All Forum Posts by: Sam C.

Good to see young people that are awake when it comes to building wealth. RE is probably one of the last avenues for people that are staring with little money,  lot's of determination, decent IQ, hands-on and patience. Good luck. Short answer is find someone that is willing to help you buy that first investment. Someone that a lender will be willing to loan the money to, that will co-own with you and let you reap the financial upside. Hold as a rental for a year or two then refinance in your name only. If done right with your sweat equity, hard work and the investor's trust in you, it will most likely put you in a position to buy from then on yourself or with a co-investor in it for a fair return on their money.  I did that with a relative about 10-12 years ago and they are now well on their way to real financial independence while bringing me great deals. I still co-sign on some deals but they have become bigger and done as a strategy that both of us profit from. 2018 will see us building an 8-unit from the ground up. Another option is find a property that someone is willing to sell to you through  a lease-purchase option or a rehab where your time and sweat equity is given a $ value then splitting  the profits when sold. Building credit and saving for the cost to buy in can still work but can be a slow and difficult process that requires everything to go right over the course of a number of years. If you really want this your greatest assets will be your enthusiasm, sincerity, transparency and selling an investor on you and the investment.

Would be great if someone would do a paper on the long-term effects and profitability of small investors like myself investing in B-/C properties more than 2 hours from home base.

We have a distribuion center in our area. They do provide a fair number of $10-12/hr jobs l. But I think that if someone would actually do a thorough analysis it would conclude that Amazon is a net destroyer of jobs and businesses.  And a deep look into Amazon would most likely show  a company with little to no profit margins with most money made from state tax incentives, customer data and gov contracts  (600m from CIA is just one example).

Not sure if you can put water/sewer bill in tenant name in Lehigh Valley. But as noted above, you will be held responsible no matter who's name the bill is in. We pay the bill and add it to their ledger (and send them a copy of it) so that it becomes part of the rent. I do have to count it as gross income when paying the business tax in Allentown. I tried to argue it but they of course did not want to hear it. It was a much bigger expense when I owned group homes and all the utilities were in my/company name. It's a small percentage now but unfair: why should I have to pay any tax on money that is not technically rental income and just an accounting service provided to the residents. 

@Dave Foster I thought the value of a like -kind 1031 exchange depended on the cost basis/sale price of the property being sold. If there is nowhere to offset the gain, isn't the taxable gain on the difference between the two the number that determines the value of doing a 1031? Is there a recapture of  depreciation if you are simply carrying the cost basis/depreciation over to the purchased property(s)? I also have not heard anyone mention that a 1031 is not a tax write off only a tax deferral. 

You've gotten some great replies on both sides of the choice. I would tend to not use a real estate agent (unless they are also property managers) if the rent is under 1000-1200 per month. (Before the backlash, I have been a licensed realtor in PA for over 20 years). And they won't screen for you. You will have to do your own. We use a firm that gives us all the information we need with an overall tenant rating for about $25 per person (charged to the applicants as an application fee but a full or partial credit back off first month's rent if they are approved). Well worth it. Might want to look at property mgt. firms. Some will do a rental only agreement and possibly include the screening information gathered but you will have to make the final decision. If you have a full mgt. contract, they most likely will make the decision in placing. Steering clear of a discrimination lawsuit is easy if you follow a few simple rules. 1. Use the same application and screening process for anyone that applies. 2. You can deny if: They cannot afford the rental, evictions for non-payment, recent bankruptcy, financially reckless behavior, etc. You can also deny on habitability limitations (# of people vs # of bedrooms), a consistent no pet policy if they have a pet,  Megan's Law registrants, ex convicts on parole or Sec 8 applications if you do not want to do the work they request after their inspection. If you are new to this, find a mgt. company and let them manage the property(s) for a year while you learn the business. Even then, if you buy more properties, you may find that having a firm manage your properties leaves you more time to grow your portfolio. 

I would think both. Without knowing all the particulars of the investment, any analysis and purchase price should be based on current rents if for no other reason than a negotiating strategy. If the purchase can only make sense financially with the rent increases, your offer should account for the time and risk required to get the rents up enough to make the purchase profitable. 

Any increases will have to be timed with lease expirations/renewals. What does the lease say about it? 

Double security, first and last's months rent: combination of the two. 

A percentage of the rent each year rented and same percentage as in the past when sold.

Like driving by a bad accident.