All Forum Posts by: Terra Padgett

Utilized a Solo401k to purchase our first few properties. You can purchase the property within the SoloK outright if you have enough or with a non-recourse loan if financing. Or you can do a participant loan from it and purchase outright or combined with financing. You have several great options already listed as well. You can also add Cash Value Life Insurance policy and Business Credit to your list of options. Seller financing and “Subject To” are other financing options to explore. 

Several options you can explore to get the down payment capital: Solo401k; HELOC on personal residence or from equity of the SFR; Cash Value Life Insurance Policy; Business Credit; Private Lenders, to name a few. Each are great strategies to access capital and each has its pros/cons for utilizing the strategy in the best way. If you're unfamiliar with any of them I'd encourage you to do some research. I've utilized several of them for down payments or buying a property outright. You can definitely get access to the capital you'll need, but set the expectation for yourself that it won't be a cake walk. Feel free to PM me if you'd like to discuss any in further detail.

While cash flow can be nice to see each month, it can be fleeting and inconsistent. As expenses fluctuate (property taxes, insurance, maintenance items, etc), the cash flow is up and down and unreliable. Cash flow, especially in this day and age, helps keep the property afloat and paying for itself without you having to put more money into it.
Appreciation on the other hand is the biggest piece of the real estate pie. It takes longer to realize, but the gain is worth so much more than a couple hundred dollars of cash flow a month. And historically, real estate has a proven track record of appreciating over time. So while cash is necessary to keep the property afloat, I invest more for the appreciation of the asset.(and depreciation & other tax benefits 🙂)

While cash flow can be nice to see each month, it can be fleeting and inconsistent. As expenses fluctuate (property taxes, insurance, maintenance items, etc), the cash flow will be up and down and unreliable. Cash flow, especially in this day and age, should keep the property afloat and paying for itself without you having to put more money into it. 
Appreciation on the other hand is the biggest piece of the real estate pie. It takes longer to realize, but the gain is worth so much more than a couple hundred dollars of cash flow a month. And historically, real estate has a proven track record of appreciating over time. So while cash is necessary to keep the property afloat, I invest more for the appreciation of the asset. 

If you’re looking to make real estate your new job and to earn cash now to use and live on like a job, then go for cash flow. If you’re looking to build long term wealth, accumulate assets, take advantage of tax code, and benefit from appreciation, then play the appreciation long game. Both are strategies, it just depends on what you’re looking for now versus what you’re looking for later. Maybe a mix of both is the right answer for you. Do some wholesaling and fix & flips for some cash now, but also buy some rentals and land for some long term gains. 

Pros: Lower price point than a house. Typically just responsible for the studs in. Not responsible for lawn care. 

Cons: HOA assessments and increases. Neighbors activity or their poor unit maintenance affecting your unit or tenants. Red tape with trying to get the HOA board to approve repairs. Condos don't appreciate in value as well as homes do.

I think if the investor has had bad experiences prior, then Yes, a call from any sponsor comes with a cloud of anxiety on what the call is about. I remember with my SFRs in the beginning, it seemed liked anytime I spoke to my PM there was an issue that required more money out of pocket. I got sick of seeing their emails or phone numbers pop up. Several years later and though it has gotten much much better, there's still a level of "what now" that crosses my mind when I get an email from them. Lol. I personally just want the monthly/quarterly updates and the inbound wires received. Same in the syndication world. I just want the monthly/quarterly updates and the inbound wires received. 

Now with that said, if they're hosting a live event or an invite to something, of course I'd want communication. However someone's past experiences will definitely dictate their reactions/perceptions in the present. (note: there was a whole chapter in the book "The Psychology of Money" regarding this)

Yes, I would take non-responsiveness as a red flag. YOU are the investor/LP/capital provider so whatever YOU deem appropriate is what matters. It's YOUR money after all. Reviews from others are very helpful in navigating the space, however think of it like any other business you've heard good things about. If you patronize or become a customer and and have an awful experience, your review of that business will be completely different. And when it's your money, your opinion of them matters. 

I would setup a Series LLC to begin with if you plan to have multiple properties or businesses. You'll have the Parent or Master LLC and then each property can be held or titled to the different Series LLCs you form. Each series llc can have its own members, assets, liabilities, contractual agreements, etc. It will have its own Operating Agreement as well. It can also have its own EIN, separate from the Parent LLC. You would file the name with the state for each series created so it's clear its a series, but you wouldn't have to do a whole entity formation or do the annual filing fees. The Parent LLC would be the only one to do that. It's truly like having multiple LLCs formed but without the administration tasks and fees that come with having multiple individual LLCs.

I'm all for fractional ownership. Haven't done it on SFR, but I've done several commercial investments where I own a fractional share. It certainly breaks down the barriers to entry so that you can spread coins across a wide array of assets and markets. You're able to share knowledge, experiences, resources, and risk. Spreading smaller amounts across a lot of different investments also de-risks your overall portfolio. I'm very bullish on Passive Investing and creating multiple streams of income (mailbox money as some would say) and see this route as an effective way to achieve that.