All Forum Posts by: Oleg Mikhailov

@Marielle Walter, there is no specific tax break for real estate investors, but NH is one of the only 2 states that don’t  have both income tax and sales tax. So it’s very friendly to work from home environment.  And since you plan on living here it will certainly add up overtime.  
As an additional note, NH is very landlord friendly state, as opposed to neighboring Massachusetts, for example. 

Manchester ... Tough area, you really need to know where you are buying. Properties are relatively cheap and can provide great cash flow, but there are significant risks. I'd look in surrounding towns first, like Hooksett, Bedford or Derry/Lodonderry. Much better schools, less risk. Better yet look closer to MA border. Like Nashua, Salem or Portsmouth.

Rochester ... one of the lowest income, high poverty, drugs areas among major NH markets. Now that said, NH crime rates are generally among the lowest in the country, So for someone from St. Louis Rochester may seem like paradise. But there are definitely better places then that to invest in NH. 

Portsmouth... Great area to be in, but got very expensive lately. Hard to find anything that makes any cash flow sense. Pricing getting very close to Boston.

Salem/Windham ... very good choice to invest in. Direct short from Boston on Interstate 93. You get all tax advantages of NH, with easy access to Boston Metro. (30 min to Boston proper)  This area is experiencing high pressure from Massachusetts as people are getting priced out from Boston Area and with work from home its looking better and better.

Nashua... Second largest city in NH, right on the state line, as Salem. Easily one of the best areas to invest. Its also only 45 min from Boston proper on Route 3. Also experiencing massive pressure from Massachusetts residents moving to NH. Vacancy rates are below 1% ( For the whole state of NH vacancies are around 2%). Real estate pricing still makes sense, and you can find cash flowing properties. Very low crime rates. Manchester airport is only 15 min away too. 
 

I own a 10+ unit brick building in the North East. 

The heating system in the building is single pipe steam radiators. The system is old, heating is inefficient, some units heat up to 90+ degrees, some units don't heat up enough. There are a lot of tenant complaints. "Too hot, too cold, valves are leaking ", etc.

So I'm contemplating converting the system to electric baseboard. And would be interested in opinions.

Advantages would be:

1. Low upfront cost of installation.

2. Each unit will have its own thermostat and be able to control the heat resulting in fewer tenant complaints 

3. Reduced costs of plumbing and floor damages from radiator valve leaks

Main disadvantage:

1. Cost of running electric baseboard heat is approx 2x as expensive as gas/steam

Questions:

Currently heat is paid by landlord. Rents are already high and pushing heating costs onto tenants could be problematic. What are possible solutions to reducing the cost of operating the system without offloading the cost to tenants?  Some solutions I've heard include:

1. setting the system on a timer (30 min on/30 min off), which would bring the costs back inline with gas;

2. Installing sub-meters in each unit where the landlord pays a base amount and the tenant pays the balance 

Are there other solutions to this issue that I may have overlooked?  Any comments or suggestions?

Thank you for your feedback.

In other words you don't have the money for the other 20% ?

Hard Money will want the first lien. What would be the incentive for anyone to fund you, if you don't have any skin in the game, if I understand it correctly, and an investor will not even get the first lien.

Sounds like the odds are against you.

We live in the world distorted by central banks. They have distorted every market ( stocks, bonds, real estate, etc ) This environment and CBs have added a whole new level of uncertainty and complexity.  But ...

It is very unlikely the rates will go up in any kind of meaningful manner. All major economies are running massive deficits. So Central Banks hands are tied. They are unable to raise rates otherwise it will significantly increase government financing costs. Never mind trillions upon trillions of debt pyramided, leveraged and re-leveraged by banks, hedge funds, and other private entities.

Global and US economy is likely to remain weak for many years to come. So we are most likely in the scenario of Japan for the rest of the world. Low interest rates for many many years with no end in sight. And if you look at government bond market and corporate bond market, they confirm it.

What does this all mean for real estate ?

In terms of price appreciation, the real estate is likely pushing on the upper limit, but it doesn't mean its going to decline in any serious way. Because in environment like this cash flow is king. And anything that yields 5-10% in cash beats 1.8% in Treasuries and 3.5% in corporate bonds.  Of course real estate is less liquid, so there is a discount.

So I think I wouldn't worry too much about price correction. Just make deals that make financial sense and you'll be OK.

Want a scary story ? 

"Long time ago, In a Galaxy far, far away...", there was a huge crime wave associated with exactly this kind of investments. In any case, make sure you are dealing with reputable investors.

This relationship is doomed. I can just about guarantee you that. 

The good news for you is that the state of California doesn't usually recognize common law marriage. Check with your attorney for caveats. So yeah, live with your girlfriend without entering into any kind of legal arrangement and when she finally leaves, get a new one .

Yes, if we aren't in a recession yet, we are heading into one. Here is the reality ... Only a small percentage of the population has benefited from nasdive monetary easing. Only those who had assets. The 90% of the population who have no meaningful assets and work 9-5 jobs (at best ) haven't benefited at all. Their incomes are stagnant and nessesities costs like shelter and healthcare and education are starting to take huge bites out of disposable income. That's why Bernie and Trump are rising. That's why so many calls to raise minimum wages. The crooked system that is benefiting asset owners at the expense of everyone else isn't working for the masses. The massEs are broke and squeezed . So be concervative and preserve cash. Opportunities are coming down the road.

How common is the practice among Hard Money Lenders to sell the loans they originate via mortgage assignments ?

Lets say you are a hard money lender who does a lot of volume. You originate the loan, keep the origination points, and then assign/sell the actual mortgage to a third party. Or does every hard lender keep every mortgage to themselves ?

Lauren, take a look at investing in NNN properties. These are very low hustle investments, require no management whatsoever. Nothing but pure cash flow. Easy to finance with a good down payment.

Usually these are properties leased to national chains or large franchises. Unfortunately cap rates for these properties have come down a lot over the past few years, and finding really good deals is hard. But an average deal right now can get you 6-6.5% return, and for the purposes of your mother's cash flow, it would be sufficient. Most important, she'll have a peace of mind.