan, this kind of deal reminds me of a situation a friend of mine, Carla, encountered a few years back in a suburb near San Diego. She had a client who picked up a leasehold interest in a shopping complex on land owned by the city. But in their case, the lease was long enough and well-structured enough that the income and stability felt almost like a normal acquisition.

In your scenario, the airport authority charging a rent based on a percentage of gross revenue isn’t unheard of, and from what I’ve read in The Economist, these ground lease structures can pop up in different forms. You need to make sure you understand every detail: how the lease terms adapt over time, what kind of negotiating room you’ll have when it’s time to renew, and whether lenders in your area are open-minded about financing these kinds of ground leases. Some lenders do see a 99-year lease..especially one that’s asumable..as pretty close to ownership, just with an asterisk. But you’ll want to do a little digging and maybe talk to a local lender who’s dealt with ground leases before, from what I’ve heard.

On the tax front, if you have the benefits and burdens of ownership for the structures, depreciation might still be on the table. That’s not guarenteed..talk to a CPA who’s handled something similar, as these nuances can get tricky. If the improvements were recognized as taxable property before, you might be able to keep the property taxes and depreciation setup. It’s a good idea to confirm you have a path to record title in a way that’s financeable, even though this isn’t a standard fee-simple sale.

The big question is whether it’s reasonable to pay a market-rate price when you’re not actually scooping up the land. Sometimes, yes. If you have a stable asset, predictable returns, and a lease structure that’s well-known and well-documented, a regular market valuation might make sense. But if the lease terms are murky, if renewal conditions aren’t guarenteed, or if the airport authority could dramatically shift the deal down the line, then you should be asking for a discount..or at least some protective clauses in the contract.

I’m curious... if you were to step into this kind of leasehold now, how do you think you’d explain the upside to your future buyers or partners when you eventually decide to exit?

Hey @Ryan Cousins

I know this post is a bit older, but I stumbled upon it while researching how San Diego's market trends have evolved. It's fascinating to see how much has changed since you posted this.. Reflecting with the beaty of hindsight, I thought it might be worth revisiting some of the strategies mentioned here to explore how they’ve played out over the past year.

For example, in early 2023, property values in areas like Bay Park and Clairemont were climbing fast, but they've since stabilized a bit. If you had managed to purchase in those areas back then, your cash-on-cash return might look quite different today, especially with rental demand still holding strong. A duplex or SFH purchased around that time would likely have appreciated by 5-10%, depending on the neighborhood, and rents in Oceanside and Carlsbad have continued to rise steadily, offering a solid ROI.

One client I worked with last year ran into similar frustrations with bidding wars. Instead of focusing solely on the popular spots, they expanded their search to neighborhoods like Linda Vista and Lemon Grove. The outcome was great.. they secured a mid-century home with a rental unit that offered both a comfortable living space and a reliable income stream.

On a personal note, a friend of mine made a bold move and purchased in a slightly less popular area. They were initially hesitant about Linda Vista but ended up loving the location’s convenience and rental potential. Fast-forward to now, and they’ve seen consistent returns while still being close to everything San Diego has to offer.

In hindsight, leveraging direct mail campaigns and off-market deals also proved to be a winning strategy for some investors. A friend of mine recently uncovered a pocket listing in La Mesa that hadn't even hit the MLS. They managed to close at a competitive price without facing a bidding war.

I’d love to hear if you and your fiancé found success since this post. Are you still searching, or did you pivot strategies? If you’re still in the game, has your perspective on neighborhoods like Bay Park or Clairemont changed? It would be great to compare notes - how do you feel about expanding your search radius or even considering new-build opportunities further inland?

Selim, first of all, congratulations on a profitable flip! I’ve seen many investors miss oppportunities when combining primary residence use with investment strategies, but you seem to have timed this perfectly. Living in the property for two years likely allowed you to claim the capital gains exclusion... up to $250K for singles or $500K if married. That’s a game-changer when it comes to flipping profits.

Your scenario reminds me of a client I worked with in San Diego who flipped a condo after living there for a couple of years. They focused on renovations that appeal universally.. think updated kitchens and bathrooms - and kept meticulous records of their expenses. Those records not only helped with tax filing but also guided future projects by showing what provided the best ROI. Did you notice which of your updates made the biggest impact on your final sale price?

If you’re exploring your next investment, it might be worth looking at markets where price growth is steady and flipping opportunities are strong. From what I’ve read in Bloomberg, markets like Omaha and Phoenix are seeing steady investor activity. What’s your strategy moving forward? Are you planning to reinvest your profits into another flip or something more long-term?