All Forum Posts by: John Nachtigall

You an invest in a high yield bond fund that returns 6-7% with zero investment of time, effort, or education.   Why would you buy an out of state property, with all the related risks, when you can get a similar if slightly smaller yield on a completely liquid investment?  The risk reward return is not worth it.

i used Kevin Hoag, Farmers Insurance for my rentals in Cleveland.   They specialize in rentals which is nice.  You can find them with a quick search.  Good Luck

I own 4 properties (8 doors) in Cleveland for 3 years and used Holton-Wise from the beginning. I can relate my experience which has been good.

First, I would say the most valuable service that James provides is his property analysis.  For a few hundred dollars he will honestly analyze any specific property for neighborhood quality, condition, prospective rent, etc.   it is invaluable for a remote buyer and is sold ala carte so even if you don’t use any other services I would use this for any property you are going to buy in Cleveland.  It simply makes remote investing possible and significantly reduces risk.  

I also used the companies real estate agents to buy the properties, manage, and even provide insurance.  They take care of everything except the utilities.  All repairs and construction, tenet management, etc they take care of, for a price of course.  I have always received prompt service and any issue have been resolved well.

I specifically own in class B area which exchanges some cash flow for easier tenets and less drama and I have been very happy with that choice.  I had full payment during the pandemic and very few tenet issues in 3 years.

On the downside, If you are looking to maximize your return then I would suggest you will not be happy.  With 10% management fee plus fees for tenet placement and profit for repairs/construction you could manage it cheaper on your own.  But without these service I would not be able to own remotely at all.  I would never put the effort into remote landlord if that would be required and even if I did I doubt I would be successful.  So it is a perfect service for me.

In summary, I have been very happy with the company.  They helped me pick, buy, renovate, rent and mange 4 duplexes with me providing minimum effort.  I hope that provides at least 1 perspective.  Good luck

Your problem is not that you are a do-nothing loser, your problem is that you are (1) disorganized and don't understand risk (2) in love with the theory of financial freedom, not the reality

Regarding the first problem. There is a set list of things that need to happen for you to become a real estate investor. Depending on the area you invest (long term rental, short term rental, BRRRR) that list has a lot of overlap and is pretty undisputed. For example, before I started buying remote long term rentals

- Eliminate all personal debt, set a limit on what part of my wealth I want to invest

- Educate myself on long term rentals

- Obtain a HELOC so I have additional capital, opportunities (this was the part of my wealth I was investing)

- Find a property manager

- set property requirements for properties

- analyze properties, etc...

It is a step by step list of what has to happen in order to achieve a final goal, in this case of owning a set number of long term, remote, hands off rental properties. Implicit in this list is an acknowledgement of the risks and benefits and tradeoffs of this plan. Again as an example, the benefit is a regular monthly income in retirement, the risk is that the cost of ownership will be more than the revenue (mitigated by using only 1/2 the HELOC so a lot of capital remains), and the tradeoff is that I am leaving money on the table by paying off the mortgages in 10 years (to increase cash flow) and that by using a property manager I am hands off, but I am not maximizing returns. In short, the longest journey starts with a step and a map. Create the map and start taking steps

When you write down the risks (fears) you can define and mitigate them.  That changes it from an emotional decision to a logical one (yes I am an engineer).  Once you have them actually in front of you you can mitigate them or accept the them.   I was not thrilled that I had 6 of 8 doors that I bought in renovation when COVID hit.   But while no one planned for a global pandemic, I had capital reserves in place for the unexpected, which it turned out I didnt need and they rented just fine.  But without that mitigation and planning I would have been reacting emotionally instead of logically.  I have fears like everyone else, the difference is I thought them through beforehand.  

Regarding 2 you are reading these books and they are "building the why" inside of you.   If you want to convince someone of something the first thing you do is "build the why".   Tell people why they should love it.   Passive money, spend time with family, use other peoples money....it all sounds great.    But if it was easy then the vast majority of workers would not get all of their income from W2 jobs.  The truth is that it is hard, risky, and requires discipline.  It is much harder than just having a job, that is why 99% of people live off jobs and very very few invest and quit.  

In a country where 60% of people dont have $1000 in cash it is blatantly obvious that most people are unsuited to try.  I honestly tell most people to just invest in an S&P 500 index fund for 40 years and work your job.   It is a lot easier and has a much higher chance of success for most people.   I dont know you, only you really know you.   So decide, are you the 1% that is willing to work harder, risk more, and remain disciplined to succeed.  Is the "why" enough to get you to take the risks and make the sacrifices?   The stats say no, the stats say you are just a guy with a dream but no ability to do it.  But while it is statistically rare for lightning to strike, it strikes the earth every day.   Are you that rare occurrence.  

Good Luck, I hope this helped you think about your problem in a different way.  

It is an interesting question, my thoughts

Legally and ethically you are not required to pay more than the law requires.   You are not "cheating" my following the laws.

Morally you would have to ask yourself if paying "more" taxes would somehow benefit those less fortunate.   In fact I would argue that morally the "rich" are paying well beyond their fair share.   For example, the top 20% of earners pay 80% of the tax revenue for the federal government and the bottom 50% pay nothing.   Now I receive exactly the same about of services from the Federal government as someone who pays no federal tax.   We both get protection by the US military, Social Security, access to welfare if we are poor and access to courts as examples.   So I am paying 75k+ per year for those services and they are paying nothing.  I dont begrudge it, but I certainly don't feel morally deficient.

I think what you are really asking is should the system change, and that is a question about democracy.   Despite what everyone tells you, everyone is getting exactly 1 vote.   The frustration with those that want to go to a system more like the Scandinavian countries (Democratic Socialism) is that they can't get the votes.   They talk about people "voting against themselves" and other nonsense.  The truth is that the majority of Americans, regardless of income, prefer a smaller government and a smaller tax bill.   It could change anytime, but the votes don't exist.

So to answer your question, no, you are not legally, ethically, or even morally obligated to pay more taxes.   And if you feel the existing system is unbalanced or unfair then simply vote, advocate, and maybe even run for office to change the laws.   Nothing is stopping you other than convincing a majority you are correct.  

Good Luck.

Why is it that everyone extrapolates the future from the near term past instead of learning from history.    

https://www.nytimes.com/2005/1...

Las Vegas.   Housing prices doubled from 2000 to 2005.   Just 2 years later the unabated growth was no longer a problem and people were talking about if the city could ever recover (spoiler, it could).

Austin will correct just like every other real estate market since the dawn of time.  Either by price collapse or by increased supply.  

what do you expect with logic like this

https://www.governing.com/asse...

But the most compelling case for rent regulation goes beyond the research and the statistics. It is that continuity and stability are vital elements of any neighborhood’s social health. They are weapons against the alienation and loneliness that prevail in any community in which nothing, not personal relationships nor physical familiarity, ever seems permanent. J.W. Mason put it eloquently a couple of years ago. “I don’t see security of tenure for renters as charity for the needy,” he wrote, “but as a basic feature of a civilized country.” I can’t say it better than that. Most economists don’t get this, and never will, because they can’t slap a number on it.

They know it does not work.   They are willing to pick existing renters over everyone else so they can feel morally superior.   Never mind that those renters kids will not be able to find an apartment when supply dries up.   Or that it will degrade the housing stock like New York in the 70s.   They can claim that the stable, non-gentrifying city has equity....as it falls into decay.   All renters will be equally poor and miserable.  

This is not directed at the OP in particular but I don't get the logic of offloading maintenance to tenets.   Isn't that the whole point of renting, you pay for the convenience of not owning the problems.   Maybe we are talking about a different class of rental but when I rented, class A,  i would have laughed if they said i was responsible for maintenance.   That is the whole point of renting.  

I think the issue here is that you seem have a fundamental misunderstanding of what the courts are responsible for.

The courts (judges) are non-biased interpreters of fact and law (findings of fact, conclusions of law).   They are not quality control.   When the bank foreclosed, it is not the court's responsibility to double check their work, especially if it was uncontested.   The bank was required to attest that they followed all the rules and the bank said yes.   In fact I bet the bank is still saying yes.    The other party in this matter is now saying no, and has to prove that in court.  The judge only gets involved if there is a dispute, in the original foreclosure there was no adverse party so there was no opposing viewpoint.   The judge can't look at the bank paperwork and say "hey, you did not do your face to face meeting, no foreclosure".   That would not be acting as a lawyer for the other side.  That is the definition of bias.   And nothing you have said convinces me the bank was wrong.  If they prevail in the lawsuit everything they did will be vindicated.  And the former owner has their rights under the law to challenge it.   

You took a risk and bought a foreclosed home with the previous owner still in place.   You thought you accounted for all the risk (eviction) but did not consider an appeal to the foreclosure.   You stated yourself you did enough due diligence you were comfortable the foreclosure was valid.   So you considered that risk.    So now that the risk is realized I can understand why you are upset, but you can't claim it was an unknown risk.   

It seems like your real problem is that the 1+ year it is going to take to resolve this and the fact you can't influence that timeline.  You say the matter is being handled "terribly" but I just don't see it.   Seems like everyone is doing their job here and the known risk you took buying the property was realized.   I am not criticizing, I understand why you would be frustrated, I just don't see why you think anyone is not handling this properly?

@Eric Oneill

I know this may be surprising, but I would not encourage you to invest in real estate at all.  I would say open a brokerage account and buy $100,000 worth of S&P 500 index fund.   For example in Schwab it is SWPPX.   Check the dividend reinvested box.   They probably wont even change you for buying the shares.   Then wait 30-35 years, dont look at it, dont pay any attention to it, just forget about it.   In 30 years with an average 7-10% return you will be getting 700k to 1.7million.  

That plan requires zero knowledge.   There is no chance Schwab (or Fidelity) will steal your money.   As long as you don't try to time the market or care about when the market "crashes" you will just set it and forget it.  The S&P 500 index has a 100+ year history of returning 10% (dividends reinvested).    Sure there will be years it falls a lot, but also years when it goes up even more.  With a 30+ year investment horizon you dont care.  There will be no fees, no continuing costs, just compounding interest.  

Investing in real estate requires a lot of knowledge, time, and effort.   It also has many risks.   Risks of loss on the investment.   Risks of getting ripped off by people who look for newbie such as yourself.  Execution risks.   Don't try and maximize return or get cute with this money.   With your long time horizon to retirement (30+ years) you can get a great return with almost no risk.

Good Luck