All Forum Posts by: Tyler Caglia

@Trevor Woodlief

Trevor, I’m also on the journey to larger syndications. I agree with a previous comment that Joe Fairless puts out fantastic free content through his podcast, books, and website. I just sent you a PM to discuss further.

@Tony Robinson

Tony, congrats on your success. That is a fantastic story. Curious on a couple of things:

1. You said next time you’ll wait to refinance because the monthly payment on a 6% interest only construction loan is cheaper than a conventional 30 year at 4.75% since the conventional includes escrow payments for insurance and taxes. However, you would still be paying insurance and taxes regardless while you own the home, the only difference is whether it’s through your mortgage payment or not (tip- make sure you’re checking the county website for property taxes due shortly after closing since it’s not automatically covered by your construction loan). Why is this affecting your decision of when to refinance? Shouldn’t it be based on whether you want to walk away with any extra cash or not after the re-fi by doing a cash out instead of rate/term refinance? Or whether you’re wanting to get out of risky debt (interest only short term loan) and lock in a long term loan with a good rate as soon as possible to complete the deal? I am just confused why your decision of when to refinance has anything to do with fixed costs like insurance and taxes being included in the loan payment. Or did I misunderstand what you were saying?

2. I saw in one of your comments you’re cash flowing about $200 after management and all other fees. Does that include any contingency for monthly maintenance and vacancy?

Again, congrats on the success and thanks for sharing. Finding a bank that gave you those loan options was a fantastic story. I am based in CA and own out of state as well, always enjoy connecting with other investors doing the same thing.

@Michael Plaks Thanks Michael for your valuable input to this conversation. A more relevant question to prove my point: Does Buffet network with fellow billionaires? Does Tiger network with fellow golfers? Sometimes it’s nice to see how your peers are handling situations similar to yours. Doesn’t mean you’re going to copy what they’re doing, but there is real value in it. I would consider the experience and knowledge that most of the active members on BP bring to the table to be much more valuable than that of a fan in the gallery on a golf course.

 Fair enough I guess, even though again, the point of this post is not to obtain advice or impact the way I plan to structure my portfolio (in reference to your suit size comment). A simple survey of other investors is all I was after. I find it interesting to see how simple or complex other investors have organized their assets, and whether it’s similar to the path I’m on.

I respect your points, and I’m not intending to suggest that all high-level professional advice conflicts entirely, rather just making the point that no two pieces of advice are identical in the tax and legal landscape, because it is obviously quite complex. Doesn’t mean any of that advice is wrong, but there are many different ways to structure a portfolio as you know.

Do you think a billionaire, who would likely have the “best of the best” tax and legal professionals on his team that all know the details of his situation, receives the same advice from each of them? Do you think every professional swing coach would offer the same advice to a professional golfer? I would argue otherwise. This is why they’re considered “high-level,” because they offer unique value to their client and have their own perspective on how to approach a situation. 

 Again, missing the main point of the post here. To your point- I’ve personally discussed my very simple situation with 3 different lawyers and 2 different CPAs, and none of the advice I received was the same. Also a simple search on BP of past forums will help reinforce my point. 

@Michael Plaks Nope, never said I was going to replicate what other people are doing. Just said I was interested in knowing what other people are doing.

Also never said I wouldn’t consider the opinions of professionals. That information is readily available in abundance and receiving it yet again doesn’t seem useful to me.

Think of this as a simple survey of real estate investors and professionals, without getting bogged down by the usual debates we’ve all seen before.

@Michael Plaks

Michael, thanks for your input. I expected responses like this, and I disagree with your assessment. I could reach out to 10 different lawyers and CPAs and get 10 different opinions on why I should do this or not do that. I could find hundreds of BP posts arguing why you should use an LLC vs. no LLC. To use your virus example- we see people stockpiling toilet paper. Do I really need an explanation of "why" they're doing so? I'm more interested in evaluating what people have ultimately decided to do with their own portfolio, as that is more useful/interesting to me than receiving another 10 conflicting opinions.

@Cameron Tope Thanks for asking, I meant to include this in the original post. I currently have my properties in my own name with umbrella insurance. I do not self-manage. Currently working on re-structuring them under an LLC, with the intent to create additional entities and a holding LLC down the road as my portfolio grows. Curious to see if anyone else has gone a similar route, as it looks like you have.

@Evelyn Castillo I’m personally waiting it out a bit. However, by house hacking you are in a different situation. If you can find a property, say a duplex for example, in which the current market rent for the other unit covers most or all of your total monthly cost, and you can secure long term financing for it, it would be a win in my opinion. Even if that duplex dropped in value in the short term, someone else is still paying your own housing expenses, allowing you to save that money each month for your next deal. Obviously this would depend a lot on what market you’re in (coastal markets are a bit more risky in a recession, for example, but will appreciate more in the long term). Good luck!

@Adam Hoak I am in a similar situation. Elderly couple that had been there over 10 years without an increase. Currently paying $550 when I’m getting $1150 in my similar homes nearby. I would love for them to stay because they take excellent care of the property and always pay on time (from what I know), but as soon as I closed on it they gave me a list of deferred maintenance items that needed to be addressed and I would be losing money every month at $550. They’re a very nice couple, and were expecting a rent increase with the home sale, so luckily when I went to them and said I’d need to raise rent, they weren’t too surprised. Trying to raise it to $800 just to break even, but with the virus situation I put the increase on hold for now. I feel very bad about it, and wish I didn’t have to raise rent at all, but ultimately you’ve gotta be fair to yourself just as much as you are fair to them. So that’s how I decided that it would be best to meet halfway for now.

Ultimately the situation taught me that buying an occupied property at below market rent can be a difficult situation if you self-manage.