All Forum Posts by: Leonard L.

Also, some of my assets are held in self-directed retirement vehicle, so no taxes due on those.

@Steve Vaughan

I used OPM (other people's money) to buy the portfolio but in form of equity rather than debt. I saw an opportunity to acquire houses while offering 10%+ returns to investors plus appreciation, but I raise those funding promising a 3-5 year holding period. Things went up, they wanted to cash out (as I promised them) and I wanted to hold, so I sold other assets and bought them out in about 2015. (If I had used the BRRR method, I would have used the extra income to pay down debt. That is just my way after losing big $ in many prior downturns. I am much more conservative now.)

The tax question is much harder, and one I am still not sure I have right.  If it were simply trading out of weaker assets in favor of better ones, I would definitely use 1031.  I tend to buy "special situation" off market deals which makes identification within the 1031 time frames tricky even in good times.

But here I am making a market bet - trying to sell when asset prices are high, and have cash for when they are lower.   So if I just trade into different assets, I have to bet either that I have the downturn timing exactly right (unlikely) or chose a different market that I think would perform differently (I never give up my local advantage) or maybe trade into a different asset class.  All of those options stink, at least for me.  So my plan now is to bite the bullet and pay a big tax bill.  Ouch.  But because I am pretty conservative on the rental front (I save my crazy risk taking for entitlement deals), and for other reasons I won't get into here, I instruct my CPA to take minimal depreciation.  So yes, the tax bill will hurt, but my depreciation recapture will be relatively minimal as a % of overall tax hit.

I hope you find some of that useful or at least interesting.

I love the title of this post.  It has clearly gotten a lot of interest.  Reading through the posts, however, I find it less interesting to hear people go on and on about what their crystal ball says about the future, and more interesting to hear how they are currently positioning their investments/portfolio in the face of current risks.  

I invest in the Riverside CA area and I am choosing to mitigate risk by liquidating a portion (maybe 35% or so) of my portfolio.  I bought most of my assets during 2011-2013, they have appreciated dramatically, and I have no debt.  With full occupancy and increasing rents for the last few years, it has been (and likely will continue to be) a great time to be a landlord in this area.  

The comment I agree with the most above is that correlation does not equal causation.  It is very, very hard to know with any certainty whether the rising unemployment rate right now will lead to decreased demand and hence falling prices.  There are just so many variables and unknowns, including the historically unprecedented stimulus (which I will share anecdotally I see funding many RE investments in my market) and the under-production of housing in the last decade.  But I do know that the present situation creates a SIGNIFICANT RISK of downward pressure on pricing in the future.  Because my market is RED HOT right now, I can exit at very high prices and lock in gains on a portion of my holdings.  I expect the super-heated nature of the present market will be temporary, but I would be happy to be wrong.

If there is downward pricing pressure in the future, as I think is likely, I will have a bucket of cash to make sure I can pounce on new opportunities. If I am wrong and the market continues to increase over the next several years, the remaining 65% of my portfolio will participate in the updraft.

My strategy reflects how I built my portfolio, my age, my risk appetite, and my views of the likelihood of a downdraft in pricing over the next few years.  YMMV.


 

Can anyone tell me which third party services provide probate filing info?  I periodically do this work myself going to the various Southern California court houses, so I know the ropes.  Pull files, exclude ones which do not include real estate, etc.  But I only have so many hours.  So I have thought about training someone to do this, but I want to first compare how much it would cost me to subscribe to a service for that same date.

I have searched these forums, and also the internet generally, and am having difficulty identifying companies which do this.  Most seem to want to also provide services I don't need (eg, All The Leads which has staff calling the leads for you).  Can my fellow professionals on these pages point me in the right direction? 

Let me clarify.  We will engage only with buyers who have the resources and appetite to acquire the entire portfolio.  Principals only.  No flippers, wholesalers or agents.

We are in process of rehabbing 29 houses from Hurricane Harvey. Our current plan is to sell one by one on the MLS. We have already listed 2 on MLS (702 Olde Oaks Dickinson and 5905 Ariel St Houston) and are about to list 5 more. But I thought I would post here and see if anyone is looking for an opportunity to get an attractive buy-and-rent portfolio at a discount to what would be our asking price on each individual asset. FYI - about 6 are in Westbury, about 10 in Dickinson including 2 great houses on the bayou we are very excited about, one in Meyerland, with the remainder scattered about. If you are interested, let me know and I can get you further information.

Buying after drywall is up can be risky.  The danger is that there is something lurking behind the new walls (like mold or conditions for mold to grow in the future).  Of course you want to trust that they did it right - with anti-bacterial spray before they put up the drywall.  But what is your recourse if they did not?  Pictures of them applying the spray would be ideal, but perhaps an invoice from a reputable remediation company would go at least some way toward making you comfortable. 

@Brian Foster  Thanks Brian.  I appreciate the tip.  

I am buying an investment property in Houston.  Since I am cash buyer, insurances are optional.  I intend to get flood insurance but have been very surprised about wind insurance, both that it is a separate insurance policy and that it is much more expensive than flood insurance.

The house I am buying is modern construction (say last 20 years) and brick.  So I figure the most likely damage from high winds is roof and window damage, not total destruction.  So I am leaning against, but thought I would ask seasoned Houston investors how they view wind insurance.

@Rick M. is right that big government makes CA a worse and worse place to make a living.  @Account Closed is right that because so many people want to live here, us entrepreneurs still manage to make a buck notwithstanding our government's best efforts to the contrary.

let's focus on things we agree on, and keep the personal attacks out of it.