All Forum Posts by: Llewelyn A.

I have been owning and self-managing Brooklyn, NYC Properties for 28 years now.

I want to start a YouTube Channel where I give weekly Podcast Discussions on the Management of the Week.

For instance, I have a couple that is splitting up. The Husband sent me a text telling me that he's giving me 6 weeks notice and I should work things out with his wife. He believes he can wash his hands in regard to his obligation to pay the rent by giving me notice.

When I get started with the YouTube Podcast, I will take things like this and begin to unfold the Story and follow it to it's conclusion. There will be multiple issues unfolding at the same time as there are always something going on!

In all my years of Property Management in one of the most tenant friendly Cities in the World, I bet there will be a lot of interested people, regardless if they are actually planning on buying in a tenant friendly City.

My management style would be considered highly unusual as I approach these issues so that it becomes a win-win situation and take into account the human element of the tenant.

There is potential for me to add more to that Podcast to include how the Portfolio did over the 28 years growth period (1998 to 2025) with real numbers.

There will be things like making the Portfolio safer as I age by paying off the Mortgages and increasing cash flow, etc.

I'm also a Cloud Software developer (Salesforce specifically) and will be employing a lot of A.I. in 2025.

The RE Portfolio is cash flowing very well and I can afford to integrate experimental A.I. to test it out.

Things like A.I. Customer Service integration to handle tenant issues, monitoring of Mechanical issues where the A.I. can proactively do something to ensure it's well maintained or to be able to fix an issue, etc.

My Portfolio has basically been self-running except for occasional P.M. Issues like I described above.

I believe that A.I. will allow us R.E. Portfolio Owners to become completely self-running in the very near future. I want to be on top of that technology and then teach it via my new Podcast.

That's the plan!

There IS going to be a big impact on Real Estate, especially for Single Family and small Multi-Family that is Owner Occupied.

The SALT Deductions are slated to expire at the end of 2025.

Trump has already said that he will allow it to Expire:

https://about.bgov.com/insights/elections/2025-tax-policy-cr...

This is NOT a small change.

The Standard Deduction gets reduced by about 40%.

Then you get to deduct the SALT (State and Local Tax) that you paid PLUS up to $1 Million in Interest from your Mortgage against your Federal Tax Return.

The only limiting factor will be AMT (Alternative Minimum Tax).

In 2017 when this Cap was put into place, it made sense.

However, now that the average Home sells for about Double what it was back in 2017, many normal Americans can benefit from the Expiration.

I'm hoping that the Trump Administration does not extend the Cap.

Too many people will love him more if he allows it to Expire!

If this Cap is allowed to expire, I would think that there will be a rush to take advantage of it.

That should increase demand for higher priced Homes because the Standard Deduction gets reduced significantly AND you can go way above the Standard Deduction by Itemizing the SALT Deductions.

If your comps are Single Family Homes and/or small Multi-Family that can convert to an Owner Occupied (think BRRRR here), it is well should rise in value as the Federal Tax deduction lowers the monthly payments for every homeowner with a large Mortgage that also pays State and Local Taxes.

It goes deeper than that.

NYC Liberal policies, including strong tenant protections, increases the risk of failure so much that the risk far outweighs the rewards.

Financial ruin is just around the corner for the small Mom and Pop Property Investor that it doesn't make sense for them.

The Tenants will have free Attorneys that are bent on delaying eviction cases so long that it stretches into years while Mom and Pop suffer from lack of rental income and still have to pay all the bills and do the management.

Additionally, the increase in homeless living rough in the streets due to Sanctuary laws causing a lack of shelter beds, then evicting shelter residents after 30 days creating more homelessness, policies that tie up the Police's ability to arrest perpetrators, etc. only causes Mom and Pop to sell out at large discounts to larger Landlords who are capable to use Economies of Scale to eek out a profit.

These larger Landlords will eventually turn a much higher profit as the pendulum will eventually swing towards the middle when the NYC Voting population eventually realizes that it's not a conspiracy of the Rich that's causing the Wealth Gap to increase.

It's the same liberal laws that encourage people to become lifelong tenants, small Entrepreneurs (including Property Owners and small Mom and Pop Businesses) to be destroyed, and Rents to rise astronomically as housing becomes scarer even when the population declines by as much as 7% in the last several years. 

So, to answer the question, "Why Does the Big-Money Invest in Landlord Unfriendly Cities?" They buy at deep discounts and have economies of Scale to be able to wait out the time when Homes Prices and Rent Prices must rise eventually.

It's a lose-lose for Mom and Pop but a Win-Win for Big Money Landlords.

It's the complete opposite of what the Liberal's intentions wanted and they will fall into self-delusion that it's a Conspiracy of the Rich.

I'm starting to find this thread entertaining with the arguments that a Listing Broker vetting an unrepped buyer is seen as establishing an Agency Relationship.

I like to do something called "Thought Experiments" which can at least help me to understand scenarios that are similar and may help work out the complexity.

Scenario #1 - FSBO vets Buyers

If a FSBO vets Buyers, does this establishes a implied Agency relationship?!

Scenario #2 - FSBO is a Real Estate Broker vets Buyers

I happen to hold a Real Estate Broker's License that I use primarily for my own Rental Property Portfolio. If I sell one of my Properties FSBO, the mere fact that I am a Licensed Real Estate Broker and that I vet Buyers somehow implies that these Buyers had an implied Agency with me?

Scenario #3 - I list my own Rentals as For Rent By Owner

I do this ALL the time. Does this establish any Agency with potential Tenants because I have a Real Estate Broker's License merely because I vetted potential Renters for their qualifications?!

I cannot imagine that the act of Vetting establishes an implied Agency. BUT.... while I'm a Real Estate Broker, don't do work for anyone else buy my own Portfolio.

Just curious what others think about these Thought Experiments.

I'm eventually going to be a Seller as I unload my portfolio within the next 5 years.

This Ruling means I don't have to worry about Buyer Agents refusing to show their Buyer Clients my properties because I didn't offer a Buyer Agent cut on the MLS.

In my Market of multi-million dollar properties, 2.5% Buyer Broker Commissions is easily $50k.

My overall assumption is that the incentive of the Buyer Broker Commission effectively steers Buyers away from these properties or the Buyer Broker just doesn't get paid since the Buyer really doesn't sign an exclusive in my Market.

This ruling seems to take away the unintended consequences of the old system to let a listed property with no Buyer Broker Commission split languish.

A good slogan to use to understand Cash Flow is:

"The Investment doesn't cash flow.... but the INVESTOR does."

This slogan merely means you can put down ZERO and the Investment will be NEGATIVE but if you buy it without financing it, you will Cash Flow.

You make the Investment Cash Flow.

Also, Cash Flow can be a distraction from much bigger problems.

Buying a Property that you cash flow in a DEPRECIATING Local Market is a set up for failure.

Take Detroit during the decades before it went bankrupt.

You may have bought a Cash Flowing property decades before, but the writing on the wall was that Detroit was going to depreciate when the Domestic Auto Industry was a decades long slow train wreck.

Detroit, at that time, was 90% dependent on Domestic Auto.

There are 2 rules that I follow:

1) ALWAYS buy in Appreciating Markets with a horizon of at least 10 years

2) You (notice, I said YOU) SHOULD Make the Investment at least break even if not some positive cash flow

If you are in an Appreciating Market, your Cash Flow will grow.

For instance, I am in Brooklyn, NY and my first investment was in 1998.

My rents went up over 350% (from $1k for a typical 2 Bedroom apt to $3.5k today) over the 26 years.

Not only do I cash flow from the Rental Price Appreciation but soon my Mortgage will be paid off by the tenants.

The Cash flow will be HUUUGE in about 2 years from now.

Many Investors here seem to not understand that Appreciation is BOTH the Investment's Value and the Rental Price Appreciation. I don't think you can get Appreciation in Value without getting Rental Price Appreciation.

Go after the gold and get BOTH Value and Rental Price Apprecation!

Anything else is just silver.

Here's a couple of good Quotes:

1) "Real Estate Investing is not really an Investment, it's BOTH an Investment AND a Business."

The more time you spend on your Real Estate "Investment", the more it's a Business and not an Investment.

I self-manage, so it's both an Investment and a Business. However, because I have Class A and B properties, the management is very light and it's much closer to an Investment than a Business. For instance, I make much more money in Appreciation (the Investment aspect of RE) than the fees I charge for managing the property or even the Cash Flow.

2) "Cash Flow is NOT a characteristic of the Property. It's a Characteristic of the Investor."

A property bought for $100k that has $10k of "Net Operating Income (NOI)" with ZERO Mortgage has a Cash Flow of $10k annually.

The SAME Property, if purchased with a Mortgage that also has an annual payment of $10k means that the cash flow is ZERO for the exact same property.

How can you say that Cash Flow is a characteristic of the Property? NO..... it's the Investor that Cash flows the Property, not the Property itself.

I'm curious what you think about the 5 year look back period where a Parent may wind up in a costly care situation, say a Nursing Home, and the Asset, including your Primary Home, can be confiscated to pay for the bills.

Does the Living Trust help shield the Asset? I read that it doesn't if the Parents continue to have Control.

I am also thinking of an example where it might just be better to sell the property to your heirs rather than try to protect the Asset and pass it down.

If the Appreciation is $500k or less, why not just sell it at the full Market Value to the Heirs and using the Primary Home Capital Gains Exclusion of $500k?

It basically functions as a stepped up Basis to your Heirs.

If the Appreciation is significantly more than $500k, I would say it makes a lot of sense to look into some sort of Capital Gains Tax mitigation.

BUT, is there a risk that one or both Parents may wind up with costly health care at end of life which may confiscate the Asset?

I also wanted to add if that you bought your Investment with your Personal Name and used a Personal Mortgage, then transferred the title to an LLC but left the Mortgage exactly the way it is where you are personally liable for the Mortgage, it would seem that any competent Lawyer will pierce the LLC by claiming that the Investment property is just an Alter Ego of the Actual Owners because it pays an Mortgage that has been personally guaranteed by the actual Owner.

Not only that, it can even be seen as Comingling funds as Company Funds pays a personal debt.

I don't know the statistics, but I would love to see if there is any cases in which a Lawsuit of this nature was successfully defended in this way.

To me, that's the only way I would rely on an LLC for Liability protection if I hold the Mortgage in my Personal name.

Whatever way you think, the Business Owners Policy is your shield, NOT the LLC.

 You can use an Excel Spreadsheet to get the COMPOUNDED Appreciation Rates easily. Here is a snapshot with the Formula you should use:

To the OP, you SHOULD use Historic Appreciation Rates as one evaluation.

HOWEVER, the best FUTURE Appreciation Rates are the ones that use can figure out intelligently.

For instance, what are the major developments happening in the target area within the next 10 years? What are the migration Patterns? What Legislation is being supported and likely to pass (for instance, rent control legislation will have a huge negative effect), etc.

I am a proponent of using your intellect to have a vision of the next 10 years.

Afterall, Squirrels know that if they don't gather than nuts and bury them for the future, they will die by the time the Winter is in full swing.

If a simple Squirrel can calculate for the future, why can't we?