All Forum Posts by: Jason Turgeon

Check out the Institution for Savings. They usually match or exceed any other rate, and their customer service is outstanding. https://www.institutionforsavings.com/

You didn't talk at all about cash flows, or whether you want to do rehabs or just buy turnkey properties, or any other goals. What is it that makes you want to sell the property you have now, and what are you hoping will be different if you reinvest the money elsewhere?

I am in a similar situation - we have a rental that we used to live in, planning on selling soon and using the proceeds to buy more property elsewhere. But our motivation for selling is that I am just not making very much in income compared to the amount we have in equity, and I think I can get a better return elsewhere. Plus I want to pull some of the equity out to pay down personal debt while I am still in the no-capital-gains tax period since we lived there, so I need to sell now to take advantage of that.

Give us more details and you'll get better responses.

Landlording is simple. You do what you can to find the best possible tenants. Then when you have good tenants, you do what you have to do keep them there. 

How do you find great tenants? Offer a great product, and screen your applicants.

What is a great product? One that is priced 3-5% below market in a good location in a decent neighborhood, that is spotless and in perfect condition, with small upgrades that don't make prospective tenants feel like you picked the cheapest thing on the bottom shelf of Home Depot at every opportunity.

After that, things get murkier, because now you get into market segmentation.

If your product is a studio apartment in NYC, you need to be adding stuff that will appeal to the kind of person who is going to be looking for that. Someone who is sick of roommates and making just enough money to get rid of them, but not doing well enough to have a proper grown up apartment. So you put yourself in their shoes and say, "how do I make this studio apartment feel less like a tiny box?" Maybe it's updated light fixtures, or a great storage cabinet from Ikea that makes up for the small size, or something like that.

If your product is a 3/2 SFH in Corpus Christi, who is going to be looking at it? Probably younger couples, maybe with kids or dreaming of having kids. In that case, kitchens and baths make a big difference. You don't have to have granite to make them stand out. Make them spotless (hire maids). Upgrade the cabinet hardware. Add a nice tile backsplash. Upgrade the kitchen and bath faucets. Make sure the floors are gleaming and the paint colors are on trend. Make sure the rooms are brightly lit, not dim. Make sure the yard looks gorgeous, without spending a ton on landscaping. You want the kind of small touches that make people feel like it's just a little bit nicer than everything else they've been looking at and is a great value.

Once you have the place dialed in, spend a few hundred dollars getting professional photos taken. You can reuse them every time you need to list the place, and since almost everyone is shopping for places online, photo quality counts. No, you cannot get as good results as a pro using your phone or point and shoot. You need a real DSLR, real lighting, real lenses, and lots of experience. 

Looked on MLS, not a ton of stuff out there. No active 3/1 listings. 1 under agreement, listed at $1800. 3 rented in the last 6 months, at $1300, $1600, and $1700. 1 expired, at $1200. If you can find a way to add another bath (or even a half bath), rents for 3/2 units were a bit higher ($1900 and $2100, also not a ton of inventory to look at).

I'd expect the stuff on craigslist to be a bit cheaper, but also a bit more run down. All the properties I saw on MLS were in decent condition and good size. I don't know the area, can't speak to neighborhoods.

First, get an accountant. You can still do your own bookkeeping throughout the year, but you need a professional to help you at tax time.

Second, if all the properties are schedule E properties on your tax return, just assign the skid steer to one of the ones that is in service and take the whole deduction. Even if you get audited, what is the IRS going to do? Ask you to prove that you only used the skid steer on that one property? Besides, you are legitimately using it for business. They really don't care if you use it on all your properties. No one is buying a skid steer for personal use and trying to write it off as a business expense. Same with the other stuff you buy for legitimate business use across multiple properties. Spread it around to maximize your deductions.

Third, get an accountant. Some of these things are equipment that needs to be depreciated, not supplies. But some equipment can be depreciated all at once with section 179, and some needs to be done on a schedule. And my advice above could be completely wrong, because I'm just some random guy on the internet who's not an accountant.

Possibly, but scheduling is always a challenge for me.

@Jim Cummings easier said than done. I'm a highly specialized professional in a very niche field. I've been looking for work elsewhere for over 6 years and have found it is very hard to get out of what I'm in now. I actually have two different opportunities now, but one of them involves a massive pay cut and I would have to do fundraising (nonprofit sector job), and the other one is a 6 month rotation to another office where I get to try something new. The former is in my field and would be a lot of fun and have great flexibility. But I'm leaning towards the latter even though it means I end up back at my original desk job in 6 months, because the 6 month gig may allow me to learn more about commercial real estate and set me up for better long-term goals, and there's no pay cut.

As for lifestyle changes, the goal of real estate is to not have to go back to rice and beans. We could sell the rental, pay capital gains, and wipe out our entire debt load except for one mortgage. We'd still have a nice chunk left over. My wife's salary and the rental income from the other half of our personal residence could cover the basics, but we would have to cut way back. I could quit tomorrow. I just don't want to take the lifestyle hit. I LIKE making big stupid art, traveling, going on vacation, and still having enough left over to aggressively save for retirement and our son's college education. The income that funds those things is what I am trying to replace. 

I also want to raise enough capital to finish the exterior of our money pit. Again, I don't have to do it - we could leave it as is, or sell and move somewhere cheaper. I WANT to do it. But no amount of lifestyle changes or pay cuts is going to produce the capital I need. That's what real estate is for.

Some due diligence for you:

http://www.nabbonline.com/

https://www.cityofboston.gov/images_documents/Back...

https://www.bostonglobe.com/business/2019/01/15/th...

https://www.boston.gov/historic-district/back-bay-...

http://www.nabbonline.com/files/Introduction_to_th...

@Lee Ripma the rules are different for owner-occupied mutli-families. I can pull out some of the money tax free, but not all of it. I expect I'll end up with about $125-$150k that needs to go into the 1031 fund and the rest I can pull out. With the HELOC paid off, that gives me another $125k to play with and the remainder I will use to pay down other debt and improve my cash flow.

Midwest is on the table. Looking for metros that have strong fundamentals but are still reasonably priced. Most of the Texas cities except Austin, Kansas City, Indianapolis, maybe Buffalo. I'm open to suggestions, bonus points if there is a non-stop flight from Boston. 

Browsing the MLS, I've seen a few listings for commercial properties with verbage like this:

"The property falls into the Medical Marijuana Overlay District for the City of Brockton!!" 

"zoning just approved for retail cannabis store located on this parcel. additional acreage available. 3 retail marijuana licenses available."

Currently there are 13 properties on MLS that mention the word "marijuana."

I'm curious as to what the ins and outs of being a marijuana-friendly landlord in Mass might be. Is there an easy way to figure out where the zoning allows for these businesses in all of our 351 cities and towns? Does being pot-friendly give a landlord a better return, or better tenants, or some other benefit? Are there financing, legal, or security issues to consider? Are there any real estate lawyers or lenders who are specialists in this area yet? 

In short, is it worth it to pursue this as a sub market now that pot is legal in Mass and people are opening businesses around its use, sale, cultivation, testing, etc.? I'm thinking that properly done, this might change the calculus on commercial buildings in otherwise marginal areas.