All Forum Posts by: Leslie Pappas

Hi Daniel,

I live in Silicon Valley, and I specialize in real estate. I can tell you what people here have done to set themselves up for retirement. There are two types of investors here:

1. Buy or inherit and hold for a long time, then cash out and redeploy equity into potentially higher cash flowing properties or other investments.

2. Buy or inherit and hold all their lives while working the properties for income.

I've seen teachers, firemen, software engineers and all sorts of people utilize both strategies successfully. One way or another, however, the investors must work to pay down loans, increase rents and decrease expenses wherever possible. One way or another, they are building their net worth.

Building net worth is how you may possibly retire with fewer worries. If your retirement utterly depends on having adequate cash flow from your properties, any downturns will cripple you. AND you must maintain adequate reserves to take care of the disasters that may happen.

So my advice- build your equity.

Most of my clients fall into the first group above. If you are or become an accredited investor, you can make straight cash investments into funds, which are small portfolios of properties.

Best of luck! 

Hi Jesse, there plenty of other opportunities elsewhere, my clients are involved in institutional grade properties across the country. My recommendation is to choose cities in safe and economically diversified areas with above-average income and population growth. It can also be safer to diversify your investment properties across the country. There is still good money to be made in AZ, FL, GA, TX and other states, however, picking the right submarkets is key.

A very good source of local analysis is rereport.com

We have many investors making straight cash investments into funds, which are small portfolios of properties. This might be something for you to look further into based on the goals you’ve shared.

Welcome to BP, Michael!

I live in Silicon Valley, and I specializes in real estate. I can tell you what people here have done to set themselves up for retirement. There are two types of investors here:

1. Buy or inherit and hold for a long time, then cash out and redeploy equity into potentially higher cash flowing properties or other investments.

2. Buy or inherit and hold all their lives while working the properties for income.

I've seen teachers, firemen, software engineers and all sorts of people utilize both strategies successfully. One way or another, however, the investors must work to pay down loans, increase rents and decrease expenses wherever possible. One way or another, they are building their net worth.

Building net worth is how you may possibly retire with fewer worries. If your retirement utterly depends on having adequate cash flow from your properties, any downturns will cripple you. AND you must maintain adequate reserves to take care of the disasters that may happen.

Most of my clients fall into the first group above. There plenty of other opportunities elsewhere, my clients are involved in institutional grade properties across the country. My recommendation if you choose to invest out of state is to choose cities in safe and economically diversified areas with above-average income and population growth. It can also be safer to diversify your investment properties across the country.

A very good source of local analysis, rereport.com.

So my advice- build your equity.

Best of luck! Leslie

Quote from @Lesley Stoll:

If you had approx 2.4M what stategy would you do? Keep in mind I am brand new at this. I do have to do a 1031 exchange to avoid capital gains. My goal is to generate income since I am closing my business which is my 9-5. What would you buy? Multi family? Single family? I want to stay in LA/OC county. So out of state is not an option for me yet. Maybe after I get my feet wet. 

Hi Lesley, if you're an accredited investor there is an investment product called a DST (Delaware Statutory Trust) that might be beneficial for you to learn about when you perform your 1031 exchange. Investors may develop their own personal portfolio of institutional properties across the country. The potential to both diversify broadly and own "hands-off" institutional real estate can be very powerful, and many of our investors have done just that. You can buy into institutional grade $50-125M projects with as little as $100,000. Professionals with decades of experience and very impressive track records do all the heavy lifting for you. You get potential cash flow, tax shelter and appreciation. Loans are non-recourse.

https://www.biggerpockets.com/member-blogs/7993/73151-what-a...

Quote from @Chealsi Stocco:

I am just starting real estate investing. What are some states (and specific areas in those states) that are worthwhile to research and consider purchasing properties? What are some resources that you like to use to determine what areas to research and consider?

 Hi Chealsi​​, welcome to BP! There plenty of other opportunities elsewhere, my clients are involved in institutional grade properties across the country. My recommendation is to choose cities in safe and economically diversified areas with above-average income and population growth. It can also be safer to diversify your investment properties across the country. There is still good money to be made in AZ, FL, GA, TX and other states, however, picking the right submarkets is key.

A very good source of local analysis is rereport.com

Hi Ashni, California can be a great place to invest but my advice would be to take the money to a different market. There plenty of other opportunities elsewhere, my clients are involved in institutional grade properties across the country. My recommendation is to choose cities in safe and economically diversified areas with above-average income and population growth. It can also be safer to diversify your investment properties across the country. There is still good money to be made in AZ, FL, GA, TX and other states, however, picking the right submarkets is key.

A very good source of local analysis is rereport.com

Quote from @J Newman:

I'm now managing my family's real estate portfolio that's basically just been sitting there being used for cash flow. No new real estate has been acquired in 10+ years. I want to explore some options to exchange some of our underperforming and older properties for other opportunities. I'm also getting the financials straightened out with a CPA firm who specializes in this, so there's no cash for investing yet, but there is 100% equity. All of it's paid for - 60 doors. I'm not sure on what financing options are available in this situation. I also feel strong pressure to get this right because my Dad and I are co-managing, and he has almost zero risk tolerance to invest. When I mentioned a 1031 exchange, he told me that I was starting to believe in the Easter Bunny again. :-)  I'm trying to educate myself, make connections in my area with real estate agents, other investors. I probably need to talk to lenders and hear my options. I have got some meetings set up, but I would love any suggestions. 

Hi J Newman, please let your dad know the 1031 Exchange is a real thing ;-) and an important tool in real estate investing. In your situation, depending on what you want to do next, a 1031 Exchange could make a huge impact. If you have owned a rental property for a significant period of time, when you sell most investors end up paying somewhere between 30-40% in taxes. If you’ve depreciated the property the seller should expect to pay the IRS 25% of that depreciation back. Completing a 1031 Exchange allows you to defer that tax and depreciation liability and invest in another rental property.

There are many experts on BP that help investors perform exchanges on a daily basis, here's some more info on a few blogs I've written on this site.

https://www.biggerpockets.com/member-blogs/7993/65931-import...

https://www.biggerpockets.com/member-blogs/7993/65927-how-a-...

Hi Megan, I have a couple colleagues who live in West/Summerlin and they love it. Agree with what Stephen said about hospitals. On another note about the area, very positive news about Sony Studios project/mixed-use development.

https://www.reviewjournal.com/business/1-8b-sony-movie-studi...

Quote from @Forest Wu:

Quote from @Nicholas L.:

@Forest Wu

got it - makes sense.

it seems like, as an LP, you give up both liquidity and control. that's what makes it unappealing to me. if i buy a REIT or index fund i give up control but have high liquidity.

of course if you find the 'perfect' syndicator you get returns that will outpace the market.  but that's the challenge, right?

Yep, that's the risk that you accept unfortunately - lack of liquidity and control. I've looked at REITs but there is limited upside and you really don't know what you're getting into sometimes. Finding the right syndication opportunity on the other hand could lead to more upside while still having a passive role. I don't want to be involved - that's the GPs job. My role is to make sure that I'm confident in the team and investment philosophy after the initial due diligence. 

For some investors, they don't care about the liquidity, cashflow or control anymore. Instead, they just focus on growing wealth and deploy a few hundred thousand each year and every year with the right syndications and wait to see the returns in five to eight years. I do believe that if you pick the right conservative syndications, it's an easy way to diversify, maintain a low risk profile and come out slightly ahead of the market over time. However, I think even these returns will get eaten up as more investors jump in and good operators demand more upside for themselves.

Yes, a bad experience in this sector of investing can very much be tied to poor sponsor/syndicator selection or offering selection. It's vitally important to know who you are working with, and have the history of the players involved. I see former players in the DST/syndicated real estate from the 2000's coming back to the industry under different business names, and some of their prior work was less than stellar. It's important to have the advice and perspective of an industry old-timer, in my opinion.

Welcome Vy, sounds like you are doing pretty well with taking all the right steps. This site is great for networking and getting a ton of real estate information. 

There plenty of other opportunities elsewhere, my clients are involved in institutional grade properties across the country. My recommendation is to choose cities in safe and economically diversified areas with above-average income and population growth. It can also be safer to diversify your investment properties across the country. There is still good money to be made in AZ, FL, GA, TX and other states, however, picking the right submarkets is key.

A very good source of local analysis is rereport.com

Best of luck!