All Forum Posts by: Paul Shannon

I'm of the mindset to not sell anything.  There might be a downturn, but if you're a long-term investor with adequate reserves, you're not going to be affected.  Trying to time the market is extremely difficult.  Not only does your timing have to be right when you sell, you have to be right in knowing when to buy back in.  Two decisions.  Good luck with that.  That's not to say you shouldn't diversify, take profits, and hedge, but that should be an ongoing strategy, not one employed during crisis times.  

Its always a good idea to have some dry gun powder to capitalize on opportunity. If there is a sell off, the STR market may manifest first.

Interesting thread.  It is all speculation as to what happens next.  We are already in a recession, yes.  Will we head into a depression?  I don't think demand is coming back this summer, and I don't think it will be back for quite a while.  Fear is a powerful motivator.  I think what is most interesting about this crisis is that there is no precedence for literally the entire world shutting their respective economies down at the same time.  We can print money in the short-term to remain solvent, but at some point that has consequences that are unintended and unpleasant for the standard of living we've grown accustomed to.   

Without all the details, It looks like from the numbers you laid out you could do either and cash flow/profit.  What are you trying to do?  Flipping is a job, so you'll get the one time pay day out of that property and that's it.  If you keep it as a rental you get the benefit of appreciation, equity build-up, tax advantages, income, etc.  If you needed the cash that you invested in it back, you could always refinance it and pull your capital out.  

With long-distance investing you are going to have to rely on a property management company to keep up with your properties and tenants.  I felt it was very beneficial for me to have managed a few rentals myself prior to making the jump to a different market.  Although I don't have experience managing hundreds of rentals and tenants, I do understand the maintenance issues that can come, how frequently they do, what they cost, how to screen a tenant, how to collect rent, etc.  I'm more confident in my ability to manage the property manager, per se.  Invaluable in my opinion.  I sleep better at night knowing that it would be very difficult for them to try to take advantage of me and its enabled me to build a trusting relationship with my PM.  

I'd be holding it in cash right now, waiting for the effects of COVID to emerge more clearly economically.  Then identify markets and asset classes to buy while others are fearful.  

I think the amount of houses you put in an LLC depends more on what your risk tolerance is versus the actual number. If you are willing to risk $500K before setting up another LLC, that could be five $100K houses or one $500K house.

Putting them each in individual LLCs is a banking/accounting/paperwork nightmare.  

You actually can get residential loans under the LLCs name. In your case, as others have mentioned, you can transfer the property out of your name into the LLC via quit claim, but not the mortgage. If you refinanced it under the LLC, you would still have to personally guarantee it, but believe it would provide better asset protection. It is possible a lawyer could look at you personally holding the note and justify that as "piercing the veil". Unlikely, but possible.

Check out lenders like Visio, Lima One, Corevest. All have been affected by COVID, but they write 30 year fixed rates with the LLC on the mortgage/note. Before COVID I was paying 1.5/2pts higher than standard rates.

I would agree with @Kyle Spearin.  People skills and relationship building through networking will bring value to your team by finding opportunity.  

Best of luck.  Out of Indy but primarily invest in Evansville.  I'll send you a PM.  

85% LTV is not something you're going to find. Lending is super tight right now, as specially if you don't already have a relationship with a lender.

I'd talk to local banks and credit unions in your market, who know the market your investing in and may look past the $75K threshold barrier you mentioned. If you are able to find one willing to lend, I'm guessing it will be at 65% LTV with a 1.3/1.4 DSCR and a 6 month seasoning.

You may have better luck raising private money.  

Thanks Alex.  I do recall that study.....best cash flow and best appreciation markets from 2010 through 2020.  Tremendous information.  That's definitely validation for any investments made during the last decade and a useful data set to spot potentially trending-up markets.  

I'm thinking more of looking into the crystal ball for what that data will say when its published in 2030.  Or even 2022.  Example: with stay at home work becoming very much more mainstream due to COVID, will tech companies need to lease or build expensive commercial headquarters in Silicone Valley, or will people be able to work remotely from a cheaper real estate market, thereby flattening SF RE prices?  Is Las Vegas' market overvalued today if casino/entertainment venues aren't going to open or resume traffic for a year?  Examples.  Trying to spot trends.