All Forum Posts by: Kevin Longeuay

@Mike Neubauer thanks for the call today, you are a wealth of information!

@John Underwood makes sense, we're in a bit of a different situation as the inheritance is coming from a trust so the sale of the estate is out of our hands and is already in process. My wife and are trying to help her dad out and we're a little late in the game. Going to talk to an accountant to see if we can come up with some good tax strategies to buy some time. 

Sorry, phone posted this to the wrong forum

And looks like I may have been talking out of *** on the 1 year thing, thanks to a quick check on BP it looks like you have to identify a property within 45 days of the escrow closing on the original property. Definitely not going to rush into anything but will put more emphasis on me doing more research in the near term

@Michael Baum understood, we’ll be doing this under a 1031 exchange which I think gives us a year (another thing I gotta research) so hopefully we can wait a little until things return to normal

@Mike Neubauer thanks will definitely follow up!

Hi everyone!

Haven't posted in quite some time but my father in law is looking to use some inheritance money to purchase a property in Maui or Tahoe. He's looking at it for tax relief as well as being able to use it for personal use (he LOVES Maui) and it would be a short term rental property to cover costs but I want to make sure the numbers work out so that this doesn't end up sinking his retirement ship. I know zero about renting in Maui but we have a property in Chicago so we have some experience in rental properties although that is a long term rental. Some things we've recently discovered about Maui are 30% down lending requirements for rental properties, most SFH/condos can't be used as rental properties due to local laws, and hotel-type rentals usually require ~30% for PM fees (pretty high but it includes onsite front desks/house keeping, onsite maintenance, etc.). A lot of costs involved and I plan on factoring those in but where I'm struggling is how to realistically determine annual income for a property. Is there a good formula for annual income? Perhaps a simple nightly rental cost multiplied by a conservative number of nights rented/month? Some other questions to throw out there:

1. What are some common mistakes investors in Maui make and how can we avoid them?

2. Does anyone have experience purchasing rentals from large hotel chains on Maui? Specifially we're looking at Aina Nalu and Aston Kaanapauli Shores since we've stayed there before and enjoy the properties.

3. What are uncommon rental costs associated with Maui properties? I know HOAs can be very high but other than that and repairs/capex, anything else we need to account for? 

4. COVID-aside, how much variation have you had in terms of annual occupancy rates? I know this may be a large function of proximity to the beach but any data I can gather the better.

5. Along the same line, do you have a large variation in nightly rental prices based on the season?

6. Any weird tax laws to be a aware of?

I know this is a lot and I thank you if you've read this far! Any information/insights are greatly appreciated!

Cheers

Kevin

@Malia Irvine you mentioned you're an RN, do you contribute to a 401k? If so, you can borrow against that to fund your first property. Normal rules are 50% of the total value of your 401k, up to a maximum of $50k. You'll have to check with your 401k provider to verify though. This is the strategy I used to buy my first rental property. There's pros and cons to it but for me the pros heavily outweighed the cons. 

Good luck!

@Ryan Blake beat me to the punch on the taxes! I need to type faster :)

Hi Juan! Check the property tax laws in tarrant county. The current taxes are really low, only $1400 which is based on a property value of $65k. Different states have different tax laws, some which require the property to be reassessed for tax purposes upon the sale of the property (like here in CA) which would increase you're taxes pretty significantly. The tarrant county tax assessor site includes a tool that allows you to see what your tax bill will be based on certain criteria. If For your purchase price of $150k your tax bill would jump from $1400 to $4177 if you're not owner occupied or $3600 if you decide to live there and rent out the other half. Their website says that taxes are reassessed every year but doesn't say if it goes up on the sale of the property or not. Definitely something to look into as it would have a big effect on your ROI.

Also for the loan it appears you'd be doing a 3% FHA loan which would include a PMI payment. Make sure you add that in as well. For insurance, I just purchased a 3bed 2bath in Chicago for $135k and the insurance on that is $68/mo. If you budget $80 you'd probably be fine. You can always call insurance companies and get a quote even before you buy the property if you want a better estimate for your area.

I know the feeling! The dreaded "what do I do now?" question. I had the same thing when I started out and my next step was figuring out what market I wanted to invest in. I'm doing rentals so I don't have any advice for flips but I imagine the bare bones approach is the same. Start by figuring out what market you want to invest in and then start talking to people in that area to build out a team. This would include contractors (duh), real estate agents, attorney, and a lender which it sounds like you're already in the process of doing. If you know anyone that can refer you to specific individuals that would be better as prior performance is a very good measure of future performance (BP members in your area can help out tremendously). If not, make sure to interview a few different people and have a list of questions so you can weed out folks that don't provide solid responses. Also make sure you have your own plan ironed out so you can help explain to everyone what exactly you're looking for. Single family or condo? Price range for buying the house and price range for repairs? How big of a project are you willing to take on? Being able to communicate your plan to others will enable them to help you find what you're looking for and avoid projects that you're not interested in. Once your comfortable with your team members, you can start searching and looking at properties with your GC. 

That's about all the advice I can give on flips as I'm not familiar with them but I hope this helps! Maybe some of the flipping crowd can chime in with some more advice.

Good luck!