All Forum Posts by: Kris Wong

Absolutely. However, if they know what they're doing, they may file the CDC paperwork, in which case your case will probably be delayed until after the new year.

I can't comment on your proforma rent estimates, but I can say your expenses are setting you up for failure.

#1 you are not accounting for management (typically 8%). Even if you plan to self-manage, you need to pay yourself for providing that service. It's extra work that you are performing. And your situation may change in the future.

#2 you are not accounting for vacancy and unit turns, which is one of your biggest costs.

#3 your maintenance number is totally unrealistic. Just because the building has been rehabbed does not mean you won't have maintenance expenses.

#4 Not including CapEx reserves will certainly end up burning you if you plan to hold the building for more than a couple of years (and may even burn you in the meantime).

And lastly, 7% is a crazy high rate in this environment. You should be able to find something under 4.5%. If you can't, that may tell you something about this deal (if lenders won't lend on it).

It's very difficult to find a cash flowing duplex in Austin when you are renting out both sides. I am not sure how you got the idea that you could cash flow positive while only renting out one side, but that is quite far fetched. You need to compare total cash inflows and outflows when you are comparing different strategies. In this case, how much would you be spending per month if you were to rent, or purchase your own home? How much could you cash flow if you used all your capital on an investment property that you did not live in? Which scenario seems to work best for you, all things considered?

Sprawl will increase for sure.
https://joefairless.com/people...

We will also continue to see folks leaving Cali and moving to Texas, Colorado, Arizona, etc...

Feel free to reach out.

The overhead associated with a series LLC is quite a bit less than multiple LLCs. I would definitely prefer it for the simple purpose of holding investment properties. Just make sure your books are clean and that each series operates independently.

In terms of transferring the properties, you'll need a title company/attorney to draft warranty deeds transferring title of each property to the new series child created for that property. Assuming your entities are taxed as disregarded entities, there are no tax considerations in doing this. However, you should at least run it by your CPA to ensure they're in the loop first. Since you already own properties in an LLC, I assume you are familiar with all considerations for doing so.

An investment that produces positive cash flow is an asset. An investment that produces negative cash flow is a liability. Which would you prefer in your portfolio? You state that your goal is to live off of cash flow, but it's hard to do that if you're starting off negative. That said, Killeen/Temple is not an easy market. You can make money there, but the management will likely require more of your time than others in Austin. I recommend you speak with someone who's successful there before committing to that idea.

@Akshay Vig mostly just stay out of the D class areas, like anywhere. If you're looking at a 9 or 10 cap, you might want to reconsider. There are "good" and "bad" areas all over town, and it can really be block by block sometimes. Parts of Avondale, Bond Hill, Roselawn, Winton, Evanston are all areas I would avoid. A good portion of the Westside. Also, be careful in uptown. Check city-data.com for any given neighborhood. It's free!

If you want truly passive income, then I suggest you find a trustworthy deal sponsor and invest in syndications. This will enable you to invest in any markets those deal sponsors are targetting. If you want to buy and hold your own properties, then you need to be prepared to build an equally trustworthy team on the ground in your target market(s). There is no "best" city. There are certainly cities that will be better aligned to your goals, but at the end of the day target areas of economic growth and you will be enabled to be successful.

Invest in growth areas. I am investing in Cincinnati personally, but I lived there for 30+ years. Property taxes are included in your financial analysis, so it doesn't really matter what the percentage is at the end of the day. What matters is the returns - both IRR and CoC. If you can achieve your goals by investing in a certain area, then it doesn't really matter the size of each line item in your model (as long as you've factored everything in).