All Forum Posts by: Gabe C.

@Craig Moore Sure. I'm no expert, but I'm happy help where I can. PM away. I think the main ways to be aggressive when you're younger are with savings and allocation of your time if you are strong in deferred gratification. You can assume more risk as well, since you have more time to recover from mistakes, but I would focus more on the former two things personally.

@Craig Moore Ha! I was being hyperbolic. I should have been more measured with that statement. 20 years ago I would have taken way more risk, but you still have to be careful not to overleverage yourself. In 2008 I had a huge setback because I was cocky after some early success, overleveraged on some multi-families, and when the crash hit and rents cratered, my partner and I didn't have enough liquid to cover it. My partner went bankrupt and the bank snatched the properties back, gobbled my lunch and almost forced me to do the same. Huge setback, but a good learning experience. Just wanted to throw that cautionary tale out there to balance it. 

So definitely be aggressive, because you can be... just don't write checks you can't cash. I have a family to take care of now, so I can't run around guns blazin' like the old days. Hence my above strategy. ;)

@Van Flowers I've had good luck on the MLS so far. If a property cash flows $500 a month, I don't care much about realtor fees. I'm just curious what to do with deals that I can't act on personally.

I will investigate FSBOs though. Thanks for the reply!

@Anthony Gayden Yeah, working with family is definitely a fear, and I dislike the idea too. The situation with my mom is an insurance policy, so that she has a paid off place by the time she retires. You are also correct that this is not good business idea. For me, family trumps business. The alternative is to let them throw money away or stress themselves out trying to figure it out on their own. My grandparents are just physically and mentally unable to deal. The loss is minuscule to me compared to the costs I have in SF, and I see it as temporary sadly, due to their advanced age and deteriorating condition (my grandfather actually just had an ER scare yesterday, but they got him stabilized thankfully). I just want them to be comfortable. At some point it will turn into a cash flowing property because I will buy a place where the numbers work.

I can afford the down payment/closing without worrying about banks. My main concern was whether this was a legitimate thing to do.

Also, I don't think my mom would be psyched if they gifted me her inheritance. She would inherit the note the way I have it set up. :)

@Anthony Gayden I'd probably put 20% down like a standard deal, so there'd be some benefit to them there. They'd be getting 6% on their money rather than the .5% in their CDs. Nothing would be in their name, besides the note, so they wouldn't have hassles with taxes, etc. They essentially would be paying a fee to cover the property manager costs, but no matter what they do, they are going to have some of that. They also wouldn't have to deal with the home buying process, which can be very stressful.

There are other aspects that I neglected to mention, so that it wouldn't get TL;DR, but they want to get a duplex and have my mom in the other side to help them out. My mom is already renting a TH from me at cost, so she'd slide over and I could get market rent on that TH allowing me to bump up the cash flow to subsidize her half and potentially some of the PITI... depending on how the numbers worked out. I'm already taking a loss on my mom's place for her benefit, and don't mind doing that a little on this deal. I just can't go broke over it. :)

I'm a buy and hold guy in SF, buying in NC. Lately I've been running across some really good cash flowing deals on the MLS that I'm not in a position to purchase. I don't want to just watch them go by after spending the time to find/analyze them though.

If I had some private lenders lined up, I could just buy them, but I'm not in that position yet either. Would it be difficult to wholesale from distance? Is there another angle I could take?

I also thought of partnering with my agent. He could forgo his fee to get it a little cheaper, in exchange for splitting the wholesale commission with me 50/50. I'd find the deal and the buyer and he could do the boots on the ground work and signing. Does that sound legitimate?

What would you do?

Some great answers! For me it's all leverage until I hit a number that I'm uncomfortable covering if I suddenly had a ton of vacancies at once. When I hit that number, I'm going to start paying off a unit. When that's done I can add an additional property, and use the new cash flow to start the domino effect of paying units off faster and faster.  Rinse and repeat until I hit my freedom number. If I were younger, I'd probably leverage my brains loose.

My grandparents are in their mid 80s, sold their house last year to rent and simplify life. Their rent got jacked up because the market exploded, and now they want to live in a house again for rent control... but understandably want ZERO to do with taking care of it. They called me to see if I'd be interested in helping. I thought maybe this could work...

My grandparents open a promissory note to lend me the money to buy a house for them, and then move in. My property manager can take care of the place, absolving them of headaches. They would have to pay me rent to cover costs, but I would basically give most of it back to them with interest immediately (much more than they'd get on their crappy CDs) to cover the note. That seems necessary for the books to work, but sounds weird. 

Does this seem legitimate? 

i noticed there are three versions of this post. I answered one of the other ones. :)

I'm no CPA, but my understanding is that LLCs are pass through entities and don't really offer tax advantages. Their main purpose is for asset protection. (At a high level) The main financial implication is that you may have additional fees for the LLC. In CA for instance, there is an $800 a year tax.