All Forum Posts by: Logan Winn

 My pleasure @Rahul P.! Feel free to DM me if you want to dive deeper into anything in particular 

@Rahul P.undefined

While I do not want to give you financial advice I personally would caution against cashing out my 401(k) and IRA funds to invest in real estate, despite the potential for higher returns. There are options to take a loan against your 401k which I had success with but profit margins after tax were not worth the hassle of the project. While your analysis shows promising projections, there are several critical factors to consider:

Tax Implications and Penalties

Withdrawing from your retirement accounts at age 40 would result in significant losses due to penalties and taxes. The 35% loss you mentioned is a substantial hit to your investment capital. This immediate reduction in your investment base would require even higher returns from your real estate investments to offset the loss.

Diversification and Risk Management

Your current strategy of having funds in 401(k), IRA, and a taxable brokerage account provides diversification. Liquidating these to focus heavily on real estate removes this safety net and exposes you to sector-specific risks. Real estate markets can be volatile and subject to local economic conditions, potentially putting all your eggs in one basket.

Liquidity Concerns

Real estate is an illiquid asset. With a limited emergency fund, you may find yourself in a difficult position if you need to access funds quickly. Retirement accounts, while penalized for early withdrawal, still offer more liquidity than real estate investments.

Alternative Strategies to Consider

1. Self-Directed IRA for Real Estate: Instead of withdrawing funds, consider setting up a self-directed IRA that allows you to invest in real estate within your retirement account. This maintains tax advantages while allowing real estate investment.

2. Home Equity Line of Credit (HELOC): If you have significant equity in your existing duplex, a HELOC could provide funds for further real estate investment without touching your retirement accounts.

3. 1031 Exchange: If you decide to sell your current duplex, a 1031 exchange could allow you to defer capital gains taxes and reinvest in larger properties.

4. Refinancing: With your current high-interest mortgage, refinancing could potentially free up cash flow for other investments or allow you to invest more in your taxable brokerage account.

5. Partnerships or Real Estate Crowdfunding: These options can allow you to invest in real estate with smaller amounts of capital, maintaining your retirement account integrity.

Conclusion

While your real estate investment projections are attractive, the risks and immediate losses from cashing out retirement accounts are significant. The conservative nature of retirement accounts serves a purpose – providing a stable foundation for your future.

Instead, I would:

1. Maintaining your retirement accounts intact.

2. Exploring alternative funding sources for real estate investments.

3. Gradually building your real estate portfolio without compromising your retirement security.

4. Consulting with a tax professional and financial advisor to create a comprehensive strategy that balances your real estate ambitions with long-term financial security.

Remember, successful real estate investing is about managing risk as much as seeking returns. Your current financial diversity is an asset, not a hindrance to your investment goals.

Hope this helps!

Hey Danny, I'm a realtor based in Pleasanton, CA. It's great to hear about your interest in real estate investing. Given your current savings and monthly savings rate, you're in a strong position to start your journey.

BRRRR Strategy

The BRRRR method is a powerful way to build your real estate portfolio by leveraging your initial investment to acquire more properties over time.

Cleveland vs. Columbus

Both cities are promising markets for real estate investment but have different strengths.

Cleveland:
- Affordability: Lower home prices, making it easier to enter the market.

- Strong Rental Market: High demand for rentals.

- Economic Stability: Supported by a stable healthcare sector.

- Cash Flow Potential: Often meets the 1% rule, indicating strong cash flow.

Columbus:
- Growth and Demand: Booming population and tech industry.

- Appreciation Potential: Consistent market appreciation.

- Rental Market: Low vacancy rate, suggesting high rental demand.

- Median Prices: Affordable compared to larger metros.

Long-Distance Real Estate Investing

Investing in properties in the Midwest while living in Los Angeles is feasible with modern technology. Key tips include:

1. Thorough Research: Understand local market conditions.

2. Build a Local Team: Reliable contractors and property managers are essential.

3. Use Technology: Leverage property management software and virtual tools.

4. Tenant Screening: Ensure you find reliable tenants.

becoming an Investment-Friendly Real Estate Agent

As you gain experience, and consider becoming a real estate agent focused on investments. Key steps include:

1. Learn the Language: Understand key investment terms.

2. Understand Investor Goals: Know what investors are looking for.

3. Network: Build relationships with investors and industry professionals.

4. Market Expertise: Stay informed about local trends and developments.

5. Offer Value-Added Services: Provide referrals to reliable service providers.

It might be challenging but not impossible to become a real estate agent in Ohio while you're in college in Los Angeles—it will require some travel.

Feel free to reach out if you have more questions or need further guidance. Best of luck with your real estate journey!

All the best!

Key Points from the Email

1. Temporary Suspension: Norada has temporarily suspended distribution payments due to financial challenges.

2. Conversion to Equity: Your promissory note will be converted into equity in Norada, which will be redeemed once the financial situation improves.

3. Strategic Measures: Norada is taking steps to strengthen its financial health, including cost-reduction measures, revenue-generating initiatives, and debt restructuring.

4. Commitment to Transparency: The company promises to keep investors informed about any significant developments.

Recommendations and Insights

1. Review Your Investment Agreement: Carefully review the terms of your promissory note and any related agreements to understand your rights and the company's obligations. Pay particular attention to the sections regarding the conversion of notes to equity and the conditions under which this can occur.

2. Contact Norada for Clarification: Reach out to Norada Capital Management for any specific questions or concerns you have. Marco Santarelli, the CEO, has indicated a willingness to respond to investor inquiries.

3. Stay Informed: Keep an eye on communications from Norada and any updates they provide regarding their financial situation and the timeline for resuming distributions.

4. Consult a Financial Advisor: Given the complexities involved, it may be beneficial to consult with a financial advisor who can provide personalized advice based on your investment portfolio and financial goals.

5. Connect with Other Investors: Engaging with other investors, as you are doing, can provide additional insights and support. Platforms like BiggerPockets have discussions on this topic where investors share their experiences and advice.

Additional Considerations

- Market Conditions: Understand that market conditions can significantly impact investment returns, especially in real estate. The current financial challenges faced by Norada may be reflective of broader market trends.

- Long-term Perspective: While the suspension of payments is concerning, Norada's decision to convert notes to equity and its strategic measures to strengthen financial health may indicate a focus on long-term stability and growth.

The suspension of payments by Norada Capital Management is undoubtedly concerning, but the company's communication suggests a proactive approach to managing its financial challenges. By staying informed, seeking clarification, and consulting with financial professionals, you can better navigate this situation and make informed decisions about your investment. If you have any further questions or need more detailed advice, feel free to reach out!

As a new investor interested in the Columbus, Ohio real estate market, you're on the right track by seeking connections with investor-friendly professionals. Here's some helpful information to get you started:

1. Real Estate Agents:
- Remington Lyman is an all-star real estate investor in Ohio

- Searching local real estate investing groups on BiggerPockets or Facebook

2. Wholesalers:

Columbus has an active wholesaling market. Some resources to find wholesalers include:

- Discover Wholesale Houses, which specializes in finding discounted properties for investors in Columbus

- Local real estate investing Facebook groups

- Websites like HouseCashin that list wholesale companies in Columbus

3. Lenders:

Several lenders offer investment property loans in Columbus:

- LendingOne: Provides short-term mortgage loans for property purchases, refinancing, and rehabs

- Longhorn Investments: Offers hard money loans for Columbus real estate investors

- Longleaf Lending: Provides 30-year rental loans for long-term rental property investments

For BRRRR and fix-and-flip strategies, consider hard money lenders. The average interest rate for Ohio hard money loans in Q1 2024 was around 11.6-11.8%, with loan amounts averaging $155,000-$205,000.

4. Market Overview:

- The median rent in Columbus is $1,495 as of July 2024

- The median home price is around $284,900, up 3% since January 2024

- Columbus has a strong rental market, with 55% of housing units being renter-occupied

5. Investment Strategies:

Columbus offers opportunities for various investment strategies:

- BRRRR: Look for undervalued properties in up-and-coming neighborhoods

- Fix & Flip: The median days on market is 24, indicating a relatively quick turnaround for renovated properties

- Rental: With a high percentage of renters, there's potential for long-term rental investments

To get started, consider joining local real estate investing groups, attending meetups, and networking with other investors in the Columbus area. This will help you build connections and learn more about the local market dynamics. Remember to thoroughly research any potential deals and always conduct due diligence before making investment decisions. Good luck with your real estate investing journey in Columbus!

Understanding Point-of-Sale (POS) Violations

Point-of-Sale (POS) violations are issues identified during a mandatory inspection that must be addressed before a property can be sold. These inspections are often required by local municipalities to ensure that properties meet certain safety and habitability standards. The POS report lists any violations that need to be corrected, either by the seller before the sale or by the buyer after assuming responsibility for the repairs.

Seller's Disclosure Obligations

Sellers are typically required by law to disclose any known issues with the property, including POS violations. This requirement can vary by state and locality, but failure to disclose can lead to legal consequences, including potential lawsuits for misrepresentation or concealment of pertinent facts. The seller should have informed you about the POS violations as soon as they were aware of them.

Realtor's Responsibilities

Your realtor has a fiduciary duty to act in your best interest, which includes conducting due diligence to uncover any issues that could affect the transaction. According to the National Association of Realtors' Code of Ethics, realtors must avoid concealment of pertinent facts and should not misrepresent the condition of the property. In your case, your realtor should have:

- Inquired about the POS Report: Ensured that the POS report was up-to-date and reviewed it for any violations.

- Communicated Findings: Informed you promptly about any POS violations and discussed the implications.

- Negotiated Solutions: Worked with the seller's agent to determine whether the seller would address the violations or if you would need to assume responsibility, potentially negotiating a price reduction or credit at closing to cover repair costs

Why You Found Out Late

The fact that you discovered the POS violations only five days before closing suggests a lapse in communication or oversight. This could be due to several reasons:

- Expired Report: The old POS report expired, and the seller may not have obtained a new one until recently. This delay could have been avoided with proactive follow-up from your realtor.

- Seller's Responsibility: The seller might have delayed addressing the violations or obtaining a new report, hoping to pass the responsibility to you.

- Realtor's Oversight: Your realtor may have failed to verify the status of the POS report early in the process, leading to last-minute revelations.

Steps to Take

To address the current situation and prevent similar issues in the future, consider the following steps:

1. Review the New POS Report: Examine the new POS report thoroughly to understand the scope of the violations and the estimated cost of repairs.

2. Negotiate with the Seller: Discuss with your realtor the possibility of negotiating with the seller to either fix the violations before closing or provide a credit at closing to cover the repair costs

3. Consult a Real Estate Attorney: Given the proximity to the closing date, consulting a real estate attorney may help you navigate any legal implications and ensure your interests are protected.

4. Evaluate Realtor Performance: Reflect on your realtor's performance and consider providing feedback or seeking a different realtor for future transactions if you feel your current realtor did not adequately represent your interests.

In summary, your realtor should have proactively checked the status of the POS report and communicated any issues to you well before the closing date. The late discovery of POS violations indicates a lapse in due diligence. Moving forward, ensure that all necessary inspections and reports are obtained and reviewed early to avoid last-minute surprises. Additionally, consider negotiating with the seller to address the violations or provide compensation for the required repairs.

By taking these steps, you can better protect your investment and ensure a smoother transaction process in the future.

That's a huge bummer, Andy. This trend is affecting many property owners in California, especially in multi-family units. Natural disasters, higher construction costs, and a competitive insurance market are driving these increases.

Review your current policy to ensure you’re properly covered without overpaying for unnecessary coverages. Implementing risk mitigation measures like fire-resistant materials, updated electrical systems, and security systems can help negotiate better rates. Document these improvements and present them to your insurer.

Working with an insurance broker specializing in multi-family properties in California is crucial. They can find more competitive rates tailored to your needs. Reach out to your network, the California Apartment Association, or local real estate investment groups for referrals.

Be aware that insurance premiums in California may increase even more. According to some of my insurance contacts, we could see a 20% to 100% increase in premiums in the worst-case scenario.

If you need further assistance or connections, feel free to reach out. My network includes experienced professionals who can help you navigate this challenging landscape.

All the best,

Logan Winn
loganwinn.com

Hey Art - Responding to your update from July 6...
It sounds like you’ve been making great progress in connecting with realtors and builders, even though the timelines for new construction are longer than expected. Here are a few strategies to consider moving forward:

1. Consider Existing Properties:

Since new construction timelines are extended, you might explore purchasing an existing property that you can renovate to include a Next Gen suite. This could be a faster route to get your short-term rental up and running.

2. Look for Motivated Sellers:

In the current market, there may be opportunities with motivated sellers who are willing to negotiate on price or terms. Your realtor can help identify these properties.

3. Temporary Alternatives:

While waiting for a new build, you might consider investing in a property that can generate rental income immediately. This can help maintain cash flow and keep your investment moving forward.

4. Builder Relationships:

Keep in touch with the builders you’ve spoken to. Sometimes schedules can shift, and being on their radar might get you a spot sooner if another project falls through.

5. Networking:

Continue networking with other investors and real estate professionals in Big Bear. They might have leads on properties or alternative solutions that could work for you.

6. Financial Planning:

Given the potential delays, ensure that your financial planning accounts for the extended timeline. This includes having a clear understanding of holding costs, financing options, and potential rental income once the property is ready.

Your current realtor’s local expertise will be invaluable as you navigate these challenges. They can help you find the best existing properties or other investment opportunities that align with your goals.

If you need any further assistance or additional insights, my team and I are here to support you. Best of luck with your continued search, and feel free to reach out if you need more guidance or connections!

All the best,

Logan Winn

Hey Rafael,

Great to see your interest in investing in a beach town with short-term rental potential in California! Here are some insights to help you identify suitable locations and maximize your investment:

Regulations for short-term rentals (STRs) can vary significantly by city and even by neighborhood. It's crucial to research local laws and restrictions. Some cities have embraced STRs, while others have stringent regulations or outright bans.

San Diego, specifically neighborhoods like Mission Beach, Pacific Beach, and La Jolla, have been popular for STRs. San Diego has clear regulations in place, and these areas attract tourists year-round. Newport Beach is another excellent option. The city has regulations, but they are manageable, and Newport Beach attracts a high volume of vacationers. Santa Cruz, known for its beautiful coastline and boardwalk, is relatively friendly to STRs, though you must comply with local rules. Oceanside, located in North San Diego County, has become increasingly popular for STRs and offers a more affordable entry point compared to its southern neighbors.

Given your flexible budget and preference for a condo, there are some factors to consider. Ensure the homeowner association (HOA) allows STRs, as many condos have restrictions against them. Properties close to the beach, dining, and entertainment will perform better on platforms like Airbnb. Understand the seasonality of your chosen area, as some beach towns have a strong year-round appeal, while others peak during specific seasons.

Since you’re not prioritizing immediate cash flow, focus on properties with strong appreciation potential. Coastal properties often appreciate well over time. Consider the costs of property management, especially if you don’t live nearby. Hiring a local property manager can help maintain the property and handle guest logistics.

If you're looking for help, I’m a local realtor in California and would be happy to assist you in finding the perfect property or I would be happy to connect you with my extensive network with other top-notch realtors in the area if needed.

Utilize tools like AirDNA to analyze potential rental income and occupancy rates for different beach towns. Stay updated on local STR regulations by checking city websites or consulting with real estate attorneys.

By carefully selecting the right location and property, you can create a successful STR investment that also serves as a personal getaway. Best of luck with your search, and feel free to reach out if you need any assistance or connections!

Warm regards,

Logan Winn

Hi Tatum!

Welcome to Bigger Pockets! Investing in California, particularly in Orange County, can indeed be challenging but also rewarding with the right strategies. Here are some key recommendations to consider:

1. Focus on Emerging Neighborhoods:

Look for emerging neighborhoods in Orange County where property prices are still reasonable but expected to appreciate.

2. Niche Markets:

Consider niche markets like student housing or senior living, which can offer stable rental income.

3. BRRRR Strategy:

Use the BRRRR method (Buy, Rehab, Rent, Refinance, Repeat) to increase your property's value and refinance to reinvest.

4. Partnerships:

Form partnerships with other investors to pool resources and share risks. Partnering with experienced investors can provide valuable insights.

5. Creative Financing:

Explore creative financing options like seller financing or private lenders to secure better terms.

6. Rent by the Bedroom:

In high-demand areas, renting by the bedroom can boost your rental income significantly.

7. Local Market Analysis:

Stay updated on local market trends and network with other investors for insights and opportunities.

Always analyze potential investments thoroughly and run detailed cash flow projections. Best of luck with your investment journey!

Warm regards,

Logan Winn