All Forum Posts by: Greg Scott

I recommend you check out Lifestyles Unlimited.  The organization has been around for 35 years, so clearly they are doing something right.

They have a huge group of members in San Diego.  Many of them came up for the class I taught in Anahiem earlier this year.  I know a lot of them well.  Some of them have also invested with us.  That same class is being taught the August 2 weekend (not me sadly).  Most of our San Diego members are investing passively in apartments across the US.

You can sign up for the basic, 1-year membership to attend the upcoming class at givemetotalfreedom.com

Small apartments can often be found on the MLS because those owners aren't really in the game.

FWIW, BP uses the term "Small Multifamily" for 2-4 units and anything 5 units or higher BP calls "Large Multifamily" because they are commercial apartments.  I prefer using "plexes" for duplexes, triplexes and quads because they are all valued using Comps.  I like "small multi" for apartments 50 units or less because they operate very differently than larger ones.

Having the data in another country would prevent the US government from forcing you to wipe the data.  However, it would not prevent someone from suing the landlord.

I love the idea and intent, but in a world where the government is sealing eviction records, anyone associated with that system would come under attack.

If you have tenants move out, you will have vacancy.  You said $7,000 per month rent for four tenants.  If you kick three out, and it takes you a month to get a new tenant in, that right there is another $5,250 of negative cash flow.  ($7k/4*3=$5250)

You are also going to have to turn those units.  Paint and carpet alone is probably going to run you about $3K per unit, so about $9K.  Now we are up to $14,250.  I'll ignore turnover in future years, but you should have a contingency for that too.

If were OK keeping rates way below market, it is easier to keep it 100% full.  If you are going to try to keep rents at or near market, you will have turnover.  If you assume ONLY 5% vacancy every year, that is ($7k*12*.05=$4,200 per year)  FWIW, I never said 5 years. Let's just look at 3 years and ignore the first year since we've already accounted for that.  $4,200*2=$8,200  To be safe, you would really want to use a higher vacancy factor.

And, remember, you were already going to lose $315 per month at market rates, which is $3,780 per year or $11,340 total.

By my calculation the total negative cashflow in the first three years is closer to $5,250+$9,000+8,200+$11,340=$33,790.  So, to hold this property, you had better have at least another $35K in the bank today an expect to feed it to the property over the next three years.  

You did not say if you had accounted for any of this in your numbers so I assumed you had not. This is why I do not like this deal.

In my opinion, the best strategy is to do BOTH!

I love finding deals below market.  If I sold them quickly, I would get a nice short-term profit.  However, I don't do that because then I would get killed on taxes.   

By holding you can take advantage of significant tax benefits.  (My tax returns are squeaky clean and I haven't had to pay Federal income tax in a number of years!)

But, hold too long and the equity gets lazy.  At that point, you need to refi or sell to keep the money working hard for you.

 @Wesley W. Makes a great point that didn't even cross my mind.  There are no ESA protections for a guest!  

Just one more reason to fire you property manager.

Please ignore a "call me'", "call me" from a 1st time poster in BP from Florida on this issue.

If you have been curious how people have achieved financial freedom through buy & hold real estate, you will want to attend this event. I am very excited about this upcoming gathering in Nashville because we have some amazing presenters. Normally, you have to be a member of Lifestyles Unlimited or one of their guests to attend. I'm offering to let you come as my guest as I will be the MC for the evening. If you wouldn't mind, please DM me on BP that you want to come and I can make sure your name is on the list.

What is being presented?:

Single Family - A couple from Hawaii has bought 5 single family rentals.  The one being featured is in Tennessee.  Guess what?  This couple has never been to Tennessee.  If they can do it, why can't you?

Multifamily - Another couple from Houston has been buying apartments in Tennessee with amazing success.  They have roots in Tennessee, but still are making it work from afar. 

Come see how to start changing your life!

I hope to see you there.

Yes.  It is a great way to accelerate the start of wealth-building.

There is not nearly enough information to make a fully-informed decision.  Based on what is in here, I wouldn't buy it.  

1) Your forecast to get to fully-leased at market rents could take weeks or months.  Can you float another $20K-$30K of negative cashflow?

2) I wouldn't buy in areas with rent control laws

3) Forced appreciation may require investing more in upgrades.  I'd want to see cost / benefit of achieving that.  If you are counting on natural market appreciation, that is something you can't count on. Nobody can accurately predict when or where appreciation will happen.  In this very forum, about three years ago, I argued that same point in a discussion about Austin TX and most argued against me that Austin could only go up because of tech jobs.  Guess what?  Austin is experiencing one of the biggest declines in values right now.