All Forum Posts by: Lou LaMedica

Great points @Bill H. ! Where exactly is Port Tobacco? Are you near Herdnon?

You may find this interesting @Ed Moran, I was listening to John Schaub on YouTube this weekend (author of Building Wealth One House at a Time") and he mentioned that a cardinal rule is properties MUST cash flow from day one. He also said cash flow is a function of how you finance the deal. So...in more expensive areas, you can either 

1. put a higher percentage of the price down

2. syndicate and pay cash

3. Find another creative method - anyone have some other ideas to make a $300-$400k home cash flow in an area where three bedroom rent is going to be between $2000 and $2,300?

@Brandon L. Hello my neighbor! I didn't take it as nit-picky, I am really trying to learn others opinions on good and bad investments. At this point, there is MUCH more that I don't know than have strong convictions about. I learned from this thread that a 30-year loan will help my overrall cash flow and that I need to do some more homework on the 1% rule. 

As an aside, I was thinking of putting together a meet up at my deli in Herndon during the weekday at lunch time. Would you be interested in attending and do you think it would add value to the local area meet up rotation? 

@Jaysen Medhurst Those are great ideas as well and thank you for your feedback. I am not looking for entirely passive income, just looking at real estate as a place to park some money that will grow. I do want to learn how to manage properties, tenants, contractors - you know, the fun stuff ;) 

@Ed Moran - Hello! Glad to see that you went in on the pro account - I think that shows a great commitment to your decision. I think that is great advice and @Jaysen Medhurst was correct. The property will lightly cash flow at a 30-year amortization. 

30 Year Mortgage

Hi @Jaysen Medhurst - thanks for time! I would like to try and pay off my investments as quick as possible. My goal is to own things free and clear, even if it means less properties. At this point, our family has a growing business, a pretty solid IRA, and we are looking to diversify into real estate. So cash flow, while nice, is not our top priority. I am looking for investments that I can hold for 15-30 years that will provide appreciation. In our area, it is hard to find anything that will cash flow positive (average home/town home price is $400k) so I am looking for appreciation over time. I imagine Greenwich is very similar?

I plan on managing this property myself as it is in our neighborhood. While cash-on-cash is negative in year 5, the annualized return is 13% with property appreciation. I am just looking to beat out 7-8%, which is average stock appreciation over time. 

I will run another calculation with a 30-year mortgage to take a look and repost. 

I am looking at this as a long term buy and hold investment with a 15-year mortgage in Northern Virginia. I think it is interesting that although there is negative ROI for the first five years, the returns look pretty good from there on out. View report

*This link comes directly from our calculators, based on information input by the member who posted.

@Phil Christian Those are great points and something that another professional mentioned to me. In our case, we are a catering company so we are not dependent on walk-in traffic and we are looking at it as a real estate investment for our family trust, so it will be a single purpose LLC with our business renting back the space.

The other big consideration is growth of the business over time - our agent recommended having a 15-year time line. Our commercial market for smaller spaces (<8,000 sq ft.) is fairly tight at the moment so that would be enough time for proper appreciation as well.

@Andrea O. Yes that seems like a smart strategy. I am not even worried about the positive cash flow as much as just building equity and having an expense on the business side that would be going back either to me or into the business. Seems like a win win! 

That's awesome @Bob Langworthy! So did you set up a seperate LLC for your commercial real estate business? How about financing? I am wondering if the SBA can help with something like this?

Are there any business owners who own their commercial space and "rent hack" the additional space in the building. My lease for my commercial kitchen is up in 4 years and I would like to learn more about this strategy. I am in the Northern Virginia market. I would love to hear any stories or any pointers to begin learning more about this option. Thank you!