All Forum Posts by: Paul Hansen

That's an interesting question, one for a CPA. Rather than paying cash, I pay for some services via Venmo, PayPal, Zelle, etc. for record keeping purposes, but I am not sure if paying your children would be considered deductible or not so that part you should consult with a CPA on.

If you use as long term rentals, and you cannot get it sub-metered for some reason (it may be worth the investment, long-term), I would figure out what you think the average bill for the utilities would be, factoring in the seasons. For A/C, summer months will use more energy and less in the winter, and vice versa for heat, but you can spread the average across all months, similar to the programs energy companies manage so users don't have large swings in their bills season-to-season, and add this to the monthly rent for each unit based on square footage, # of occupants, etc. To mitigate the risk of all-you-can-eat, add a risk % to the averages you determine to allow for overages, then adjust annually based on actual usage. You may be able to advertise a base rent with an electricity surcharge so as not to inflate your rental rate in the eyes on prospective tenants searching online who may not realize at first that the rental rate includes utilities.

@Ben McMahon I believe that agents who embrace AI-driven platforms in a way that adds value to their client base in terms of interpreting information to intelligently guide conversations, negotiations, operations, etc. will still flourish. It’s less about this blip in time and more about how technologies have been (and are) slowly changing the way real estate transactions work. Perhaps we may see a rise in sellers and buyers attempting to leverage AI to do the work on their own, but as someone mentioned before, most buyers and sellers only transact in this nature once every 5 to 7 years or more. While AI platforms make some pieces of the transaction easier, AI can’t completely replace the need for human engagement on a deal, which ensures that profits are maximized and that deals successfully close. Take tax season for example. Unlike AI driven platforms like TurboTax which offers a guided process that allows a user to finish up in a day or two and repeat the process each year, real estate transactions are completed on average two to three times in a lifetime and require specific expertise not entirely possible with AI alone. Agents who do not embrace AI now and over the next 5 to 10 years will begin to see a downshift in business as competition will become tougher, not only driven by AI advancements but also from lower demand due to slower GDP growth as well as slower population growth. Agents who leverage AI in a way that creates value for their clients will continue to adapt and grow their businesses.

This is really good insight. I do a combination of voicemail drops, texts, and calls in addition to mailers and social media prospecting. I try to hit all of these bases to make sure that my approach fits a universal audience because, as you mentioned, some will not answer the phone but will respond to a text, even if to say "not interested." I have also received call backs to voicemails from people who like to have conversations on their own time as opposed to me interrupting their day. My best cold calls are to older people with less chaotic schedules who have time and enjoy having conversations. There are so many personality types so I find great value in taking a multi-faceted approach to prospecting.

@Boone Tyson thank you. That way of looking at it definitely helped. 

@Dave Foster Excellent information, I appreciate it!

Thank you everyone, this has been very helpful!

@Jeremy Taggart That was weighing heavily on my decision to sell or renew my tenant’s lease last year and, in hindsight, selling was probably wiser. 1031 exchanges get stressful if/when you can’t find the right deal and I have only worked on other investor’s 1031s as a broker. Have you had experience with reverse property identification in a 1031?

@Peter Nikic - thank you! I am glad you reminded me to think of 1031. Arizona is of interest to me because I know the area and state very well having lived there 30+ years and have most of my network there; however, I am also interested in scaling up in emerging areas (Detroit, Pittsburgh, etc.), and I see myself doing well with BRRRR type strategies, possibly flipping in my off-seasons. I live in NYC now where I frequently work with investors as a real estate broker. I know and understand the NYC strategies; however, these are not investments I see fitting into my strategy for many reasons.

I have a townhouse condo that I have owned for 11 years. It was my primary residence until I moved out of state 4 years ago. For the past 4 years, it has been a rental property that has served me well on a cash flow basis since moving; however, recently the market has demonstrated a notable jump in appreciation, specifically in the complex that this condo is located and I stand to make a nice return. I am trying to decide whether it makes more sense for me to continue collecting the cash flow or cash out on the appreciation and purchase other investments. I currently do not have other RE investments. I, however, work in real estate and plan to begin using BRRRR or flipping strategies to grow my wealth. Here are some details and I would love to hear opinions from others on whether you would continue holding or cash out.

I purchased the home for $184,000 in 2008 with $1,000 of my own money. I paid an FHA mortgage for 8 years before moving. While living in the home, I made $25,000 worth of upgrades so I calculate that I have invested $26,000 plus the interest, mortgage insurance, taxes, and HOA fees I paid while living in the home.

I have had tenants in the home for the past 4 years with only a two week vacancy. The rent is $1,395 per month and my expenses are $1,200 so my cash flow is $195 per month or $2,340 per year and I have had minimal maintenance costs in the past 4 years, totaling around $1,000. So in 4 years, my cash flow has been appx. $8,360, which I feel is a great return that is generally 8% to 9%.

Based on current market conditions, I believe that I can sell for a minimum of $225,000, and I do not anticipate such accelerated growth in the next 5 years. My remaining mortgage is $148,000. My closing costs will be very low as I will not need to hire a real estate broker so I stand to cash out with roughly $75,000. This is very enticing to me, but so is the return I am receiving on the property.

I feel the $75,000 can be employed to drive my new investment strategies as this home was never intended to be used as a rental until I moved, and now I have bigger ideas on how I would like to grow my investment portfolio.

What would you do if this was your investment? Thanks for your input!

that makes sense and was helpful, thanks Scott