All Forum Posts by: Scott Raley

I sold my  rentals in California in  late in 2019 and early 2020 and invested via  1031 exchanges as a general partner in two storage facilities in Florida. My income is double what I was netting in California. I'm always looking to buy to flip but its super competitive here in Silicon Valley. Only chance to make a  profit is to find a deal off market. 

Within a year after buying my first home,  a neighbor on the same street and real estate agent asked if i would be interested in buying their home. This was in 1985 and the asking price was $119,000. That same house today is worth $1,150,000. Few investments stand up to  Silicon Valley real estate. 

This would be a tragic mistake and any chance of me voting for Biden just vanished. What a bold and reckless money grad from our citizens to the government. 

1031 exchange transactions bring fresh inventory to the market. Anytime, land, residential or commercial real estate is bought or sold its a huge win for everyone (think real estate firms,realtors, title companies, tradespeople, developers, construction workers, inspectors, appraisers, etc.) These workers all pay taxes on the income they  earn. Plus local government benefits from the income generated by city and county transfer taxes, permit fees, recording fees etc. Real Estate is dynamic and should be priority #1 of any politician or voter  to commit to making this industry as strong as possible. 

I also have friends that own one story properties with concrete slab foundations. They paint the slab and let the  tenants  buy area rugs. Saves on having to replace rugs when a tenant moves out and reduces pets smell. Again no female cats as their urine is borderline toxic and a very hard smell to get rid of. 

I charge $250 per pet up front on a rental agreement and $25 per month thereafter per pet. No female cats and no dogs over 30 lbs if it's in an HOA. Birds are no charge. I also have the tenants sign a separate disclosure stating they will be 100% responsible for any and all damage their pets causes to the residence or common property if there is an HOA. No pitbulls or german shepherd dogs. I live in lawsuit happy Bay Area California so I need to keep things dialed in. Yes, I have found renters with pets to be more stable tenants.

I'm invested in syndication, multifamily opportunities. The General Partners in most of my deals used  conservative underwriting as part of their proforma combined with abundant reserves  collected from investors on the front end. Now  with Covid-19, they  have implimented  solid strategies to do workouts with those who needed to pay reduced rents or forebearance. These  represented less than 3 % of the total units under management. My take away is, the best syndicators  in MF, choose projects in cities with growing employment, no state income tax, great school systems and  increasing but still reasonable rents. Texas and Florida seem to be the  best fit for that criteria. Unfortunately , my home state of California and high tax New York, do not make the cut. California is the appreciation bet. In, Santa Clara County where I live, the median price is $1,335,000 for a SF home. Run the numbers and your negative hundreds of dollars. However, most SF & MF properties since the 2008 crash have double in price. Email me for the best performing syndication general partners. 

Most of my MF investments through syndication general partners are doing just fine. I do have one in Houston, that has currently suspended the preferred return and is evaluating the property performance on a quarter by quarter basis. What I've learned through Covid-19 and MF,  that it is very important where your invested. For example my DFW area investments are all performing well with very little rent forebearance. Many fortune 500 companies are in  the DFW area with lots of job diversification and a highly educated work force. Plus , Texas is business friendly ( unlike California) no state income tax, and an education system  in the north suburbs  that is excellent. Two things to remember, people have to eat and have a place to live. Class B, is affordable and is very recession resistant in the right areas. 

Like you are now, I considered both options. I work as a realtor and also do a residential flip or two each year in Silicon Valley. That generates enough income to invest in one or two syndication deals a year. My goal is to have 15 or more syndication deals that generate 8% preferred returns and 1031 exchange my initial down payment and the final payout into the next deal the general partner generates.  I personally invest with Thompson Investing because of the track record of the sponsors David invests through. As a passive investor my liability if limited and the sponsor or general partner is on the hook for the loan. My #1 job as a passive investor was to find the right syndication race horse, in my case, Thompson Investing and then decide what races to run with him in ( syndication opportunities) Good luck to you Molly. 

Brian,

If  your an  east bay realtor why are you advising an investor looking to invest in Fremont, San Jose or Milpitas? 

Good info Brian Sparr but much  of your  information does not apply to the Bay Area Real Estate market. Your analysis is  very generic and  does not apply to our
Bay Area market. Your from Cary, NC. How can you possibly  comment on being a RE expert in an area that is 3000 mile from your home?   You likely  use Zillow and Redfin  to do your analysis but everyone know their numbers are baked and unreliable.  The  bottom line is  that boots on  the ground ( local agent specialist) know  what going on.