All Forum Posts by: Account Closed

How are prices in Bastrop? Can you hit the 1% rent rule on buy and holds? Is there Cash-Flow?

@Josh Goldstein what is the difference in rents here? Are we talking $50? $100? If so, then maybe it's OK to keep the rents the same if the numbers still work. This will allow you to gradually increase them over the next few years without them really feeling a pinch.

However, if the rent disparity in what they are paying versus Market is significant, then that's on the previous owner for not properly managing the residents. It isn't your fault they are in the situation they are in. 

Here's the thing. Let's say you realize you can't do it so you pass - and you feel better about yourself. But then, another investor comes along, buys the units and raises rents immediately. Some tenants stay and pay some move on but in the end everyone is still well and alive - but you lost out! Part of being a landlord is making hard decisions.

I understand the dilemma you perceive yourself to be in, but you have no responsibility towards anyone other than as a landlord and as required by law. Raising rents on tenants who have been paying under market for years, elderly or not, is not immoral. Just be prepared to offer options or referrals to services that may help. 

@Josh Goldstein It may be as simple as bringing on a Property manager, if only for a year, and instructing the manager to immediately raise the rents. This is the best way to insulate yourself from any difficult confrontations/discussions with residents. Just be sure your rents are in line with market. Let the Property Manager be the Sin Eater. 

@Justin Guidry how far is the facility from any major city? The only concern I would have is that it was originally an ALF but was converted into apartments so that suggests that the market could not support the business as running an ALF can be costly. Just my opinion, but if I were going to start an ALF I would find a company that manages them (i.e. all the hiring, scheduling, etc) so practically everything is outsourced. At the very least, you can consult with them and ask about their services and what the state requires to get an idea of what you would need to do without hiring them.  Also, depending on how long ago the site was an ALF you may need to make updates due to code changes. Best of luck!

At what point is it determined, in the eyes of the IRS, how to tax a flip? For example, if we buy a property with or without the intent of renting it out, and after rehab we place a tenant in the unit, can we sell it as a buy and hold and pay capital gains tax instead of income tax?

@Lexi Teifke how do you source your deals? Are you doing the marketing or using Wholesalers? 

@Lauryn Meadows Since this is a commercial deal, I believe calculating the ARV should be pretty straight forward. First, determine what market rents and vacancy rates are in the area for comparable units. Then, calculate NOI as accurate as possible with what you know. Finally, use CBRE's 'Multifamily Cap Rate Survey First Half 2018' report to determine what cap rate stabilized properties of similar class are trading for in your area. Finally, divide NOI by cap rate and there you go. 

Best of luck. 

@Dmitriy Fomichenko @Mark S. I called my plan administrator today to re-confirm what I was told. I believe there was some confusion on my part initially. I've been informed that, while I am able to roll funds into the plan and take loans against the funds in the 401(k) account, I cannot make direct contributions. However, I can make contributions via a back-door rollover simply by contributing to my pre-tax IRA account and partially rolling those funds into the 401(k) account. .

@Vanessa Allsup my rentals are in Bossier City, Louisiana. I can pick up SFH rentals that rent for 1%-1.25% ARV all day long. It's also the fastest growing city in Louisiana. My properties are all B class (no section 8).

I self manage my two properties from 6 hours away - and that's one way. When something happens, i have the tenant text me photos to assess the situation better and then i just call the local handyman I have a relationship with in the area. I spend no more than 15 minutes or so on these ordeals. Since the properties are in the same town as family, I'll just drop by to check on them when I visit