All Forum Posts by: Ty Coutts

Hello, Austin Nicol, understanding the difference between cash flow markets and appreciation markets is crucial for real estate investors, as each type of market aligns with different investment strategies and goals. Here’s a detailed breakdown of these two types of markets and the factors that contribute to each:

Cash Flow Market, a cash flow market is one where rental income exceeds the expenses of owning the property (mortgage, taxes, insurance, maintenance, and property management), resulting in positive monthly cash flow for the investor.

Key Characteristics:

High Rental Yields: Properties typically have high rental yields compared to their purchase prices.
Stable or Slow Appreciation: Property values increase slowly over time, if at all.
Lower Property Prices: Generally, property prices are lower, making it easier to achieve positive cash flow.
Higher Rental Demand: Strong demand for rentals due to economic factors, demographics, or local employment conditions.

Factors Contributing to Cash Flow Markets:

Economic Stability: Stable job markets and steady local economies that support rental demand.
Rental Market: High percentage of renters compared to homeowners.
Affordability: Affordable property prices relative to rental income.
Local Policies: Landlord-friendly laws and regulations.

Appreciation Market, an appreciation market is one where property values increase significantly over time, offering substantial capital gains upon sale, but rental yields may be lower, resulting in lower monthly cash flow.

Key Characteristics:

High Property Value Growth: Significant annual increases in property values.
Lower Rental Yields: Rental income may not cover the monthly expenses, leading to lower or even negative cash flow.
Higher Property Prices: Generally higher property prices, which can make it harder to achieve positive cash flow.
Strong Economic Growth: Rapid economic growth, population influx, and development.

Factors Contributing to Appreciation Markets:

Economic Boom: Strong local economy with job growth and high-paying industries.
Population Growth: Influx of people moving to the area, increasing demand for housing.
Infrastructure Development: Significant investments in infrastructure, amenities, and services.
Desirability: High quality of life, good schools, and attractive neighborhoods.

I hope this information finds you well. 

Hi Allan,

Yes, it is possible to list your property for rent on platforms like Zillow, Apartments.com, and Avail.Co without displaying the exact address to the public. 

When you create a listing on these platforms, you will have the option to provide details about your property such as the number of bedrooms, bathrooms, amenities, and rental price without disclosing the exact address. Instead of the precise address, you can describe the general location or neighborhood where the property is located. Interested renters can contact you through the platform for more details. You can then provide the exact address and schedule viewings based on mutual agreement.

Hope this helps! Please feel free to DM me if you need further assistance or if you would just like to discuss!

Hello, Manuel Llanas, your property has several positive attributes, such as a great location and a low mortgage rate. However, you also face some challenges, including renovation needs and an unusual humming sound. Here's what I would do step-by-step.

1. Get a clear estimate of the renovation costs. This will help you understand the financial investment required to make your property rental-ready.

2. The humming sound you mentioned could be a concern for potential tenants. Consider hiring a professional to check it out to find possible causes. 

3. Research comparable rental properties in your area to determine the potential rental income. Websites like Zillow, Rent.com, or local real estate agents can provide insights.

4. Calculate your NOI (Net Operating Income) by subtracting your operating expenses (including mortgage, insurance, HOA, maintenance, and property management fees) from your rental income.

5. Perform a detailed financial analysis to determine the viability of renting out the property. Consider the following: 

- renovation cost, monthly expenses, potential rental income, cash flow, return on investment

6. Use this information to form a pros and cons list, and see if it makes sense for your lifestyle. I hope this helps. 

Hi Shelley,

Some potential courses of action would be:

Review Lease Agreement: Check your lease agreement with the tenants. Typically, it should outline what can and cannot be placed on outdoor areas like porches. 

Discuss with Tenants: Approach your tenants in a friendly manner and express your concerns about the punching bag. Ask them about it and whether it's free-standing or attached to the porch. Explain your worries about potential damage to the new porch and noise disturbance, especially if it's causing vibrations that could affect the structure or annoy neighbors.

Consider Amendments: If your lease agreement doesn't currently address items like punching bags specifically, consider adding an amendment that outlines rules for using outdoor spaces to prevent future misunderstandings.

Document Agreements: Whatever agreement you come to with your tenants, document it in writing to ensure clarity and as a reference in case issues arise later.

If you need any further assistance or would like to discuss please feel free to DM me!

Hi, Igor Balakhnin, I think I can help with your question. It depends on specific conditions.

The IRS allows for a capital gains tax exclusion on the sale of your primary residence under certain conditions:
- Single taxpayers can exclude up to $250,000 of capital gains.
- Married couples filing jointly can exclude up to $500,000 of capital gains.

Conditions for Exclusion:
- Ownership and Use Test: You must have owned the property and lived in it as your primary residence for at least two out of the last five years before the sale.
- Frequency: You cannot have excluded the gain from the sale of another home in the two years before the sale of this property.

For a duplex where you occupy one unit and rent out the other, the rules are slightly different:
- Owner-Occupied Unit: The portion of the property you lived in qualifies for the exclusion, provided you meet the ownership and use test.
- Rental Unit: The portion of the property that was rented out does not qualify for the full exclusion but can benefit from partial exclusion based on the proportion of time you lived in the property.

I personally have set my rentals up as LLC's and gotten an EIN number in order to set up bank accounts in which all the rents get deposited and all the expenses get taken out of. This will not only protect your personal assets from any potential renter who is looking to sue, but it also will vastly help the underwriters track income when looking to get approved for future loans. This will also help you be organized when completing taxes and writing off any potential expenses like furniture, utilities, repairs etc. that come with the rental business. Please note that I am not a CPA or an attorney, so please seek professional advice for any legal or tax questions as I know just enough to be dangerous! If you want any good contacts for those realms as well, let me know!

@Rick Albert mentions a great point. You can absolutely keep going from FHA to FHA (as long as you move into the properties), but you will need to refinance to first home into conventional before using FHA again. Also a weird caveat is that in order to count rental income on any FHA property to offset the mortgage for your DTI calculations on the next approval, the properties have to be more than 100 miles away.

Also, in regards to communication with your lender, I always tell my clients to consider me as their lawyer and tell me everything (good, bad and ugly) and then I can best help them navigate how to communicate to the Underwiters. Let me know if you ever want to chat more directly about house hacking as my wife and I personally do this as well as most of my clients that I help!

Hey Ryan,

Dayton, TN, is experiencing growth and increasing demand for rental properties, which could make it a good investment for a multifamily property with 2 bed, 1 bath units. While specific rental data might be scarce on platforms like Rentometer, local real estate agents, property managers, and online rental listings can provide more accurate rent rates and market trends. It's advisable to conduct thorough due diligence by visiting the area, speaking with local experts, and evaluating economic indicators to confirm the high demand and growth potential.

I can provide you with more information on rates if you message me directly, or connect you with any one of these information sources.

Hi Ashish,

Zip code 38125 in Memphis is generally considered a good area, often described as an A+ neighborhood with newer developments and amenities. However, as you stated, Memphis can vary significantly by street, so I recommend visiting the area personally and observe the specific streets and surroundings, or doing a zoom call with a trusted realtor who has physically been there. Additionally, talking to local residents and checking crime statistics for precise locations within the zip code can provide more detailed insights.

If you have any other questions or just want to discuss further please feel free to message me. I could also possibly help connect you with a realtor!

Hey Carter,

Renting to a Section 8 tenant on disability can provide stable and reliable income since the government pays a significant portion of the rent directly to you. However, it's unlikely the government will cover 100% of the rent. Tenants typically pay around 30% of their adjusted income towards rent, with the government covering the rest based on local payment standards. While renting to Section 8 tenants can reduce the risk of non-payment, your property must meet specific standards and pass inspections by the Public Housing Authority.

Please feel free to DM me if you have anymore questions or if you just want to discuss further!