All Forum Posts by: Bill F.

@Phil LeNeveu Thanks man. I know it can be a little overwhelming having to fit all the pieces of the info together that you have absorbed over the last year of research into goals and plans that work for you. I know I got into RE Investing to diversify my portfolio out of equities and gain financial freedom, not to have answer the deep questions about life; however, knowing where you want to go and why makes planning the route easier and putting in the extra hours have a purpose.

I'm sure you've heard of it, but your goals should be SMART (Specific, measurable, attainable relevant, and timely) You're more than half way there with $450k gross rental income. Once you slap a time frame on it you'll know if its attainable. 

I'll diverge from the crowd here and agree with you about SFR being a good place to start. I've been in the 12 hours a day six days a W2 job club and it works for a few reasons: 1. lower amount of risk in terms of capital if you make a major mistake. 2. it has a larger pool with which to choose from assets 3. there is a good chance RE may not be for you at this point in your life so SFRs give you a better exit strategy.

Why are you thinking turn key and not investing locally (w/in 2 hour of Boston)? I grew up outside of Boston and there still great opportunities locally.

@Justin Bullock I'll echo what everyone else has said, especially @Tamiel Kenney, with one caveat. You need to find a lender, be it a local/regional bank or credit union, who wants to make loans on small apartments. Some may want to be in that space and others may not. It could be for a number of varying reasons that don't have anything to do with you; they may not have anyone on staff to underwrite them, the asset may not meet with their strategic goals, or something else. 

Short answer to your question: find a bank that loans in the asset class you want to be in, find the property, then bring it to the bank. 

@KC Jones Its not that common, but I've seen it a few times. It does serve to keep some tire kickers away and is more prevalent in investment properties. 

You can do your walk through when you insect the home. I only walk through a property once. I run the preliminary numbers using the pictures online to make a guess about rehab cost, make an offer with a home inspection contingency, put up some cash for escrow and walk through the home with your home inspector. After the inspection I refine my numbers to see if my offer price is still works. I begin to negotiate concessions with the seller if the deal allows it.

I wouldn't worry about them hiding something. If they are, it will come to the surface if you conduct a through due diligence.

@Phil LeNeveu One critique I have is that four properties isn't a goal; its a plan. Its seems petty, but a goal answers why you are investing. For instance, I have a goal of $150k in net cash flow per year by 2027. I can reach that goal through buying only SFRs, only MFRs, 10+unit apartment buildings ect. Only buying one type of property is unlikely though. I'll most likely buy a few more SFRs and then transition to another property type and then maybe I'll transition to Note investing. In short the path doesn't matter, the endstate does. 

People tend to deal in absolutes and assume that what worked for them is best for you. Figure out your why, define your goals, figure out your constraints and restraints (things you have to do and things you can't do). That will make it easier to figure out a pan for you. If you work 90-100 hours a week maybe pure rentals aren't for you. With an I-Banking background and lack of time, Notes could suit you better. 

If you want to do out of state turn key, make sure you know how to do your due diligence about location, value, and PM's. Don't chase cash flow at the expense of capital preservation.

Hope this helps 

@Daniel Rehner A lot of good ideas and issues have been brought up. 

I'd wait to get more details until you officially classify this as a domestic issue. You know what people say about making assumptions. If it is a domestic issue I'd forgo holding them responsible for the duration of their lease. 

When you get in contact with the male I'd ask him what he wants to do. If he wants to stay I'd tell him that since he can't cover the rent with his income alone he will have to reapply and give him a no later than date to have this done. If he doesn't want stay handle it like any other tenant leaving. Give him 30 days and start turning over the unit like you normally would. I'd email both parties to see how they want to handle the remaining security deposit, but since both are on the lease dividing it in half and sending it to them is the best bet. 

Make sure to get a new mailing address for both of them too.

The term downturn has been thrown around a lot, but no one has really defined it. Are we talking about another 2008 like scenario with 40-50+% lose of value or a more traditional 10-15% decline? The latter is more likely. 

The rise of student and auto debt will cause large problem, but not to the degree of 2008 for a few reasons, but mainly because they don't have degree of cross collateralization as 2008.  If you don't make your auto loan, the car gets repossed or with newer ones turned off remotely until you pay. That's quite the incentive to not miss a payment. The auto loans have skyrockets from 800 billion to 1.2 trillion since 2010, which is interesting, but the auto industry is a cyclic market and the loan prime rate can account for a lot of the increased volume of loans.  Student loans are nearly impossible to escape under current BK laws. I agree that these loans will be a drag on the economy, but not a catalyst for a major crisis. They will dive up people's debt to income ratio and make qualifying for a loan more difficult for those people in the margins.

In short, the increase in loans outstanding could be an artificial creating of low interest rates and most likely won't cause a collapse but will act as a long term anchor on growth and productivity.

@Nick M. You can also tell him you need to swap out the locks because you are upgrading. I have the KwikSet Smart Key that allows you to re key a lock without changing the cylinder. I'd recommend using them on all our units.

Changing out the locks is a win win. It gets you a key and makes future turnover easier.

@Patrick Cartier

Not the answer you are looking for, but it depends on your reasons for buying the property and if you buy in your own name or an entity's name. I don't know how Canada's business practices work, but if you own the property in a pass through entity(LLC) in the US you can write off all the expenses for the property before its considered income. Like @Buddy Holmes said, depreciation with eat up a lot of your positive cash flow. 

Seeking the advice of a tax professional is probably a good idea in your case since you have such a high tax rate. Every dollar they shield from taxes buts 50 cents in your pocket!

@Vijaianand Thirunageswaram Education and understanding are the key! With the rise of easily available information from the internet many folks are tempted believe any thing (ie ZEstimates) they read without figuring out its sources. It allows people quick access to info that used to take time to collect from independent sources (Registrar of Deeds, Craigslist, Police Reports...) 

We can debate which platform, Zillow, Trulia, Realtor.com, are better; at the end of the day they give us easy to search data base of past and current sales, rent, crime, schools, like you and @Christopher Blanco pointed out. I personally use Realtor.com since in my area I've found that their database gets updates quicker and more often. I've ran preliminary numbers on a few properties off of Zillow that had gone off the market 15-45 days prior. Not a huge deal, but it gets annoying if you analyze 30 deals a week. 

@Vijaianand Thirunageswaram I agree with your assessment. The estimates specifically are just another data point to use in the decision making process. whether or not that data is used in the ultimate decision depends on a lot of factors, which you addressed. The other information that Zillow, redfin ect, provide more information to more people and at the end of the day makes the market more efficient. 

The issues come in when a buyer/seller only uses one source to make their decision and refuses to take other information. I've walked away from a few deals with sellers who get stuck to the ZEstimates price while ignoring all the other market information. I don't think this is a new phenomenon though. Those same people who take the ZEstimates as gospel would find a way to convince themselves their asking price is accurate. 

Overall I think Trulia/Refin get data to more people faster than was possible 10 years. This benefits some people and hurts others, but in aggregate, its better for the overall market.