All Forum Posts by: Yuuj V.

Hello BP!

I am am trying to look at things logically and think bigger picture, long term. But in the micro, at the current moment, I am really losing motivation on this asset that's honestly been through nothing but issues. The house is fine, but maybe it's the luck or something. I own this out of state. 

It is a 3 bd, 1.5 ba, 1155 sqft property in IL.  

Purchased for $100,000 I purchased it in 2018, 25% down. 

In 2018, it went un-tenanted for an entire year. I'd attribute that to the poor management company / lots of miscommunication and just general incompetence. Eventually changed them out and went with a new PM.

As far as rehab costs, the costs in 2018 into 2019 were about $12,000

In 2019, it rented for $1900, with a mortgage of $1150 and PM fee of $171, so CF was ~$579. Didn't require much maintenance that year. 

Now in 2020, was going fine up until March where COVID hit and things went wrong. Essentially, I went without rent for 6 months, on top of a $2.3K rehab/repair bill. Tenant was living free while we tried to get funds from the state to pay for SEC8. Tenant was taking advantage of the eviction moratorium. 

Now, tenant finally decided to move on. 

The PM got a quote for $14,000 in repairs. This will cover changing out the floor for sturdier flooring and making it rent-ready. 

The Agent believes he can get $2,000 for the rents. The PM also lowered my PM fee by .50%. 

I believe the PM is being honest, and believe the construction company is also being honest. 

I'm trying to keep things in perspective. My plan is to get an appraisal afterwards and see what the price of the house could be. I've been negative in the deep red with this house over 3 years. I could wait 2 more years to see what happens. I don't think the CF will help recoup my investments / rehab funds within 10 years. 

Only solace I have is knowing I get to claim these large rehabs on my taxes, but even that may not truly off set anything or be worth while. 

I'm trying to rationalize keeping this. It's a solid property, that I believe has just been through terrible luck and I want to believe it can be turned around. 

Worse case, I get my appraisal back, maybe it's jumped up a bit (Zillow says its worth $110K, Redfin says $160K) and I can 1031 it for something else, or just keep it. 

Trying to look in the long term, I told myself if an asset doesnt perform within 5 years, I should dump it. 

Looking for any input. 

Thanks!

Can't invest into real estate without money.

Can't get money without Income. 

Can't get Income without skills.

Can't get skills without education. 

Can't get education without direction.

Can't get direction without action. 

1. Find and talk to other OOS investors. 

2. Read tip #1

BP has tons of forum posts on this very topic as well as blog posts and I'm sure theres plenty of YouTube videos. 

I invest OOS, but my journey is not typical and I don't recommend it. (I own properties in 3 different states, sight unseen). 

I've run into surprises with rehab, city requirements, state requirements, and different issues all together. Sucks getting a water bill at the end of the year for $890 thats overdue and I can't charge the tenants the bill directly because of state/city laws. SURPRISE! 

You should/could consider turnkey investing, if investing OOS is your goal. You *could* entertain investing in the next state over or next city over, or whatever. But ultimately, you need a plan (Active/passive, property management/self management, etc), research the area's/cities, do your numbers, etc. Or ... just go through a turnkey provider. (Theres plenty of those here on BP)

Hope this was a little insightful. 

And because Grant Cardone says it, it must be true! Just invest with him, Cardone Capital! I like Uncle GC, and his books/message, but he does peddle people to invest in him. Can't hate his hustle.

Now, for the OP,

Welcome to the forums.

First things first, congratulations on coming to the conclusion so many of us have come to.

Before you start, you need to learn, and learn, and learn. Did I say learn? Here are some actionable steps for you, starting today.

Be a sponge and absorb all things real estate. Watch Youtube videos, read books, listen to podcasts. Download books on Audible. Have a few minutes on your bus ride? You better be watching youtube videos or reading books. I burn through audible books on my 45 minute commute to work. I call it Highway University.

To start - as a starting point, have you read/listened to Brandon Turner's Book on Rental Property Investing? That was my first RE book and it opened doors for me to whats possible. Second, since you are young, I suggest reading a book on personal finance, such as Set For Life by Scott Trench. That was my second RE book, and it's playbook/framework laid the foundation for me.

A more advanced book: The millionaire Real Estate Investor by Gary Keller. Probably my favorite book, a little advanced, but teaches you about money, and not just real estate. Worth every dollar.

Also, a personal finance favorite, Rich Dad Poor Dad by Robert Kiyosawki. Foundational knowledge you should know at a young age. I read/listen to it once a year as a refresher, and the information is invaluable. It's one of the books I 'wish' I read at 16. It would have changed a lot for me. But I digress.

Now that's out the way,

You can consider REIT's as well, traded on the public stock exchange or REIT's that are non-traded like Fundrise.com (I invest in both) as well as Real Estate. If you don't know what a REIT is, theres something you can google and Youtube to get a better understanding of it. (hint hint, if you don't know something, you should read up on it and get a better understanding of it. Don't always expect 'the answer' up front from anyone, especially on forums. People will do their best to help and provide information (BP is famous for this), but ultimately it's up to you to dig and dig deep. Do the leg work and research. I keep a running journal of stuff I just happen to find.

Now to address what you can do between now and in the future.

There is truth that RE has a 'high barrier' to entry. That is, not everyone can invest in real estate because of the capital it takes to invest. (Thats where REIT's come in). Your area, market, city, state will determine that. I personally invest out of state (technically out of country). I invest in markets I can afford as my home state would cost me an arm and a leg.

But, you should, and I say this wholeheartedly, learn skills or a job that produces high income or find a way to get more income (shopify store?). Web development, IT Support, Sales (big time), or other high income jobs will make this journey easier and quality of life better. A cashier will have a harder time putting a downpayment on a home versus a Financial Accountant or Salesperson whose income can range between $50,000 - $75,000 or $85,000. Of course your lifestyle will play a role in this. (Avoid spending money on junk)

Heck, you can even consider shadowing a Real Estate Agent at a real estate company to learn some new skills. Of course you'd have to find one. (put in the work)

Anyways, I hope this post was insightful.

The one thing I regret the most, is not learning sooner. School and University have their place, but personal education and personal development is where the rubber meets the road. I wish I had read books much sooner than when I started.

Edit:

On last thing I forgot -

Keep that same energy and motivation, over the long term. I see a lot of people get hype and give their reasons and desires as well as their famous "I will become rich" speech, but fizzle out over time. Success is consistent positive actions taken over the long term. Over the summer, try and score a shadow or internship at a RE Agency. Just walk in and ask, or email them or whatever. I was lucky enough to score a high income skill summer internship at 16. (IT field). And it has since paid the bills, and paid me back 100x. 

Maybe your school has a counselor that can assist, or resources. COVID has really made it tough to do anything, but you'll never know unless you try. 

Is this unusual? 

I have it in writing, from their customer service departments. I will still make phone calls to be sure 2x. 

thanks for bringing that up. 

Good Morning BP Community!

I am in a predicament with 3 SFH's I have mortgages on.

I asked all mortgage companies if I can move the properties to LLC's. All my properties are in different states, (OH, IL, LA)

For sake of ease, House IL, House OH, and House LA

House IL Mortgage said I can submit paperwork to transfer to an LLC at no additional cost. I am positive I will need to do a quitclaim deed to transfer the property to an LLC once that is established.

House OH Mortgage said I would have to refinance into an LLC. Again, assuming I would need to quitclaim deed the house to the LLC.

House LA Mortgage said it's possible as long as I meet certain investor guidelines. Again, I would need to quitclaim deed the house to the LLC.

With all this going on, I am also closing on a 3-unit apartment. 

My question(s) are :

1. Would it be wise to do all this while closing on a property? Could there be any blow back? 

2. Has anyone done this before? I wasn't planning on using a law firm (I'm sure I'll get disapproving looks from this). I can set up the LLC's myself, and operating agreements with business bank accounts. I plan to move all the LLC's to another LLC based out of another state (WY, NV, DE)

3. This seems simple enough, move 1 property at a time to an LLC, but my misunderstanding is timing, should I do it all at once, my credit score will be taking a hammering since it's being checked so much. Could this affect me negatively? Again, I am also closing on a property.

My thought process is:

Create the LLC with operating agreements and bank accounts
Quit Claim Deed the property to the LLC's
Move the mortgages to the LLC's
Update rental agreements at my properties
Setup WV, DE, or NV LLC and hold those 3 LLC's. 

Any input, guidance, experience is appreciated. 

Of course I'll take it strictly as information, not as advice, and of course I'll seek legal counsel / CPA before making any moves. 

Thanks!

I thought I was the only one who looked at Physical RE as a replacement for bonds :)... minus the liquidity factor. 

Thanks for your input, nice to see I'm not the only one thinking about this. I suppose you're right, in that there isn't a right answer. 

I've debated with myself in trying to keep my total RE holdings at about 35% and Total Stock Portfolio at 50% and Alternatives like crowdfunded RE at 15%

Good Afternoon BP,

Hope this post finds everyone healthy during this wild time. 

I'm curious how others model their total portfolio's when using Real Estate, and how they come to their conclusions about allocations and diversification. 

To be transparent, I am invested in:

Retirement Accounts:

401K invested in a fund which is mimicking the S&P 500 Index. 

ROTH IRA invested in a fund which is mimicking the S&P 500 Index.

Taxable Accounts:

Invested in the Index that follows the Total US Stock Market index. 

Invested in publicly traded REIT's and other companies.

Alternative Investments:

Invested in Crowdfunded REIT's (Fundrise, Diversyfund, RealtyMogul) as examples.

Hard Asset Investments:

Physical Real Estate. 

My current asset allocations are:

• Retirement Accounts: 32%
• Brokerage Account: 23%
• Alternative Investments: 7%
• Hard Asset Investments: 38%

This was not by design, this was just how it ended up. I try to keep a 70%/30% allocation between Non-Traded Crowdfunded REIT's and the Stock Market (excluded retirement accounts). Ratio is skewed at the moment as I been dropping excess cash into the markets to take advantage of cheap index shares. But I will rebalance and get it ideal later in the year.

I have 0 bonds or treasuries in my portfolio, all 100% equities. (Some would say that is stupid and dumb, but I am still at my growth stage and not fearful of market drops like we are having now) 

Now with my added hard asset(s), I'm having a hard time trying to figure out, what would be an ideal ratio, or allocation split, between Equities (Stocks), Bonds and Physical Hard Real Estate, with Non-Traded Growth / Income REIT's?

How do you all structure yourselves? How do you look at your portfolio's of total assets (paper and physical)? Just curious how other investors are modeling their portfolio's and what metrics or criteria you use. I'm honestly just saving capital until I see a great deal on a house, while still passively investing into the Stock Market through retirement accounts and my own taxable brokerage while still dropping cash into Non-Traded REIT's in order to have a balance during volatile times in the stock market.

Looking forward to everyones thoughts!

Good Morning BP!

I am in a dilemma and can't seem to get myself out no matter how much I keep running the scenario's and the 'what-if's' and numbers in my head. 

I'm at a fork in the road. 

I am working oversea's right now, and have been for the last 3 years. 

Over that time, I have been able to do long distance RE investing and have 2 rentals on lock. I am working on house #3 at the moment. 

House 1 was $100K with a $25K DP.

House 2 was $80K with a $17.5 DP. 

Both are geographically in different area's. 

However, I have been saving a sizable cash DP for house #3, and have been thinking about what I should do. 

My family (brothers and father) lives in Mass, (expensive, I know), and I have toyed with the idea of buying a SFR or MFR and have them live there and just pay the mortgage. I can make money off the tax return, and I'd be able to sleep guilt free at night. I know this is just business, and I should charge appropriately, but it's not important to me. Shooting myself in the foot?

Houses in MA go for $500K - $750K, so you can expect my DP cash reserve to be substantial. 

With that said, I have also thought about just focusing on 'me' and purchasing a 3rd rental, maybe even a 4th rental in different markets. 

I could use that cash for other things as well (brokerage account, invest in loans, invest in other things with better returns).

But I am stuck. 

Anyone ever come to this point in their journey where they need to decide on a tactical decision?

My 5 year plan is 5 - 7 houses, I'm on year 3 now, working on the 3rd house with reserves just in case. 

My other two houses are performing as expected with decent average returns.

If I ever decide to come back home, I would expect to live in MA, so long term, it makes sense. But long term is probably 5 - 7 years down the line. 

Thoughts?
 

Last section ---

Are REIT's good investments?

The real question is, what is your investment goal? What do you hope to achieve? Why are you interested in REIT's?

My investment goals are to build a portfolio that generates dividends that I can eventually live off of. I am interested in REIT's because of the tax breaks, it's exposure to Real Estate and it's not speculative investments (Crypto, Facebook, Amazon, etc). I invest only to receive a return, not invest and wait for the return when I sell (nothing wrong with that). Buy and Hold mentality, while collecting returns.