All Forum Posts by: Ujwal Velagapudi

I do not have any vacation rentals, but I have looked into some. I actually looked into one, in a foreign country, as my first investment and glad I ended up with something local instead. It can be a lot more hands on, more capital intensive, and may be a bit more of a task when just starting out. I do recommend a first investment to be something that you can roll up the sleeves and get your hands dirty with, managing everything yourself. Once you get a feel for it, you can then explore out to other asset types. 

If this vacation rental is close by and something you can/want to manage yourself, I would definitely consider and give it a shot if the financials make sense and property checks out! As long as you are making money on it, I think you'll definitely learn a lot from it being more of an active investor.

I started buying CRE one year out of college. Lived in a room I found on Craigslist for $350/mo. (all inclusive!), kept saving, living frugally. Eventually real estate + frugal lifestyle + saving led to purchasing businesses and more CRE. I was able to work my job and still operate 3 full time businesses (with decent incomes each) pretty effortlessly after I had spent a lot of effort to streamline their operations. On one hand it was too easy, I could just keep buying more and accruing more (to an extent). On the other hand, it was my environment that frustrated me. I didn't want to be boxed in. I wanted to explore, meet ambitious people, and scale further. I wasn't growing where I was. I took my last job offer knowing that it would be my last, and I set a date nearly 1 year out for when I would quit, and I did it. Career wise, I never compromised my growth. I could've kept going, and climbing.

Toughest pill to swallow was literally 6 days after I had resigned, while I was on a beach in Thailand, I got a job offer for 35% more, fully remote (very tough to come by pre-covid), sr. manager role which I had to turn down because it was against the principle of why I had quit my job. It wasn't the money, it was so I could release the mental reigns I felt like were on me to go to my potential with all of my entrepreneurial ventures & scale them. So one feedback I'd have on this is to think long term. Yes you will lose out on your W2 income stream for a while, but you are betting on yourself to make that up multiple times over with your RE or other activities. 

I still think having a W2 has its positives, but once you have multiple (or even one strong one) other sources of income, and truly an entrepreneur that it just mentally drives you nuts being confined to a 9-5, then it's time to go. 

Start with an actionable, quantifiable plan first, and execute.

I have faced this. It was something that had happened 35+ years prior, even before the seller had the property. It got my financing held up until I would perform environmental studies. I had to dig up all of the records from the city, utility companies, and present what I could to make a case that I didn't need to drop tens of thousands in Phase I & II studies. Eventually worked, but deal almost got dropped a few times and took a couple of months of investigative work.

It definitely should not be a deal breaker. It is not uncommon for industrial/commercial properties. Just make sure to check with the city, ensure it was properly decommissioned, and request all the documentation. If you can, I would also request that the seller provide any environmental studies (if requested, most likely will if documentation is poor) by a lender. The biggest issue is the contamination potential, a risk you don't want to mess with, so need to check all the boxes and do it per protocol. 

3.5% CAP with a 3.5% interest rate. You can stop right there. Fees, interest, term length, etc. will make this negative cash flow. Also risk for any slight capex cost, decrease in occupancy, etc.

Appreciation, and other motives, are a reason to purchase, but I wouldn't buy it if the numbers don't work in terms of cash flow with some conservative underwriting. 

I think for those figures to work you would need to get into 4-5% CAP at bare minimum. Also, others may not be leveraging any debt and satisfied with a 3.5% CAP?

I didn't have this with roommates, but did with neighbors in a complex. I didn't say no to a pet in an office unit, and the residential neighbors in the building thought that was permission for them to bring in a pet - even though it's against the lease.

Technically since one was a residential tenant living there, versus another who would simply bring a dog as they worked in their office, it was a bit different. I only charged the residential tenant, and that too a very small fee since they were a long time tenant. Both situations were not for medical reasons. 

In your case, it's under the same apartment. I would charge both, that sounds like a messy situation if it does get out that one wasn't charged. However, if the tenant with medical reasoning does have a doctor's note or something legitimate, I don't think you can charge that tenant legally. So just make sure to check the law within your state on what constitutes as a support animal, what documentation you may (or may not) need, etc.

I'm licensed in MI and here for a little bit. I don't act as an agent, but if you provide a few more details, I can surely connect you with great realtors/teams within our office that will help!

I think that verbiage your attorney has is 100% valid & true. I'm no lawyer, but have seen the most ridiculous cases. You can be sued for anything in this country, doesn't matter what you do on paper. So I personally would be fine reading that, he as an attorney is only looking out for himself too. 

So you ask can you still get sued by investors if all paperwork, agreements, information, etc. is relayed correctly? Definitely. But that doesn't mean you are in the wrong, or that you are not able to defend yourself, or that it will result to much. But you certainly can get sued.

I always make sure every piece of communication is in written form, preferably digital. All documents are formally signed. Also I recap any important conversations and send it via email to confirm/clarify our phone conversation. This is key because I don't want something to be misconstrued, assumed, or implied (even though this will be in legal docs anyways). Having your verbal conversation in a written format changes things, I've seen it so many times, so make sure to recap and bullet point the items you discussed. 

So yes, from my experience anybody can get sued. But you will have a lot easier path to defending if you proactively protect yourself with some steps. I'd be interested to get a lawyer's perspective on this as well on BP. 

Before all that, I would make sure the LP's I'm working with are people I have a relationship with. Just a piece of advice I've been told that can save a lot of headache down the line. Lots of people have money to give, but who do you want to go into business with when stuff hits the fan, or simply doesn't go the way they want.

Well at least it hasn't pooped inside the house...been there before.

I've had a couple tenants hide pets from me/my PM as well. I don't understand how they don't expect it to come out, especially through the neighbors. 

I eventually caved and made sure they complied, extra strictly, with clean up and all. They also had to pay a pet SD + monthly pet fee. In your case you seem to have other issues with the tenant too (hammock). I would still work with them on this issue. I've never had a dog, but I know that people equate their dogs to a child, and they will do absolutely anything to keep it with them. It's best to place strict guidelines, inspect like you said, and charge a higher fee (if possible, not sure how ESA works). Be more understanding and empathetic in your willingness to let them keep the pet, but that they must abide by the guidelines you set. 

I had a tenant that was on the brink of eviction, held out for 6 months through the whole lockdown and just as the eviction moratoriums lifted within that ordinance, they paid the entire balance! I think they hid their cash in a shoebox, just hoping that the government was going to bail them out with with some relief. Thankfully they paid up, but this could've been a painful process for a landlord to bear this on a larger scale.

First priority is cash flow, and then it's the appreciation potential. The first is more in our hands to be able to actively swing it in our favor, but the appreciation aspect isn't necessarily (outside of value add). I'd buy a cash flowing property with potential to increase yield, that just happens to be situated in a growing city/economy/jobs/population.