All Forum Posts by: Zachary Beach

@Sara W. I invest near Boise Idaho and big bear CA which is a lake town and the closest ski resorts to LA, San Diego and Las Vegas. Idaho units are managed by a management company that was recommended by family that use them so it wasn’t much work just buying and setting up auto pay and getting paid. The properties I have in Big Bear are brrrr’s that I Use as short term rentals so not passive at all but the people we manage for it is passive for them they just buy and set up auto pay and get paid. We even offer furnishings services for the properties so that they are staged nicely as well as Search engine optimization for the listings so the are top performers in the algorithms so we can get the properties to perform optimally.

@Sara W. For 8-9% absolutely not I could play darts with an MLS listings sheet in most markets and blow that out of the water. (Assuming leverage is allowed) honestly if you are not getting at least 20% IRR on a relatively passive investment with a property manager than you are not getting a good deal. Both the LTR's I have out of state with a property manager and the properties I manages for STR's for others after our costs are above 20% a year if the property is leveraged. I don't know Boston but I bet you could find a 20% in your area also. When I say leverage I mean around 75% LTV even higher returns with 90% LTV vacation home loans or 95%+ house hacking loans.

@Charles Masten cashflow and  appreciation are not opposite forces. Also the idea that a higher yield must mean a more risky investment is laughable. I read recently a "financial adviser" from a big well known company saying there are no good investments at 20% return and there was a 98% chance if it's 20% return you will lose all your money. That is the type of insanity that keeps people poor. You can and unless you don't leverage should average over 20% ROI a year on real estate if it's mostly passive and a lot more if not. Create value or team up with people that create value and you can get market appreciation, forced appreciation and cashflow plus tax benefits, equity pay down, credibility, confidence, experience, enjoyment, financing freedom and more.

@Abigail Veit I think the biggest factor is if you and your parents like you living their. If you don't or they don't LOVE you being there house hacking is probably the way to go. If you and your parents actually like you living there than maybe consider a rental maybe even a vacation home loan for STR you could probably get 10% down and similarly good rates as a house hack and get better cashflow if done well.

@Brian Denvir I see I  totally agree I have a property manager for my LTR's out of state and it's very much worth it. The STR business has so much profit potential I see people daily that think they are killing it but are leaving thousand of dollars a month on the table and spending thousands more than they need upfront and dozens of hours of there time a month that they don't count. STR's is without a double worth looking into my properties have all gotten double digit cashflow and appreciation the last couple years and still give double digit even at new prices. Doesn't hurt that the market rents are up 58% Not many markets or types of real estate can say that!

@Brian Denvir when I read your post it jumped off the page to me was when you said management is an expense and cuts into cashflow. I know most people see management like this but a great manager in STR's should pay you more than you would revenue yourself and in any kind of management should do it better and at less cost per hour than you value your time. I have a lady that's a super host and makes over the 75th percentile monthly for her properties that's switching to my management company because we manage for her sister and after our cut and cleanings we are paying her sister just two hundred dollars less than her sister revenues before taking out cleans supplies and her time all things we supply. Oh and the sisters house is a little more expensive and I objectively nicer. Managers should make you money not cost you money.

@Brandon Leffler A few things to weigh.

Is the capital gains savings more than the selling costs?

Can you get a good deal for buy? equity at buy and or way to force equity from value add.

Do you want to focus more on cashflow or appreciation or what I do Both.

How active are you looking to be?

Only you can answer this question. the potential for ROI is higher with selling no question but the work risk and cost is also higher.

@Parth Patel be married to a real estate professional or become one. Get a ton like tens maybe a hundred million in real estate that you can get bonus depreciation on and that’s very highly leveraged and don’t make to much cashflow or you will pay taxes still so go for expensive appreciating markets.

I would just focus on getting real estate some taxes will still happens. My places cash flow so well even fully leveraged they out cashflow my depreciation and deductions.

@Michael Hudson I’ll bite what’s the best?

@Ben Bartels one thing I like to look at is the cap rate to interest rate. In order for it to work you need to get the correct real cap rate so after factoring in things like maintenance. But as a theory if your 75% LTV loan on a true 6 cap with 2% appreciation that your financing for 3% your return if you kept the same leverage amount (doesn't really work like that) would be 23% not counting depreciation. your making 3% on your leveraged money 6% on none leveraged and 8% from appreciation. My properties have greatly outperformed both the cap rate and appreciation numbers in the example giving me massive returns

It's not real estate itself that's an amazing investment it's the cheap high LTV financing that makes it potential amazing.

Where real estate really takes the win is house hacking and brrrr’s. In house hacking say you have the same 3% interest rate and 6 true cap rate with 2% appreciation. If you put 5% down let’s say it was 3.5% but you have closing costs. You would have a return of 63% plus 40% from the 2% appreciation. So it’s all about financing the same house gave you 8%, 23%, 103% return in the first year in my examples. Note that most of the returns are not cashflow.