All Forum Posts by: Steve W.

An LLC is for asset protection, not tax savings. So there would not be a tax advantage from the perspective of forming an entity. In fact, you can move the ownership now into and LLC or trust (without selling), which is actually probably a good idea if the plans are for you to inherit the property (helps with probate etc).

I am a fan of “trading up” meaning selling one property to get into a better neighborhood or better house. 

As I mentioned, I live in Sarasota and self manage here locally. It is hard for me to imagine a location where the house sells for 600k and the location is bad. What area is is located and where is the new location you are considering? 

Feel free to send a DM if you prefer.

I live in Sarasota and self-manage here locally.

Suggestion about what to do, It really is a question of “what do you want.”

You say they don’t want to pay for 2 places. That they want to pay cash for a home to live next to you.

Is it possible they value the quality of life by living next to you, and the peace of mind of not having a mortgage or having to deal with a long distance property, more than owning real estate? Not everyone optimizes their life for financial efficiency and long term wealth, especially once people reach a certain age in life and values change. 

So I think it is important to understand why they want or don’t want the things you mentioned, and then dig deeper. For example, Would they entertain owning two houses, if the FL one supported itself and even paid for their new primary residence, if it brought them income and they never had to spend a second thinking about it? If yes, how would you make that work?

Quote from @Gabriella Borukhov:

Quote from @Taylor L.:

Can you be more specific with its location in Florida?

 It's in the city limits of Sarasota. 

I am local in Sarasota. I did a live-in fix and now rent it on AirBnB/VRBO. I'd be happy to chat about whatever if you'd like. 

I had a horrendous time with contractors. Very expensive, don't show up on time, and do crappy work. I'd say the #1 most important next step is to get a contractor that you can trust, because you just really can't see the finer details through facetime/video/pictures. 

1. Hold and pay property taxes

2. Build

3. Sell to a developer

Will that be its own training/course or be an addition to the 3LPD?

What does being near a "top school" have to do with STR?

Realtor wants to make a comission on the sale and then get recurring revenue afterwards. He takes zero risk while you bear all of it, meanwhile getting mediocre returns even with his inflated revenue projections.

I say no deal on this one.

As a self identified Super Rookie, I would suggest *NOT* rushing in to things. It is good to be excited and motivated, people are here to push you to action. But give yourself the time to learn, strategize, make a plan, and act on it. Especially given today's market conditions. You have time to figure things out.

That being said, @Bonnie Griffin Kaake gave some stellar advice. IMO a HELOC is best used for short term deployments, to get access to quick, short term cash infusions. Like a hard money lender but substantially cheaper for your own acquisitions.

STR is "saturated" everywhere, meaning it is a buzz word everyone is frothing about that surged to the frontlines even when compared to just 2-3 years ago. But what if you spent the time to REALLY understand the STR opportunities in your back yard? Then lazer focus on that, and when you find the right opportunity (location, price tag, income, expenses) you are equipped with your HELOC to take it down. With material participation + cost segregation / bonus depreciation + first year's income, you could be well into paying off that HELOC ASAP (to then go deploy again). For more information on that, check out "Tax Smart Real Estate Investors" on youtube, and find videos tagged with short term rental loophole (many of which can be found in the playlist "The Real Estate CPA Podcast"). You'd ultimately need to connect with a CPA to make sure you are executing this correctly, because there are a lot of steps. But remember, you have time to get your ducks in a row!

Another strategy I have heard people use, is to use a HELOC not for the down payment, but for a full blown cash offer. People were doing this as a way to win bidding wars, but nowadays with price reductions and buyer financing contingency cancellations, you can try to leverage your "sure thing" cash offer to get a discount on the property. Then, after closing, you use delayed financing to immediately turn around and get a long term mortgage to pay off (most) of your HELOC. Check in with lenders to learn more about the practical aspects of doing this.

MANY places have skyrocketed in price, it is not unique to Sarasota. Assuredly, some of those markets are more exposed than others. The question is - compared to what? Do you think Sarasota is one of those markets that is comparatively more exposed?

And if the answer is yes, sounds like your heart might now be in Sarasota, might feel more comfortable with a place that hasn't gone up much in price, doesn't have high prospects of going up much in price, but also less risk to the downside - the traditional linear markets with better rent to value ratios. 

Quote from @Cal Martin:

I live in an area that under most circumstances that doesn't currently cash flow for new deals and deals are selling at a higher premium than any other place in the country. I am looking for alternative markets to put my money into.

Through my research I've selected Birmingham, Memphis, and San Antonio as my front running markets.

Give me a 3 Bullet Point list on why I should invest in Birmingham

- Statistics are encouraged, however, I am also interested in the feel and vibe of the city and prominent areas.

Looking forward to hearing your responses!

Sounds like you've done a lot of work narrowing down to 3 areas. IMO, At some point, data can only take you so far and you need feeling to take you the rest of the way. Sounds like you might be at that point. I'd suggest networking with people in each location, then taking weekend trips there meeting in person and touring the area.

For example, but I have visited Memphis and didn't like it, Birmingham surprised me left me with a very good impression, and I've never been in San Antonio. When you visit, you can make your own subjective insights.

First, let's cross #1 off the list :)

Choosing between 2 & 3 depends on your goals. 

- If your goals are cashflow TODAY, would you re-invest in a cheaper area that has better rent to value? Do you have that market picked out already?

- If your goals are appreciation TOMORROW (in rent and/or value), do you LIKE this area? Do think this market will do well in the long run, or do you favor somewhere else? As long at the property is supporting itself, it sounds like it will still give you a good $160k to continue to play with while keeping this one.

- Or maybe for your goals you've decided you prefer a different asset class, like MFR or SFR condos. That could be another reason to sell. I was talking to an investor the other day, and he is selling a property that he likes, we would prefer to keep it, but he needs the cash to be a partner in a mobile home park.