All Forum Posts by: Sam Applegate

@Alberto Solis
Let me know if I'm mistaken, but it sounds like your issue is with being an LP rather than with the DST structure itself. I do agree that there is a lot of risk associated with being an LP, mainly due to the number of operators who focus on making money for themselves rather than for their investors. That being said, there can also be some advantages, such as economies of scale, which allow smaller investors to achieve better returns.In other words, the DST structure itself doesn't significantly hamper returns. If you are running a DST platform, you could do so in a way that benefits the investors. However, if you generalize, if the company isn't personally investing in deals and is solely working off fees and carried interest, then I agree that you probably aren't seeing the best deals.

@Taylor Cook
I believe you are considered a resident if you spend more than 181 days of the year in the state. However, I believe Colorado also has a requirement that you must spend 90 consecutive days.

@Charlice Arnold
This is a tough question because it's so broad; debt is dealt with on a deal-by-deal and location-by-location basis. It depends a lot on the asset, the cash flow it generates, and the risk tolerance. The best way to become good at navigating the process is through repetition and by going through the process yourself.
However, here are a few items to consider: whether you want a fixed-rate or variable-rate loan, and also understanding prepayment penalties. I would recommend finding the top lenders in the area where you're buying and gaining a good understanding of their terms.

@Connor McGinnis 

It is more of a lifestyle choice. What do you want: more or less debt? It seems that your parents prefer less debt, which is why they like their loans to be amortized over a few years. Essentially, a shorter term allows them to pay off their debt more quickly. That is a fine approach and is more conservative.

However, for my preferences, I would focus on optimizing debt for cash flow. I want my interest rates to be as low as possible and my loan to be amortized over the longest period, typically 30 years. This allows my loan payments to be smaller and my properties to be more profitable. Additionally, a longer amortization period provides more flexibility. If you have a 15-year term, you're forced to pay it off quickly. However, with a 30-year term, your mortgage payment obligations are smaller, but you have the option to pay more toward the principal if you choose.

If you’re having trouble penciling things out, it could be because you’re using an atypical debt structure. Many investors use 30-year terms.

@Spencer Perron

I agree with the previous comments. I believe tenant laws in Saint Paul can be quite strict. I’d make sure your business plan lines up with these rules to avoid any problems. It might be a good idea to talk to a local expert to make sure you’re on the right track.

@Raj Singh

I agree with @Scott Scoville that it's important to check the leases to make sure the rents match what the broker or agent told you. You want to confirm your expected income.

After checking the leases and seeing what the current rents are, I’d also compare them to market rents and see how much time is left on the tenants' leases. Depending on your plan, some lease terms might work out better or worse. For example, if both leases are month-to-month, the tenants could move out right away. This could be good if you plan to raise rents quickly, but it could also be risky if you’re counting on steady income to cover expenses. It's worth weighing the pros and cons to make sure it fits with your overall strategy.

@Jared Mink

You might want to take a look at this website - https://www.furnishedfinder.com/. It specializes in short term rentals for nurses.

@Alex Ng

This is an interesting business model, and I don’t think having Section 8 tenants automatically means more issues. I actually have Section 8 tenants who are great—no turnover, and they always pay rent on time.

What really matters is the quality of the place you’re offering. If you’re providing low-income housing and the property is rundown, tenants might not take great care of it. But if the property is clean and well-kept—even if it’s nothing fancy—people are more likely to respect and take care of it. Section 8 tenants often don’t have nice places to live. So when you provide that option to them, they're more likely to treat it well.

@Account Closed

This is a great question, and while I wish I could give you a direct answer, it really depends on what you want your life to look like.

It might help to figure out your end goal first and then work backwards from there.

For example, if your plan is to buy a few properties and live off the passive income so you can focus on your hobbies, that’s going to be a completely different path than if you’re looking to network with limited partners and start your own syndication fund.

I’m not as experienced in development, so I'm going to take a stab at extrapolating my multifamily knowledge to development.  

LP's have a significant amount of dry powder but the majority of it is on the sidelines. They have been very hesitant to deploy capital, especially if you don't have a track record. If the fed cut rates next month it's possible some of this capital will become more active, although tough to say. For multifamily acquisition, LP's are looking for a high teen IRR with conservative underwriting. I can't speak to the return thresholds for development but it's safe to assume it's higher given the larger risk profile.

That being said, it doesn't hurt to give it a try as you never know where those new relationships will take you.