All Forum Posts by: Tim Marr

full disclosure:

I am not a CPA, attorney, RE or mortgage broker/agent. Please do your own due diligence.

Hi Ryan,

I currently own a short-term rental with a partner. The property title is held by an LLC where we are both 50% member managers. this is how we split the initial capital influx from day one and we also divided management roles. We have an operating agreement that outlines all the details of how returns are split (both cashflow and equity) and when--for us we committed to a 5 year hold before any profits are dispersed.

You can split equity, cash flows, management roles and even personal use of the property (if applicable) however makes sense for your partnership, as long as it is well agreed upon and documented. As I'm sure you have heard partnerships are certainly great for moving further along in your wealth-building journey, but if partners are poorly selected they can also temporarily put the brakes on that journey. I have known my investing partner for almost two decades and fought side-by-side in combat with them, so I have very little reservation about my choice to partner. However, pulling in someone you don't know well, or haven't run through a deal with can have risks. My advice is start small on partnerships (whatever small means to you, maybe one STR in a separate legal entity from the one you run now).

Regarding guaranteeing a "flat rent," do you mean like arbitrage style? Meaning you pay them fixed monthly return (rent) since they are the majority owner of the property and any revenue you create above that, as the manager of the STR is yours? That's interesting, but I suspect most people that want a piece of the STR game want it because the returns are far superior to long term rental investing (if you are in the right market). Just a thought. End of the day, just ask the investor what they want out of it and tailor your deal structure around that and your requirements. That conversation with the potential partner will answer most of your questions, I suspect.

Regarding the comment from @Luke Carl, if the "several people" that are interested in partnering are those that you have a previous relationship with, then you don't necessarily need to syndicate. Either way, I agree with @Jimmy Woodward in that you should keep it as simple as possible. However, you should have air-tight legal agreements that cover any and all scenarios that you are likely to encounter while owning/managing the property. That leg work up front will make it very simple moving forward because you can reference the OA for any future contention if it arises. I know one can't cover every possible scenario in one document, but that should be the goal.

That's my two cents. Good luck with whatever you end up doing and feel free to DM me if I can help in any way.

Best,

Tim

Hey Colton! Thanks! Hit me with a DM. Would love to catch up on what you're up to.

@Dave Foster That makes sense. So a qualified intermediary will be able to advise on specific details on how to structure the entity (I've read tenancy in common is the way to go) for our circumstances (one partner coming in with 1031 and one with just traditional investment capital) and also be able to execute the exchange on our behalf? I somehow thought a qualified intermediary was just analogous to an account custodian who can take care of the mechanics but didn't really advise on particulars, but I suppose part of them ensuring all legal requirements are met is making sure we structure deal in accordance with the law. Thanks for the tip?

Hello Fellow Investors!

Does anyone on here have a solid referral/recommendation for a tax attorney in the Portland Metro Area that really knows their stuff regarding 1031 exchanges? Any leads are appreciated. Thanks in advance.

Best,

Tim

Hey Nathan,

Without knowing your personality I won't presume to tell you whether you should go to college or not, but I’ll tell you my experience, my current life position and my thoughts. 

I went to college at 27 after some time in the military and various jobs. College resulted in a B.S. and masters in engineering which landed me my current job and my wife, to echo @Account Closed.

What college did not give was a better understanding of practical finance and investing. That has been acquired through my own self education, networking and execution on deals (and a good bit of failure).

It didn’t make me rich quick, although my career pays well. For most students I’d argue the standard model of college actually sets them back financially, when loans and opportunity costs are factored in. This is a topic for a much longer post/discussion.

I am currently 43, and will soon be redirecting my energy away from my primary career and 100% towards growing my small investment portfolio. This plan has been influenced and enabled more by everything I’ve done before or after college than by my college experience.

If you have a particular goal with college that supports your long term strategy then go for it, but don’t let it wreck your credit or bury you in debt. Also, don’t think you can’t hustle outside of class in activities that work in concert with your overall investment plan. As mentioned by others here, there are several great stories on the BP podcast where guests came out of college with huge portfolios and tons of real world investing experience. Good luck either way!

Cheers,

Tim

@Neal Collins

You don't see HB2001 impacting the Portland market much then? Low volume compared to new development assuming, as you point out, that current SF owners/residents even make conversions or sell to someone who does?

@Bovard Doerschuk-Tiberi

Your last comment is what I'm hearing from many people I speak to--that SF values will increase if large-scale multi-family in-filling takes off. I think much of this relies on a few assumptions and should be viewed through the lens of where we think the RE cycle in PDX is heading in the short/mid term. Major assumptions that I would want to confirm to have confidence in your version of future events are:

Is current supply-demand gap for rentals big enough or still rising fast enough to justify large-scale MF conversion? I don't know how the large MF dev projects in progress/recently permitted will affect this.

Do the demographics/psycho-graphics of new residents (Portland is still projected to have large pop growth/influx over next decade) conform to "Millennial Mindset" (not to pigeon-hole Millennials) about what ideal living is? Wouldn't this shape property class demand? Maybe traditional SF starter just isn't as desirable as it used to be?

Is PDX, or the RE cycle at large, on the cusp of Phase III/IV? How will this play to HB2001?

Either way, you bring up some really great points. I am very interested to see how things shake out with HB2001. It has the potential to really shake up the PDX housing/RE market for sure.

Cheers,Tim

Hi Ryan,

Welcome!! Small multi-family listings in the Portland Metro area have always been elusive in my experience as well. I may be wrong, as I often am, but this may change a bit moving forward after HB2001 was recently passed. Maybe it is too soon to tell. See details below:

https://olis.leg.state.or.us/liz/2019R1/Measures/Overview/HB2001

I wish you and your wife luck in your search and would love to connect some time. 

Best,

Tim

@Darren McGillvrey somehow I totally missed your reply on here. Need to get a better handle on my alerts... Thanks for the response. Just sent a invitation to connect.