All Forum Posts by: Sushil Sureka

We have purchased 3 deals from new western.  They are generally honest people - the hardest thing has been that they will have an open house and 100 people would show up. The competition is just insane. We gave up after 2019... mistake :-) Only if we got few more..I am in Austin by the way..

Just a quick note on the Austin/SA corridor - we own three houses in Schertz/Cibolo area (170-190 range) - it cash flows fine (though getting little harder) but the biggest problem has been all houses has experienced some foundation issue. It seems like soil is on softer side, and it is not a matter of if but rather when. Other than that we have been generally happy.

Here in Austin, it is just not worth looking for rental. Pflugerville is also getting out of reach. Round Rock, Cedar Park, Leander has already been not cash flowing. Even liberty hills has not been spared. Taxes will kill you. The house that use to barely cash flow is now easily cash negative. The appraisal for 2020 is further up across the board, further pressuring cash flow. Appreciation is only realized when you sell, for now we are bleeding cash in Austin with property taxes.

Hi

So me and my partner have now rental property that is worth above > $1M. Since all of them has mortgage behind them, our net equity is much much less - 20% or so. But I suppose we are still required to file a balance sheet. Is that a correct understanding.

Also what if we just split the properties in three different LLC, will the requirement go away or there is some clause to not allow for that.

Sushil

I would say deal flow. 

Another one for me personally is what duration note to purchase. We have purchased  notes for 5 years to 30 years duration. I am not sure what my priorities will be in life in 10-20 years, so sometime it feels 30 year duration is something I should avoid but then there is a trade off. I get better pricing on those and also it addresses deal flow issue to an extent.  I still am not sure which way I am headed on duration. 

I have not rented through an agent but everything we post on Zillow gets good traction. We have tried couple other online site like rentals.com etc but of not much use. 

I do think paying $500 or so for a leasing agent is fair given that it gets you larger exposure on MLS and they can personally be there to show the property if need to be. It is just that we never had any vacancies so had no need to go down that path.

Sushil

I struggle with that question myself. We have three properties that are in 10 mile radius from where we live, and then one around 75 miles. 

It is just that we feel for capital improvement projects, being nearby helps out even if you have a property manager. For example, our property that is 75 miles out, is next to a 2 lane street and we are looking to raise the fence and plant some trees. It is lot easier if we were around.  For HVAC replacement I feel the same. It can save you $500 to $1000 if you are involved in these decisions based on our pure guesstimate over a year.

2nd advantage is we have much better idea in terms of how much to push on rent in nearby places than the one that is further away. Property managers can help you quite a bit but we feel we have little more say into it for local zip codes.

Other than that, I am not sure if there are other big differences.

Sushil

I have taken a loan from 401K. If you are still working for the same company you can not roll it over to self directed IRA which means you can only take portion of the 401K as loan.

Fidelity requires I pay 3.5% or so to myself. The only downside is that this 3.5% interest will be taxed again in future (you would be taxed on whatever interest you earn at your regular income tax level now). Honestly not a big deal but just wanted to note that.

If you are not working for the company anymore, look at SDIRA services. Lower fees and the interest is paid back in the same account so the whole money grows tax free. Much much more attractive option.

As others have said, withdrawal - bad idea.

MLS is the way most people go with. Each city has its own MLS access so you need to contact a local agent. Most agents will pull it up for free as a goodwill gesture/relationship building for the first couple of times.

We are looking at a deal to finance land at a very high LTV - the trade off is we get to participate at equal or better terms on profitability. We have done business with the potential partner and have high regards for him.

The idea is to flip to a larger apartment builder or REIT to build an apartment in multi phase approach. It just got rezoned for multi family. As part of our research we are looking to see for an area of say 20K population, how many apartment units are really needed or can be supported by the market. 1000 units/500 - more? I suppose the first answer is it depends. We can get a feel of the market by calling around other apartments and see how tight the inventory is. Are there other avenues in terms of data maintained by government or third party. How should one go about researching market needs and see if flipping is a viable option here.

If you have experience in this area, please ping me. I can provide more detail.

Sushil

I wanted to get your opinion on a financing situation where borrower/buyer is looking to finance at 65% LTV - value is under 300K.

The seller is willing to finance/note for 40% of the money at 2nd lien position. We would fund 60% of the transaction price + 5% additional money allocated towards improvement. We would get first lien position.

It is a 5 year+ loan. The question is with borrower no money down, would you do this deal.