All Forum Posts by: Michael Lewis

@David Terbeek I appreciate the advice.

@Dave Poeppelmeier Yes, as well as the main stack.

I currently have 6 SFR's in my portfolio. One of them is a dud. I've made a 4% return the past 2 years due to constant maintenance. Tenants just moved out and it will cost 14k to make rent ready. I do believe that after making rent ready I'd be able to bring rent to current market value however this property being in Cleveland seems to have the same runny toilet issue no matter how many times we send maintenance. I've been offered a cash purchase which will allow me to recoup my original down and maintenance costs. No real profit. I generally only buy to hold but my gut says to move on from this property.

Question is:

Make rent ready, increase rent, hope for less maintenance and hold or exit with no loss and move on?

@Whitney Hutten

Thank you Whitney. I believe you're correct. What it comes down to simply is having more cash invested to yield to CF I'd like to see. Buying SFR's is what I know and feel comfortable with but it's slow and as mentioned it doesn't move the needle much. Perhaps it's time to entertain larger purchases.

@Whitney Hutten

Thank you Whitney. I appreciate your input. My portfolio does cash flow. In fact to date for 2020 my portfolio has had a 11.6% COC return. To answer your questions. About half are TK and one is fully paid off so I have a mix which I believe is good. Perhaps I just find that with every new property added it only moves the needle slightly. The concept of 2-4 unit MF's sounds good in theory however from my research and in the areas I invest in the MF's tend to attract a lower quality tenant which result in increased maintenance and turnover. For example I almost pulled the trigger on a duplex last week. It was in a decent B-/C+ area and was rehabbed a few years ago. After some due diligence I found that in the past 18 months it had a total of 16 maintenance calls and a break-in. That was a hard pass for me. The #'s looked good on paper as usual right but the reality painted a diff story. I run into this often when looking at 2-4 units. The idea of buying into a 5+ like a small apartment when OOS is something I'm not sure I'm comfortable with. Especially with the presence of covid and the increased demand for SFR. If I were to buy an apartment building I'd prefer it within a couple hour drive from home. Yes you are right, I've calculated 25-30 SFR's to bring in the # I'm looking for out of a RE portfolio however is that advisable? Seems like a lot to manage even though I use professional PM CO's there is still always the managing your PM that is required.

Feeling a bit frustrated. Looking for inspiration. I currently own 6 SFR's and under contract on #7. I buy to hold and always felt that eventually with enough property I'd start to see real passive income. However with 7 properties I expect to net $2,700/month(with no maintenance). I run numbers before each deal so I account for the expected expenses however I'm starting to see that my portfolio really only takes care of itself and doesn't do much to bring in real passive income. Allow me to elaborate. There always seems to be unexpected issues that arise with rental property. If it's not the tenant it's the property. When it's time to see what these properties net each month it's always less because of one thing or another. Maintenance, the tenant is short rent, the water meter is broken, etc. When I had 1 or 2 properties and an unforeseen issue would arise for $500-$1,000 I'd lose my mind. I'd get so upset. This would bring me negative and I'd be out of pocket. What kind of investment is that right? Now with 7 properties I find that when these same issues arise the cost is simply eaten from the cash flow coming from the other properties so I'm not personally coming of pocket so to speak. The question is however, how can a rental property investor build a portfolio that both takes care of itself and nets 8-10k/month of passive income? What does it take? 30,40,50 properties? Is the ticket to switch to MF? I'm an OOS investor and multi-family is a bit daunting. I'm not a big fan of syndication as I believe it's far more advantageous to the syndicator. Also, they are short term and I'm looking for long term. Buy and hold forever. I've hit a wall as I'm beginning to feel like there is no reasonable way to win in this game yet RE is the most tried and true form of investing for long term wealth right? So, what am I doing wrong? I'd appreciate some insight.

@James Li Hey James, any updates to this?

Is there any benefit to putting multiple residential investment properties in one LLC? If an issue were to arise it can potentially affect all properties within the LLC. I'm in CA and have properties in 3 other states. Since I file in CA it would cost $800/year per LLC and in my opinion doesn't make financial sense to create a separate LLC for each property. Consequently this is best way to mitigate liability. My CPA mentioned that an umbrella policy is really the most cost effective way to reach the same goal however for peace of mind a good idea would be to move these properties into a single member S Corp.

Any insight from the gurus here? I’d greatly appreciate it.

@Jack Martin

Hey Jack,

I understand that purchasing MH’s is not ideal however owning the land they rent to place their MH is ideal. Is there a way to purchase land in a park without buying the entire park? Any advice or direction would be most appreciated. Thank you

@Anish Tolia

Agreed