All Forum Posts by: Eric Martel

This is really specific to your situation so you should consult your CPA. Typically you can only use it to offset your passive income and not your ordinary income. Unless you are a real estate professional which basically you do real estate investment for a living. Even if you are not a real estate professional you may be able to offset your ordinary income up to $25k as long as your Adjusted earnings are less than $100k or something.

1. and 3. I am not sure about the carry it forward rules.

2. Stock and notes interest would most likely be considered passive income so you should be able to offset them.

Always consult your CPA because there are so many rules that may be true for one individual doesn't apply to another.

@Dan H. Let's help our friend @Rodrigo Serzedello who is looking to invest $200k today to get monthly cashflow today. I look for markets who are landlord friendly, with moderate growth so that the prices are not over inflated, with business diversification. Then look at data online to identify markets where the median price is near the 1% median monthly rent (the 1% rule). Finally you may to acquire multiple units with that $200k to minimize risks so that if one tenant leaves you still have some cash coming. For example, that $200k could put a down payment on 10 turnkey rentals sold in the $90k price range with a $900 rent and $250 net cash flow each property. Another option could be to buy 4 turnkey rentals in the $250k price range renting $2,000 cash flowing $500 per property. There are a number of markets where this works. I have a database of 400 markets with these metrics all compiled. If you are interested send me some specific markets you are interested in I would be happy to share with you.

I invest in Cleveland. Does that count?

@Dan H. Thank you for clarifying. That makes a lot more sense. Unfortunately I can't turn back time and buy property at 1999 prices. For properties I already own I also look at the return on equity as a key metric. You want to make sure you optimize that return as well. For example if you have $1M in equity in a house in San Francisco. The rent is $60k a year and NOI is 36k. Then you ROE is 3.6%. I can easily reposition or leverage that $1M and make more than 3.6%.

@Mitchell Wyatt The key is to find the right market for your strategy. If you are looking for cashflow with good returns like me I had to look outside of San Francisco. You can always make a property cashflow if you put a big enough down payment but the key is the return. There are many markets that can work for you. I do turnkey in Cleveland and Memphis and these are great markets for us. A property in Cleveland would cost $80k and rent for $800. Net cash flow of $250 after financing. PM me if you have any questions.

@Taylor Holden What is it rented for? Are you managing the property yourself?

@Eric Brunner You should find some PML who can led you the money. These PML relationships are always useful, especially if you are planning to acquire 10 SFR in the next 5 years. It also reduces your risk and increases your returns.

"It doesn't matter how much money you have, you are always short a couple of millions". 

@Dan H. Can you confirm something because these numbers are unbelievable? You purchased a duplex for $375k and you are getting $16k in rents? In SF Bay Area you can buy a $1M house and rent it out for $5K.

@Mendy Blasberg I will assume that by multi-family you mean 5 or more units. The 2-4 unit building are still considered residential and are appraised using comps which tend to be harder to find. 5+ multi family on the other hand are appraised using their "economic" value which basically uses the NOI and cap-rate. The cap rate is determined by market, neighborhood and property type. CoStar publishes a report every year on cap rate for the major us markets.

I agree with @Jeff Louis you need work with a property manager who knows the market and can guide you on what these units can rent for. Are they rented at market? How much rehab is needed to bring them the rent at market? Is it worth it based on cap rate?

Another way to look at it is by determining your target return. and ask yourself what price should you pay for this property in order to get the return that I want. The interesting about commercial real estate is that they don't always have an asking price so you have to offer the seller what it is worth to you.

Thank you for sharing your story @Annchen Knodt