All Forum Posts by: Zach Stanard

I have a specific market in mind, though it is early in the planning stages and I haven't yet set foot in that market. (I will be taking a trip there later in the year to check things out.)

What I Wanted to know was what are the tax implications of owning a property - an income-producing property - out-of-state? (I would have to reach out to my accountant for more detailed information, I know.) Have you found any tax-related problems pertaining to this?

I am thinking as of right now, based on some of my preliminary planning, that the property(ies) that I invest in would likely be rentals. Possibly rental-to-flip. 

I am also wondering about tenant relations as I am out of state. What would a PMC charge for services? Would having a PMC be a workable system? Can they put a lien on my property? 

To everyone that has posted: thank you, kindly! Your responses have all been very helpful! :D

I am trying to get a clearer shorthand of real estate development.

For the purposes of this discussion, imagine there is a parcel of land that a developer sees as potential for a housing tract. The developer has also obtained permits from the city and county as needed, as well as the approval of local residents and has had all the requisite surveys for drainage and flooding, and whatever other concerns that a developer and the community would have. The land is either already paid-for or the developer has financing of some kind. Also, in our scenario, the developer is only concentrated on development and is outsourcing everything else to a builder who has their own architects and designers. This also goes for engineering firms who do roads and streets, as well as access, etc...

Would the developer be responsible for bringing utilities to the site?

What about either paving or staking out the streets and access ways to the site? (Again, the developer would be outsourcing this.)

Street lights, street signs?

Sewers?

Most of all, how does a developer make money in the case of a ground-up fresh development project? Obviously, the developer has the vision for the land, owns the land initially. But in the case of a housing tract as in our example, does the developer make money on the sales of the individual homes? Because when the project is finished, the once-single parcel of land is now many individual lots with homes. And if there is a separate builder involved (not part of the development company) how do they make money since they're building on someone else's land? 

I apologize for the ignorance. 

Thanks! 

Also, I forgot to mention: I haven't had a chance to read the article, but I can tell you that there are down payment assistance programs and other state programs available to borrowers. The borrowers must meet certain minimum credit requirements (FICOs, income, and employment) These programs can offset the cost of getting into a home. At least that's their stated intention anyways. (Usually these programs require occupancy for a certain duration or else the programs are voided and the borrower is liable for those costs.)

In fact, Fannie Mae just announced a couple of months ago that they are now offering closing cost assistance to borrowers/lenders. If you combine this with down payment assistance, silent seconds, grants, and whatever other programs the borrower is eligible for, they can get into a home REAL easily and the lender isn't going to back out of the deal because they bear virtually no risk. In these scenarios, the government does: both federal and state - sometimes local. And the deal is practically guaranteed to be approved. 

The whole point of some of these regulations is that lenders (bank or non-bank) are required to try, at the very least, to make credit available to EVERYONE. Some of these regs were in effect before the crisis.

In 2008 the government stepped in and imposed all kinds of regulations to banks and lending institutions to prevent a repeat of the crisis. What actually happened, it seems, was the government become the biggest investor and writer of risky loans. Basically, the government stepped in and told the banks: "You can't do that!" but went ahead and did it themselves. 

Lately, though, a lot of non-bank lending institutions have started to crack down on the credit quality of borrowers. Traditionally, a borrower can get an approval for an FHA loan with a FICO as low as 580. As far as I am aware, that's still the case. However, lenders are now starting to require better FICOs to get those loans. (Usually 620 or better.) This is for a straight FHA loan, not state first-time buyer programs which usually tend to have higher FICO requirements (660 or better.)

It's a very unusual world we live in right now to say the least! 

I agree with this. California is a prime example of where prices are bloated to a point that I would consider out-of-control. But, in some place like St. Louis, prices might be more realistic and stable and should a crash happen in California, the crash may possibly not affect Missouri as bad. I hope, anyways! 

I think values in Orange County, and to some extent LA county, are inflated at any given time - anywhere between 25% and 30%. That's up or down market. It's just the nature of CA. 

Bloomberg tends to have a bit of a pessimistic bias.  

My question has to do with PMCs and how much of a cut they get on rental properties - specifically SFR.

If it matters, I am a newbie; I haven't even acquired property to invest in yet, and I live in California. Given California's ever-increasing property values and my current liquidity, I don't know that I will be able to kick off my investing activity here. Perhaps I am wrong on that. I was thinking I would likely get started somewhere out of state, where markets are more flexible and acquisition more commensurate with my current liquidity. The liquidity is also the reason I am aiming for SFRs at the moment, because I don't know that I can necessarily get a multi to start with. Again, I could be wrong on that.  

Whatever property I get at first, I likely wont rent out and hence wont use a PMC; I will likely just flip it. 

***I have a target in mind for how much rental cash flows I would *like* to generate should I get into a rental scenario.*** 

Anyhoo, thank you for reading and I apologize for my post being so erratic.