All Forum Posts by: Matthew Bailey

Thanks everyone for taking some time to respond! That’s very helpful!

I am looking to expand my portfolio and add some vacation rentals. I'm extremely busy with my land flipping business and am happy to pay for a course or coaching to decrease the learning curve for STR (short term rentals). Who has taken a STR course or a vacation rental course and found it to be actionable and complete? I'm already familiar with residential buy and hold real estate but I could use a crash course on the STR nuances and a community of people doing deals to bounce ideas and questions off of.

I plan to start doing research in the markets where we vacation since we're already familiar with them (Lake Tahoe, Mendocino, Santa Cruz, New Jersey)

Any advice is appreciated!

Thanks for the replies everyone! @Jared Hottle, I'll drop you a line. I'm certainly interested in those midwest markets, would love to hear more about your experience.

@Sam Wilson The search for multi has always been on my radar, land investing (flipping) is like wholesaling.  It is a good source of capital generation, not necessarily long term wealth.  It is also very labor intensive.  The tax liability of this year's success is pushing up the timeline on moving into rentals.  As a RE professional the $250k (single) and $500k (married) write of for a cost seg depreciation against active income would be about a 40% savings at my tax rate.  The land business is doing great, it's more beneficial for my long term wealth strategy to take the tax savings and I can afford to pay private money (friends/family) to fund the land deals.  As for the rest of your questions (2) I'm open to all asset classes with the focus being on the "right" type of asset to maximize depreciation (I.e. more value in improvements relative to land cost since it's not depreciable).  (3) No location preference at this time, but I think part of the tax qualification involves some level of self management, at least to part of the portfolio (clearing that up with my CPA in one week) so I'll do one CA property at least.  I think that also knocks off syndications in the beginning.

Thanks Frank!

I own a successful real estate land investing business that takes a great portion of my time.  I am looking to acquire three or four multifamily properties in before the end of the year to round out my tax planning strategy.  In keeping with the book "Who not how" I would like to try and see if there is a "who" that I should be networking with to help with this task.  Rather than asking, "how can I buy these properties", I am asking "who can help me acquire these properties".  Perhaps there are consultants that can help me identify the market that fits my goals, identify target properties and offer prices, and underwrite and help during the acquisition, and I'm curious if such support exists?  Maybe I should just find a good RE friendly agent, maybe there are people on UpWork who specialize in helping acquire/underwrite properties, I just am putting this out to the BP ecosphere to see what I don't know.  Is there a "who" for my situation that I could enlist to help?

Here are some important things to consider:

- I am pretty much at capacity running my RE business, so I don't have a ton of bandwidth to do it all myself

- Let's presume my opportunity cost is such that pulling away from my RE business to "do it all myself" for these rentals is not a good use of my time, as I'd earn a higher dollar per hour being the CEO of my RE business than the dollars per hour savings trying find off market deals (I.e. saving 20k and trying to do the rentals myself would cost me more than 20k of lost opportunity cost by pulling my attention away from CEO level tasks at my RE business, which might generate 40k of revenue for the same time)

- By the same light, turnkey could be an option, I'd be willing to pay the turnkey premium for the time savings of finding and vetting my own deal, however I know I'd still need to underwrite my own deal provided by a TK company, so having someone who can help that underwriting process would be super valuable, rather than me trying to learn from scratch how to properly underwrite the deal. (I've read all the BP books, I have a base understanding, but still need to learn the best way to find rents, check insurance, check crime, check this, check that, etc)

I know that the BP community is all about "do it yourself, you don't need a guru, save the money" type mindset a lot of the time.  But are there folks I could hire to help me through the process, since my time is better spent on my existing business that I'm scaling.

Thanks so much in advance!

@Christopher Bailey

Thanks Chris (that’s my brother’s name so I was like what?! Haha)

Yea I’m eyeing a few on UpWork, I’ve had a lot of luck finding great people on there. Would be ideal to find a CFO who understands wholesaling already, as my business model is highly transactional like that one. Might just be best to find the best one I can on UpWork but thought I’d float it to the RE community to see if anyone has thoughts. Great recommendation!

I own a land investing business, similar to wholesaling but with vacant land, and we take title to the properties (we don't do assignments like wholesaling).  It's highly transactional, this month we'll do probably 10-15 deals.  The financial modeling and forecasting is an area where I could use some help.  I know the financials are sound, however I'd love to have someone model the business and be able to answer questions like "What if conversions decreased by 25%, or the market fell 20%, how does the business model look then?"  I don't know for sure how much runway to keep liquid (I'm presently keeping 5 months of runway liquid, I.e. salary, overhead, all expenses) since we don't have passive income, it's all active income from cash deals.  Is that too much, too little?

Basically the cashflow in and out of the business is getting more and more complex, I want to be sure that I can take care of the four full time employees that I have, I simply feel like I need a professional finance person to look at what I'm doing so we can come to conclusions about if that's appropriate, and how we can improve it.

So has anyone hired a "fractional CFO", i.e. part time/on demand CFO.  I think that could give me a lot of peace of mind, as some unforeseen market shift or increase in competition impacting the financials is what keeps me up at night.  I think that a professional opinion on how the business is being run, its vulnerabilities, how to protect against the downside, etc, could all be of benefit at this stage of scaling the business.

Thanks so much to everyone who chimed in!

@Bob Norton thanks for your insight! I’d envision it would work like this: A 770sqft office space rents for $2,700/month in my area, that’s $34,000/year. Therefore 34k of my flipping business’ profit could be written down as rent so instead of being taxed at the highest tax bracket I can then apply rental deductions like insurance, mortgage interest, landscaping/cleaning costs, property taxes etc. That also should allow me to get $250k capital gains on the property tax free because I live in it.

If anyone can gut check that I’d appreciate it. I fully understand nobody is acting as a CPA or attorney, I will of course do due diligence and hire those people before jumping in. But this seems feasible to me? Anyone see any holes? Or more advantages I’m missing?

@Joshua Nackenson to be clear this isn’t a commercial property, it’s a mixed use property. Partial commercial, partial residential. Much like 514 S Murphy Ave, Sunnyvale, CA. You can look that up, see the law office in front, the residential in back. (There’s actually two residential units in the back)

Assumptions: I would charge market rent. Split my insurance/property taxes/interest deductions appropriately for the split of the property.

I own a real estate flipping business, so all of my profits are taxed as ordinary income (and at a high rate).  I thought it could be beneficial if I bought a mixed use property and rented the commercial space to my flipping business as office space.  I am in the SF Bay Area so costs are high.  Could this be a feasible way to find a way to buy a primary residence and decrease my tax liability by charging myself a fair market value for the commercial space, thereby converting my profits into equity in the mixed use building instead of having to pay high capital gains taxes?

Is anyone familiar with the pro's and con's of this sort of a strategy? Or any pitfalls I might be missing while this is in a very early stage of an idea?

Thank you!

@Jay Hinrichs

That’s funny, I think I know the paper subdivision your father probably invested in. I did a ton of business in Lake Co, CA when I started, but in Clearlake or Kelseyville. Lots of good starter flips in that area. Never mailed your lots though (I suspect!)

Anywho, I think when I wrote this I was more-so hoping someone who does long term buy and hold might chime in and I could network and learn from them.

That being said I think I just happen to find the serious land buyers through the course of my day to day business. And then learn their buying criteria and adjust my acquisitions accordingly.

@Austin Palacios

I don't think hard money lenders (I presume this is what you mean by HML) do land banking. HML comes with high interest so your land would need to appreciate at least at the rate HML charge (to break even at that). HML is short term lending.

There is capital for short term (less than one year) cash land flips though. Not too hard to find in the land investing community but it’s expensive too.