All Forum Posts by: Tanner Lewis

If you want to sell it and avoid capital gains tax, you could do a 1031 exchange into a new deal. This would essentially defer capital gains until you either 1) sell the new deal or 2) die and the IRS cleans the slate. This is the swap till you drop method. 

I am a big fan of small multifamily deals in this market. 2-4 units to maximize cash flow. 

It really just limits your exit options and decreases your ability to leverage. If you are looking to do this deal, I suggest looking at seller financing and then having an exit strategy to sell to an all-cash buyer, but personally, I would look at other deals. 

Is the reason for assuming it the current interest rate of the debt? 

Quote from @Kelsey VanSleen:

Quote from @Tanner Lewis:

Hey Jeremy, the best strategies for high cash flow will also be riskier. The riskiest strategies that have the highest projected income are flipping and short-term rentals, behind that, BRRRRing, and behind that is turn-key cash flowing long term rentals. Of course, many other strategies exist, but these are the basics. 

As a first-time investor, I HIGHLY suggest going with a turnkey long-term rental, and once you begin to learn how to master that strategy, you can branch out into another. It is best first to master the basics, even if it takes longer to make a significant profit. I have seen too many first-time investors try to gut and rehab a house and find themselves underwater on the deal. 

 Considering the concept "you make money when you buy" how would you reconcile that against your recommendation that a new investor starts with a turnkey rental vs a property that needs even minimal work so there's equity in the property after repairs/upgrades?

Hey Kelsey - I hear what you are saying: it is hard to buy something at a good price when it is not distressed. I still think a lipstick rehab is ok for a first-time investor, but you just have to be careful about getting in too deep on your first deal. I see a lot of investors tear a deal down to the studs when they just need a cosmetic rehab, and then they are underwater on the deal and aren't able to exit without losing a significant chunk of money. What makes sense for you really depends on your experience and risk tolerance. 

Hey Bryan, you can either get a HELOC or cash-out refinance. Then, depending on your strategy, you can use those funds on an investment property with a DSCR or hard money loan.

I would target high-interest-rate debt first, anything above ~8% or so. Once that is paid off, I say gradually pay off the rest but invest more into your business. It really comes down to what the better return on investment is. Just pay off whatever debt interest rates are below your rate of return on your business. 

Quote from @Account Closed:

I live in Los Angeles and am new to real estate investing. I have about $100K saved up and am able to save $4k/month. My goal is to build a large enough portfolio to live off of (I'm still in college). I'm interested in BRRRR but not sure which market -- maybe Cleveland or Columbus? I've been reading a ton about real estate, and I'd be interested in becoming an investment-friendly real estate agent. Would it be possible to do deals in the Midwest while I'm still going to college in LA?

Please reach out if you have any real estate groups I can join!

Hey Danny! I personally am a big fan of the Cleveland market. I have seen a lot of movement there on the lending side, and it has both good appreciation and cash flow. If you are looking to BRRRR, it may be tricky to do your first flip in an out-of-state market, especially if you are using hard money. I think the best thing to do to set you up to be eligible for financing across the board will be to buy a mostly turnkey deal, and then do a lipstick reno out of pocket, and then refinance. This will build a track record for hard money lenders and will also give you experience with remote flip management with lowered risk. 

Quote from @Bob Stevens:

Quote from @Tanner Lewis:

Quote from @John K.:

Quote from @Tanner Lewis:

Hey John - I'm also in Austin! If you are starting out, I think relocating to a market with higher cash flow and lower taxes makes more sense. You can move to one of these markets and do a 3.5% down FHA loan, live in the property for a year, and then get another 5% down conventional. With this, you will have 8 units with as little down as possible. Then, I would go ahead and start to use hard money and DSCR to BRRRR properties. This is my strategy, but another may be better based on your goals and risk tolerance.

Hi Tanner, 
Thanks for your advice. What are the examples of markets that can cash flow well? 

The midwest is good, but I am mainly a fan of Ohio markets like Cleveland. I also like North Carolina, Tennessee and Georgia since they are more hybrid markets that have both appreciation and cash flow. 

Cleveland has had some of the highest % increase than any other place I am aware of. Double triple quadruple and more, on TOP of the 30% net caps from 7 8 years ago. IMO EC is going to pop! Its already starting, hence no inventory for a reason 

All the best 

Yeah I have seen a lot of movement in that market recently on the lending side

Quote from @John K.:

Quote from @Tanner Lewis:

Hey John - I'm also in Austin! If you are starting out, I think relocating to a market with higher cash flow and lower taxes makes more sense. You can move to one of these markets and do a 3.5% down FHA loan, live in the property for a year, and then get another 5% down conventional. With this, you will have 8 units with as little down as possible. Then, I would go ahead and start to use hard money and DSCR to BRRRR properties. This is my strategy, but another may be better based on your goals and risk tolerance.

Hi Tanner, 
Thanks for your advice. What are the examples of markets that can cash flow well? 

The midwest is good, but I am mainly a fan of Ohio markets like Cleveland. I also like North Carolina, Tennessee and Georgia since they are more hybrid markets that have both appreciation and cash flow.