All Forum Posts by: Manon Sheiman

@Julian Joseph The purpose of going to a Tier1 school rather than a state school is to network and make lifelong valuable connections for advancing in your career, with the side benefit of hopefully gaining a superior education. Sure, there are great students in state schools and even community colleges, but those students generally work, don't live at school, and don't have access to the same connections. This is just the cold, hard truth, and the reason Penn State students will statistically end up higher on the socio-economic ladder than CC or state school students. Money hangs with money. That said, there are other ways to end up higher on the economic scale than a PhD research scientist, business and real estate being two of them. 

Right now you don't have the capital or experience to BRRR or MF, which would be true investing. So I hope you have a good career planned, and as a secondary play, I wouldn't call it investing, I'd just call it a smart beginning to make your primary dwelling a duplex, and have tenants help pay your student debt. Just make sure you have a reserve saved up.

If I were you, I'd want to use capital to make money to pay my debt rather than only spending my W-2 wages. Though that shouldn't stop you from being frugal and saving every penny for your first investment property. Just my 2c. 

@Jorge P.  One figure that has not been mentioned is what your capital gains hit is going to be. Does your state have cap gains tax as well? My state, California, has 9.3% cap gains tax, so in addition to the 20% Fed cap gains, (and 25% depreciation recapture in my case), that would take a huge chunk out of that 130k. 

Too bad you can't do a 1031 exchange. Still, with the cash in hand, do you have an idea of what kind of cash flow you could get from a replacement investment? 

You sound very tempted to keep the property and are in love with it as well. It's not that long before you cash flow $3,000/mo, you say. You feel confident in your ability to renovate the property, and you have the funds to do it. Those are the factors that keep you wanting to hang onto it. 

You have to weigh those factors against all the good advice you've gotten here, and make your decision based on bottom line, not emotions. 

Geez, this raises the hackles on the back of my neck. Not saying anything's wrong, but the innocent, unsuspecting way you said "they say people are asking for showings, but no takers yet"... And now they've waived the application fee?!? 

You can never be too paranoid, as Lily Tomlin said. 

Have you been to the property? Do you know for a fact it's vacant? How do you know it's not rented, and the reason they've 'waived' the app fee is because they've pocketed it along with a couple months rent? 

And they cover the mortgage until it's rented out?! Never heard of such a thing. Is this customary for turnkey props? 

Someone in a forum recently said (and it made my antenna stand straight up) that he could think of a million ways a property manager could steal his money. I've trusted my PM implicitly for years, and felt fortunate to have an honest one (as probably most are), but it made me think of a certain way they could be skimming, and now I have to check it out. 

I've caught embezzlers in my office through the years, and it's always the best workers, the most effective, the most diligent. Just thankful they haven't gotten away with too much before I caught on. 

Trust, but verify. Ask for a time-stamped video of the inside of the property. 

Here are two honest reviews of BP members' experiences with CI:

https://www.biggerpockets.com/forums/79/topics/414...

https://www.biggerpockets.com/forums/79/topics/446...

If you still want to go with them, it's your privilege.  

@John S Lewis All I'm saying is that this PrivateLenders.com is part of Connected Investors, who are known scammers. That's why I personally wouldn't have anything to do with them. 

The link I gave you above is not the one I meant; there are several threads here on BP with members relating their personal experience with CI. 

Just throw the words 'Connected Investors Largest REI Scam' into your Google search bar, and the first result you will find lists several BP forums. Please read them if you want honest reviews. Plus a few dishonest reviews. The ones that are shilling for CI stick out like a sore thumb.
https://tinyurl.com/ydevb2vt

 Anyone can print a 'press release'. 

Just because someone drops a name is not enough to verify the ethics of a company's practices. I've read enough credible complaints of how they rip ppl off, do not obtain the financing they promise, and generally run a shady operation to steer clear of them with a barge pole. 

With Section 8 tenants your rent is guaranteed, with disability and welfare it is not. 

It sounds like the tenants have already self-selected that building, so it may not be feasible to change tenant type now. Is there anything about the building that would make it attractive to non gov't assistance tenants? Gov assist tenants go where they are accepted, which is usually the bottom of the barrel, or where the landlord chooses to make a killing on Section 8. 

My agent is offering me a triplex, units as small as 650-700 sq ft rented at $1700 to Section 8. No one else in their right mind would pay that much rent for a unit that small in this town. 

In California the landlord has the right to choose whether to take Sec 8 or not, which drives the price up on available units. There's years long waiting lists. 

A friend told me that in her state they don't have the right to refuse them, so check your state landlord-tenant laws on that. 

Jeez, when I think of the countless days my tenants and I spent in 100F Los Angeles heat waves with never any a/c, me just wetting my clothes every half hour or so. Didn't occur to us that anyone owed us air conditioning. 

Look at this post on BP: 

https://www.biggerpockets.com/forums/79/topics/414...

Originally posted by @John Thedford:

"Crooks are everywhere. Connected Investors, Craigslist, BP, anywhere they have an opportunity to find a sucker. Note the most common trait all the ripoff lenders have: they want advance fees."

Just a simple Google search, my friend. 

Thanks, that is an incredibly helpful post!

Manon Sheiman