• Breaking News

    Tuesday, January 19, 2021

    Real Estate Investing: SEC Charges Real Estate Fund Manager With Misappropriating Over $7 Million From Retail Investors

    Real Estate Investing: SEC Charges Real Estate Fund Manager With Misappropriating Over $7 Million From Retail Investors


    SEC Charges Real Estate Fund Manager With Misappropriating Over $7 Million From Retail Investors

    Posted: 18 Jan 2021 05:17 PM PST

    https://www.sec.gov/news/press-release/2021-4

    Posting this because IMHO some posts here and r/realestate in particular under-represent sponsor risk and the risk of any LP investment in general. While this one is especially egregious, it is critical that you vet your sponsor and their actual track record as well as the investment itself.

    > The complaint alleges that in marketing Funds III and IV, Malley and MG Capital falsely claimed that they had previously managed two highly-successful real estate funds with a combined portfolio value of $1.18 billion that had significantly outperformed the S&P 500 Index over a 10-year period when, in fact, those prior funds never existed.

    submitted by /u/JoshuaLyman
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    Is There Always Going to Be an Excuse?

    Posted: 18 Jan 2021 10:28 AM PST

    I feel like I'm caught up a little bit in the common sentiment that we're in a bubble, everything is overvalued.

    Then I think about my dad telling me about how his first house was 14% interest and it makes me wonder...

    Would I be saying back in the 80's how it's a bad time to invest because of interest rates- like how we can say it's a bad time now because things are overvalued?

    Could it be that some people just make it happen under any circumstances and some people just watch no matter the circumstances?

    submitted by /u/wc1048
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    Austin Investors, what do you think of Round Rock, TX?

    Posted: 18 Jan 2021 07:32 AM PST

    What does growth look like in that area? Is it a good or bad idea? How can I see what new businesses are being developed or moved there? I found a multi family there and considering making an offer. Any help is appreciated I'm new to this.

    submitted by /u/Parkin_Wafer
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    What’s your strategy for accumulating the capital necessary for down payments on rental properties?

    Posted: 18 Jan 2021 09:41 AM PST

    Hey guys, so full transparency—I'm a financial advisor. I'm not here to sling anything to anybody, solicit my services or push any of my ideas on anyone. I'm actually here to learn a bit about how you guys think and operate as "research" for how to better deal with my real estate investor clients and those that I'm come across going forward.

    My question to you is:

    How do you save and plan to accumulate enough capital for down payments on your rental properties?

    Obviously if you save in cash, you're losing out to inflation while you wait—not ideal.

    On the other hand, if you invest (with the real estate sector being a part of the overall market) the best time to purchase property is going to be when the market is down. And if your market correlated money is going to be down during the most opportune times for you to invest then that will nullify most, or all, of the outpacing you've done against inflation.

    This presents a problem either way you go, so I'm curious how you guys tackle this issue and how you weigh the pros and cons. I have some a strategy that I implement with my clients, but I'm here to see if there are better options out there and pick your brains on the best ways you have found to solve this problem.

    Thanks in advance!

    submitted by /u/emurrell17
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    Thinking of buying an apartment complex somewhere. Tax-wise, what is the best state to buy an apartment complex?

    Posted: 18 Jan 2021 02:26 PM PST

    I currently own two homes and rent both out. I have positive cash flow on both, and have a considerable amount of equity. I'm thinking about buying an apartment complex somewhere in another state. I've heard some states have no state income tax (but maybe get their tax money another way? Like property tax?).

    I'm going to be selling both houses to put a huge down payment on an apartment complex somewhere, but I want to set myself up financially so I can pay less tax and have more wiggle room for profit. California is wayyyy too expensive to buy apartments, and I could get more units in the midwest somewhere, I think (though lower monthlies.

    1. What states are real estate (apartment) investor friendly?
    2. How do I do my taxes if I live in California and own income property in another state? Am I taxed twice on the state level? If so, how do I avoid that?
    3. A little off topic, but what's the standard percent a real estate agent should be charging to sell a house? My uncle has been in business for 45 years and charges 6% and I think that's insane, no matter which way you look at it. But he gets stuff sold pretty fast.

    Thank you all!

    submitted by /u/MakeSureYouHydrate
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    Where do you find a list of houses that the power or water has been turned off?

    Posted: 18 Jan 2021 02:11 PM PST

    Hey everyone,

    I remember awhile back I read that many people look for homes to flip or buy by looking at houses that the power or water has been recently turned off at.

    Where do you find such an archive? County records? Call the power company?

    submitted by /u/Throwawayyyyy199569
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    How many of you buy turnkeys?

    Posted: 18 Jan 2021 07:04 PM PST

    I know the dream for a lot of smaller investors is to BRRRR since it scales well. But I'd like to hear from those that turnkey and what your reasoning for going that route is.

    In my area BRRRs are getting increasingly hard to find, even complete interior demos are being bought with all cash offers, but there are plenty of turnkeys available that have decent cash flow potential. And that's not wishful thinking, they are solid deals, but I've held off since it takes me about 2 years to save for a DP, and without a cash out refi this makes scaling almost impossible. Especially since my area does not have an appreciating market.

    So what's the best argument you can make in favor of turnkeys?

    submitted by /u/Harry_Coolahan
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    Where to park home sale proceeds?

    Posted: 19 Jan 2021 02:10 AM PST

    What are some places to hold my home sales proceeds while I search for another one to buy? Is there anything with better returns than money market funds or savings accounts? Capital preservation is of course important since I will need all the funds for the next purchase when I find something. Any safe ticker symbols would be very helpful so I may research them. Thank you!

    submitted by /u/ekimace
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    Buying real estate as company with SBA loans

    Posted: 19 Jan 2021 02:07 AM PST

    I have a company (LLC) which does small online business.

    • I see that 504 loan prohibits buying rental properties, can I get 504 loan to buy real estate as office, flip, and sell?
    • From the site, it seems 7(a) loan doesn't have the rental property limitation, can I use 7(a) loan to buy rental properties?
    • Do RV park, camping site, mobile home park, small lodge, airbnb count as rental properties?

    Can I transfer the property from company to myself?

    submitted by /u/MoonlightFlowing
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    Looking at a property with a partner

    Posted: 18 Jan 2021 09:12 PM PST

    Price is $700k, but $500k with partner. Four units total, two garden (currently rented at $900 and $850) and one 3 BR 1 BA that'll rent for $1500. Partner will buy the fourth unit for at least $200k. So three units for $500k.

    Taxes and insurance about $1,070 (total of $1500/month pro rated with partner). Maintenance at 1% per year is $400 a month.

    This seemed to me like a good deal, but the math seems like it doesn't work. Income at a minimum is $3250/month. But costs are probably $3800 - mortgage on $500k is $2370, plus maintenance and costs estimated above. Am I analyzing this right?

    submitted by /u/fireatty
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    House hacking multi families for cash flow: What are the best current markets for triplexes / quadplexes?

    Posted: 18 Jan 2021 06:00 PM PST

    Just getting into real estate investing and my main goal is cash flow. I am planning to house hack, and I love the idea of a triplex for many different reasons.

    I wanted to ask the community where the good markets are for cash flow right now. I am a single guy with no family, and am literally willing to move anywhere.

    Currently, I am looking at Greeley CO, Tampa FL, Charlotte + Raleigh NC, and Philadelphia.

    submitted by /u/bmoffitt1990
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    Use cash or equity?

    Posted: 18 Jan 2021 02:50 PM PST

    I have a paid off rental house worth about 500k with paying renters.

    I want to buy another property but I don't have cash of 20% down to make it more cost effective for my ROI.

    Would you suggest pulling 20% from my rental house to get the next one or something else? Either HELOC or cash-out? What other options do I have to begin my RE endeavor?

    The paid off house is not going to be sold. I plan to retire in it down the road. Thank you!

    5 year plan: buy 3-5 additional units 7 year plan - add a unit in Hawaii as an AIRBNB/ personal vacation home.

    submitted by /u/SANMAN0927
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    Looking to buy my first rental home, where do I start?

    Posted: 18 Jan 2021 07:39 PM PST

    I'm 26 and looking to enter into the rental real estate space and it's all a little overwhelming to be honest. Most people say they are buying a home, but that's not actually what they are doing imo. They are tying a 30 year loan to their waist instead. I've been reading up on it and slowly learning what I need to know. I'm hoping to purchase my first property this year or at least start looking in confidence. What I'm looking for is some direction and advice for someone about to dip their toe in. I graduated with a degree in Accounting so most of the finance stuff I can understand if I bang my head enough (I'm not an accountant though, long story, I'm a software engineer now) So far I have these 3 books I'm going through:

    1. Building Wealth One House at a Time by John W. Schaub

    2. The Book on Rental Property Investing by Brandon Turner

    3. What Every Real Estate Investor Needs to know about Cash Flow by Frank Gallinelli

    My vision is owning and renting out 2-3 family homes (3 bed, 2 baths at least) within the next 5-7 years. Backbone of the plan is they will be investments so I'll be hiring a property management company to handle tenant screenings, day-to-day contact, and operating expenses. I'm planning on vetting out a good company before I purchase my first property. I understand the mechanics of earning profit, but I'm a little fuzzy on the nitty-gritty aspects of research, forecasting the cash flow, and then actually purchasing a house. Beyond forecasting expenses and such, I'm not quite sure on the initial chunk of money I'll need to get started. I've never purchased or owned a home before so its all unknown :/

    A couple questions:

    Should I hire a realtor? Will they have experience in looking for rental homes and be able to walk me through some of this?

    Location: this seems to be a really big key, beyond hear-say from coworkers and such, any recommendations on figuring out the good neighborhoods? I live in a fairly small city, Lincoln NE, population 300k.

    Resources for estimating finances: do you all use Zillow at all? How do I get accurate enough data to be able to forecast operating expenses for a family unit? Ask around? I have 4-5 friends that own homes I could ask.

    I've heard of the 10/10/10 rule: No more than 10% down payment, negotiate down to at least 10% below market value, and get less than a 10% rate on your mortgage. My credit score is like 750 so I'm not worried about about the mortgage rate, but is it feasible to only do a 10% down payment if I go to my bank for a loan? As far as 10% below market value, is that common in real estate? Do sellers normally get below what they're asking?

    I'm hoping to get a house between $120k to $180k, any idea how much I may need to make a purchase? I'm sitting on 9k right now and I'm starting to save 1-1.5k a month for this endeavor.

    Emergency fund: How much should I have saved away to cover any unexpected expenses with a property? I figured it goes hand in hand that something unexpected will happen and I want to be prepared for that.

    Any and all advice is much appreciated. I'm trying to not let all the unknown holes in my knowledge base freak me out and slowly work my way through it all. It's a lot, but I figure if I'm smart about it, figure out a deal that nets me positive cash flow, and plan for unforeseen expenses; Then a year from now I may be a lot more comfortable with this after my first initial purchase. Thank you in advance! I'm a new member and will be reading up on this reddit page a lot.

    submitted by /u/highlanderaffliction
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    House hacking.m a multi family with your S.O. How do you split the cost? Do you?

    Posted: 18 Jan 2021 07:35 PM PST

    Hello all,

    Not sure if this is the right place for this question but was looking for opinions/advice. I just graduated college around 6 months ago. I have a stable job and am doing fairly well. I am strongly considering starting my house hacking journey and going the typical FHA loan route with a duplex or triplex. With this being said, my girlfriend is likely moving in with me. We generally split everything evenly as it is, and would do so with rent if we rented a normal apartment. I am looking to eliminate or greatly reduce my housing expenses and build a passive income, hence the housing hack. With this being said, the 3.5-5% downpayment put down would come from my money and not hers. How do you guys handle this situation in terms of further mortgage payments/expenses? I would imagine we'd split the minimal amount left for rent/utilities/PMI after receiving rental payments. But I would imagine I would handle all of the maintenance repairs and etc myself with my money, and then I would imagine this means that the equity and all being built in the rental would be mine as well. How do you guys handle it?

    submitted by /u/Finreg28
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    To LLC or not to LLC... that is the question

    Posted: 18 Jan 2021 06:41 PM PST

    I am about to complete a new construction build (my second home). As soon as I finish it, I plan on selling it. Should I form an LLC to protect my assets before selling it? If I do so, how do I subtract my costs of constructions at tax time?

    My major concern is that I won't be able to claim all the expenses I put in to develop the land and build a new home if I put it in a single-member (myself) LLC. I imagine I would sell it to my LLC for $5, but then when I sell it for $180k, I won't be able to claim the cost of $120k anymore. So I am concerned that I will have to pay short term investment taxes on the full $180k, and not the actual $60k of profit. My only other idea would be to put it into an LLC and joint venture my LLC with myself... such that as closing, my expenses of $120k get paid first, and then the LLC keeps the $60k which will be passed down to me as income (since my LLC would be single member).

    Do I have any other solutions?

    submitted by /u/sugusugu
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    Free Land in Jefferson, TX

    Posted: 18 Jan 2021 08:50 AM PST

    I have the opportunity to receive two plots of land in Jefferson, Texas close to Lake O' The Pines in the Pine Harbor subdivision. The person that wants to transfer it to me says there is a Tax Lien on it for $1600 which is 17 years of property taxes. Kinda hesitant because I am not in the position to build on the land but it seems like a interesting opportunity. Should I do it?

    Backstory - guy is trying to receive SSI benefits but he forgot he still had this land he tried to build on 20 years ago and just stopped paying the taxes on it. He's basically giving them away so that he can receive his government benefits.

    submitted by /u/txsig1855
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    Overleveraged?

    Posted: 18 Jan 2021 04:20 PM PST

    I went to a Real Estate Investors Meeting for my County. The speaker told us to get as much real estate as we possibly can because the values are skyrocketing and will all double within ten years. Won't this lead to being way overleveraged?

    I talked to him the next day on the phone and brought up the possibility of the market dipping and being upside down on loans and his response was that everyone needed a place to rent regardless of the market.

    submitted by /u/Kason25
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    Need advice on getting started.

    Posted: 18 Jan 2021 10:11 PM PST

    Hello,

    I need some advice on real estate investment. I'm finally in a place where I have enough income to invest in something substantial, other than stocks or my retirement. My father is a general contractor and has always wanted to push me into real estate investments (buying into houses to rent) since it benefits his company by giving him work and me, property assets. He owns 4 rental properties so far and they do well on top of his business. The only catch is that I'm military and across the world (Guam for the next couple years). How do I get started and not fail, or worse get stuck in something that doesn't make me money? I've had the talk with my father, however, I'd feel more comfortable listening to some professional real estate agents or people that have done this before and have made it profitable (not at all that I don't trust him). Where do I start and are there any step by steps available? Thanks for your help and time!

    submitted by /u/Gronkthekillah
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    Any good books on flipping virtually?

    Posted: 18 Jan 2021 10:02 PM PST

    I would like to learn systems to be able to flip virtually.

    submitted by /u/wizkad8602
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    Where can I see wether a home is registered as a homestead property or not?

    Posted: 18 Jan 2021 02:20 PM PST

    Looking to invest in some tax liens in texas and Florida

    submitted by /u/Reyg13
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    Talk to me about countertops

    Posted: 18 Jan 2021 03:34 PM PST

    I've been doing some adding of countertops in my primary residence — marble and quartz. The people I've been working with have given me screaming deals because of some personal connections so far, and have asked I would also like for them to work up bids for some rental properties that I have. However, I haven't been able to find how much of a difference this makes in rental houses/for resale.

    So... what have you found that people want, and what kind of difference has it made for you? Also, my peeps have amazing access to marble— quartz is a little less well priced. Is quartz worth more investment?

    submitted by /u/Snoo_33033
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    Getting a Broker Price Opinion to remove PMI

    Posted: 18 Jan 2021 01:45 PM PST

    Hello,

    I have a loan on a second home that is currently rented. I am at the point where I am at 80% LTV based on Zillow numbers, (taking a couple grand off for over estimation). I spoke to my mortgage lender and they state I need to get an appraisal done or a BPO (Broker Price Opinion). The place is rented and I am hoping to do all of this without anyone entering the home, they are an older couple and I want to prevent this due to the current pandemic.

    So my question is can I get either of these options done without entry into the home itself?

    submitted by /u/gdx
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    Want to become a first time home buyer/investor at a HCOL city (Boston), looking for advice to "min-max" my living situation

    Posted: 18 Jan 2021 01:53 PM PST

    Age: 30

    Credit score: 785, not as high as I would like it to be, but I'm pretty sure it's good enough for most lenders.

    City: Boston

    Living situation: I've been fortunate enough to be living in the heart of Boston rent free, provided by employer. All I pay for is utility. I have secured my current position for at least another year. The living benefit will be the same as long as I do not get burned out by the job and quit. Currently do not own any vehicle, work is walkable distance.

    Finance: Debt free. I've always lived a frugal life style so I was able to save a good portion of my income ever since I got out of college, however only started to aggressively invest for the past 3 years(which I plan to continue to do so until FIRE).

    Goal: To expand on my cash flow and income. Not in a hurry to become a land lord just yet in the current housing market. Becoming a land-lord never crossed my mind until a year ago, that's when I first passively shifted my investments a little bit more heavier onto the cash side to prep myself for a downpayment. Current liquid asset: ~35k (pretty low for a 20% down payment, but planning to go through the first time home buyer assistant program that Massachusetts offers.). Hope there are redditors from Massachusetts, how was your experience with the program? I hope to invest in a property as a first time home buyer without actually using it as a "primary residence".

    Have been casually following a few YouTubers and BiggerPocket and learned a bit of BRRRR method and house hacking. I have to confess, although these methods are all attractive options to me, I've been lazy and lacking the real motivation to start actively learning more about real estate and to actively search for property deals.

    Question: If you are in my situation, how would you best utilize your time and effort to take that first step of becoming a real estate investor?

    tl;dr: Looking to include an additional FIRE route to my arsenal through real estate, need strangers over the internet to get my lazy butt to start hustling.

    submitted by /u/flyswatterxD
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    Starting an LLC with 3 other friends and looking to start real estate investing. Tips welcomed

    Posted: 18 Jan 2021 03:51 PM PST

    Hey all, long time lurker, first-time poster. So as the title states, a couple of buddies and I are looking to start an LLC and start investing in real estate. Single and Multi-family homes. We're in Mass. We all have a mutual understanding to split everything equally. Has anyone here ever done it?

    If so,

    What is the process to get a mortgage? Do we all get individual loans or will the bank give all 4 of us a loan? Any other tips will be welcomed! If you have any other questions for me don't hesitate to ask!

    submitted by /u/bostonkehd617
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