All Forum Posts by: James Triano

@Kathryn Bowden

This scenario is not actually much different (albeit I had less liquid cash) than my own personal situation. Here is what my current strategy is:

I have one rental property (SFH) which is getting my feet wet in residential property investing. I have developed numerous system through reading (BP books, and forums) and by trial and error. You can use a portion of your money for a down payment on a 1-4 unit building as your first rental. Use this time to develop systems and build relationships with property managers and local contractors. Then play Monopoly and move up to larger properties and increase your portfolio.

Simultaneously, flip a house. You can use your funds to buy a property in disrepair for cash either on the open market or at a sheriff's sale or the like. This, again, will allow you to build systems, relationships and a business in flipping houses. Your goal here should be a 20% cash on cash return for your flips (since you say you have experience, this should work).  Then, use your profits from flipping to buy another rental and so on. 

Of course, this is just my own personal strategy. My goal is to flip 2 houses, buy 1 rental, flip 2 houses, buy 1 rental in perpetuity until I have enough income from the rentals to retire on. It's a slow process but I believe it's going to be the best way for me to go. Plus, it's going to be fun, I simply enjoy the work I'm doing in real estate right now. 

@Amber Landry

This depends on many different factors and as @Lance Lvovsky mentions, it also depends on what your entire financial picture looks like. Is this your only retirement account? Or is this just one of many? What are the types of investments this IRA is invested in?

I'm actually thinking this is probably a Tradiitonal IRA that was opened with a bank and is just sitting earning very low interest like a savings account. My wife had one of those and we rolled it over to Vanguard and purchased some low cost index funds. There are many options here but it depends on what your overall picture looks like.

@Shalabh Jain

It's been a while since I've posted on here - largely because I've been busy with this particular project, among others.  This worked out very well for us.

My experience was actually in the Greene County Sheriffs Office which is about 40 minutes south of Pittsburgh.  So, unfortunately, I can't help you with the Pittsburgh office in particular.  Answers to your questions are below:

- I did not get title insurance on the property.  I had my lawyer (a trusted source) do a full title search for us BEFORE I purchased the property at the auction.  I was able to get the list of properties for sale and had this one search before stepping foot in the court house.  This title search came back clear and the only lien on the property was the current mortgage which was being foreclosed on.  

- The Sheriff Office provided the deed upon full payment of the auction price that I bid which ended up being about 30 days after the auction.

- No problems have come back to haunt us.  I believe we were very diligent up front on this and we should be just fine.

- They stopped below the judgement value because the property simply was not worth that much.  They sent contractors in to estimate repairs (interestingly I talked to them, but that's another story) and based on the repair estimates they knew they would not be able to get enough out of it to based on the amount of repairs needed - the house had been vacant for some time.

Hope this helps.

@Barshay Graves

I would be very hesitant buying a rental property with hard money or a credit card.  The interest payments will be extremely high for a buy and hold investment as the cash payback is slow.  Do you have a very strong re-finance strategy in place?  Otherwise this may not be a very good idea. 

I'm a bit conservative when it comes to these things so when I hear "buying a house with a credit card" for buy-and-hold, I tend to disagree.  I am currently flipping on a credit card BUT I have all the cash in the bank and it's only because Home Depot provides such great financing terms (0% for six months).  

Lee:

It sounds to me like maybe you don't really need a property manager.  What you might really need is someone who will be on-call to handle maintenance issues.  Believe me, I understand that you don't want to go fix HVAC units and refrigerators on the weekends.  I don't either.  However, I also don't mind doing the bookkeeping, taking phone calls, and am not willing to give up 10% of my income to someone who will not treat the property like it's my own. While my business is less than half the size of yours, here's what I've done:

1) Out-source maintenance - find someone in your area (a general contractor, carpenter, handy-man, etc.) who is willing to work on a per diem basis anytime there is a maintenance call.  I've worked out a deal with a local guy here and it's gone well.

2) Document all of the other admin stuff - create some processes and systems in place so that the bookkeeping entries, phone calls, rental and showing process, etc. can all be outsourced at some point.  For you, that some point may be now.  Get a virtual assistant and answering service to handle some of that for you.  The main part of your job now would just be re-renting your units.

3) Build up and become the management company that you can't find.  Because your portfolio is getting large enough, it may make sense to hire someone, even part-time, to be the beginnings of your own management company.  Even if you only ever manage your own properties, this could really help since you have the experience already of managing your own units.  

This is the direction I'm going in long-term.  I haven't found a very good management company either and so I've decided I'll just become one.  It certainly won't hurt to look into larger apartment buildings as well and using your own management company may be something that can help.

@Douglas Orr

@Natalie Kolodij is correct.  1031 Exchanges are meant to defer long-term capital gains and can't be used for a flip (unless you're taking 2+ years to flip a property?). Flipping is not really an investing activity according to the IRS, it is treated as a profession and as such, you're going to pay income taxes on it.

@Anthony Kondor

It sounds like you really need to systematize your business.  Assuming you've done all the work in the past, you need to sit down and write out all of the tasks you complete.  Like a very detailed job description of all of the tasks you do, the work you complete, what tools you use, etc.  This way, you will find out who you need to hire and what help you need.  

It also sounds like you really need to do some trial and error on the marketing side.  I'm by no means an expert there so it might serve you to post some questions about marketing in the wholesaling forum or do some searches here on BP.  

Read the book "The E-Myth Revisited"... this book was essential to me setting up the framework for systematizing my own business. 

@Gunnar F.

Unfortunately, you're right.  There aren't going to be many folks out there who offer advice without trying to sell you something.  One thing I've done, is just voraciously self-educate.  I've read tons of books, blogs, and attended webinars on personal finance strategy and even corporate finance strategy as they're both the same just on different scales.  Feel free to PM me and I can give you some things to check out and let you know my overall strategy.  

@Brandon Eleazer

I think that's a pretty decent strategy but if your partner isn't buying into that, it's going to be a struggle.  I am very much like you, very type-A personality, and I like to be very organized and systemic in my planning and decision making.  Unfortunately, for every one person like us, there is someone who will procrastinate and firefight instead.

The time blocking may work, however, one strategy that I've employed instead is just a weekly/twice per week face-to-face meeting or phone call.  This just lets an open issues accumulate into a one-time meeting to walk through everything.  Again, this may be tough unless your partner really buys in but it's the most effective way to do it, in my opinion.  

It's a great strategy but it will work 0% of the time without 100% buy-in.

@Jens Nielsen

The roof should definitely be added to the cost basis of your property.  The other repairs will depend.  Where they actual repairs to damaged property or were they improvements to increase the value of the property?  If they were the latter, then they should be added to the cost basis and depreciated.  

As always, you should check with your accountant on this.