Tag Archives: investing

HomeOwners Association – Love or Hate Relationship

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HomeOwner Associations- Love or Hate Relationship

In this episode Nic and I are talking about HomeOwner Association.  I get asked my opinion of them a lot and my answers depends on the purpose of the property.

The Good

If the property is going to be your primary residence and you want to live a quiet lifestyle and don’t mind living under the rules of the community then a homeowner association (HOA) is a good thing for you.  They keep the property and the values uniform.  They keep the lawns in good shape, service vehicles out of the driveways, houses uniform in appearance and common or community areas maintained and in good shape.  They can control the paint colors of the homes, organize and community wide yard sale and organize to help the neighborhood and make it a great place to live.  The homeowner association will oversee that the neighborhood is a great place to live and the homes are all uniform.  I have even seen them maintain bank-owned or neglected properties until a new owner is in place.

The Bad

Like anything a homeowner association can also be bad and make everyone living there miserable.  Here in Florida we have more homeowner associations than most areas and while most are good, some are not.  A common homeowner association problem that I have seen is that some retiree moves into the neighborhood, usually by the gate and decides he owns the whole neighborhood.  They proceed to make friends or just plain bully other neighbors into voting them HOA president.  Once their regime is in place, it’s when the real nightmare can begin.  Under the guise of doing their ‘elected job’ they proceed to make even the smallest infraction a huge deal.  They get their torches and pitchforks and begin to mob terrorize the neighborhood.  The tyrant typically has a group of fiercely loyal supporters that helps with the fear and terror campaign throughout the neighborhood.  Neighbor turns on neighbor.  It makes the owners live in fear.

This happened to the neighborhood next to where I live.  It got so bad that the association president would follow the trash truck through the neighborhood each week and if the cans were not removed nearly immediately you got a notice in the mail with a picture.  The neighborhood was made up of working people what would bring the trash cans in when they got home from work.  Apparently, that was not enough for this guy.  Finally, at a board meeting the entire neighborhood showed up and disbanded the entire homeowner association.  Now while this is an extreme case, I frequently, get calls for homes I have listed for sale by the HOA president notifying me that the grass is 1 inch too tall or the shrubs are out of violation.  When I suggest they call the owner, they’d rather be passive-agressive about it and avoid the actual owner.

We have a lot of condominiums here in Florida and their associations are similar, but a big issue with these associations is the finance.  You can get someone with no real financial background making decisions for a large commercial building that could have serious consequences for the owners.  Capital improvements for large condo building like roofs or resurfacing the parking lots can easily be hundreds of thousands of dollars and not budgeting for the repairs over time can lead to a special assessment to the owners.  I have seen this also, you suddenly get a letter in the mail that you owe $8,000 for some building improvement that the condo association did not budget for.  My advise, get a professional company to manage the condo association and maintain the budgets.

The Investor

Personally, I don’t like homeowner associations for my investment properties.  However, if I owned a short term rental property near Disney or a class A (up scale) property, I’d think differently.  Your relationship with the association depends on your investment plan, area and type of property.  Just be aware before you buy a property in one of these areas that they also have a cost associated with them that can reduce cash flow.

 

 

 

 

 

Rental Properties, vacation rentals near Disney and wholesaling properties.

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Rental Properties

In this episode my wife Nic from www.rapwithnic.com are talking about rental properties.

Vacation Rentals

Nic and I are also talking about the popular trend of buyer short term rental properties near Disney.  There are literally entire neighborhoods of all short-term vacation rentals.  These homes are typically newer homes that are at least 4 but up to 6 bedroom homes with pools, that allows entire families vacation together near the parks and reduce their housing costs.  We cover several aspects of these types of properties.

Wholesaling Real Estate

It seems like everyone is now selling some course about wholesaling real estate. 
Every corner now seems to be littered with “I Buy Homes for Cash”.  But I get a lot of calls from people that bought a course and have not been able to make any money.  Either for lack of effort or the course made false promises to them, the failure rate seems really high.  There is no “get rich quick” methods, and if there was they probably would not be selling a course about it.  While I do think wholesaling is a good way to make some money it is neither cheap or easy.  You are essentially starting a marketing business.  You are marketing from sellers and buyers.  Don’t believe the hype..

Episode 78: Secrets of the 1031 Exchange

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Secrets of the 1031 Exchange

My guest David Foster from ERG1031 gives us the details about Dave fosterhow to use this section of the tax code to defer tax liability.

  • What is a 1031 Exchange?
    • A 1031 exchange refers to the section of the tax code that allows you to sell a property and roll up the profits into a “like-kind” exchange and defer the tax liability until a further date.
  • What’s the benefit of a 1031?
    • You can literally save millions of dollars in taxes over a real estate investing career.
  • How do you start a 1031?
  • Perameters
    • Starts with the sale of a property
    • Intermediary has to be in place
    • Client must produce a list of potential replacement properties with in 45 days.
    • 6 month time to close on the next property
  • What is a “like-kind” property
    • investment property for nearly any kind of investment property.  NOT PRIMARY RESIDENCE.  You can exchange a single family or several for a commercial or multi-family property.
  • You MUST purchase as much real estate as you sell COST wise.. Does not matter if you change one property for thee or more.  The import part is the dollar value amount.

This system only works for buy and hold investors.  You should hold for at least a year before you try to do a 1031 exchange.  This method has been used buy rehabbers when they rent the property for a period of time after the rehab, then after a period of time they do an exchange.

Now if you can use this method if you hold the properties for you life span, when the properties are inherited by your heirs they will not have to pay the deferred taxes.

You can have as many 1031 exchanges as you like.  You must “intend’ to hold the property for “productive use” as an investment, but there is no set time period when you can do a 1031 exchange.

Here is Dave’s contact info

Dave Foster || Phone 850.889.1031 || fax 303.496.1031

Corporate Office 303.789.1031 || dave@erg1031.com

Exchange Resource Group || www.erg1031.com

 

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The Five Most Important Skills of a Real Estate Investor

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The Five Most Important Skills of a Real Estate Investor:

I see a lot of real estate investors.  Some are good and others are lacking and always seem to be struggling with one thing or another.  The more successful ones seem to all have the same characteristics.  These are some of the most notable characteristics that I see in the truly successful ones.

  1. Work Well With Others In real estate investing you are going to encounter lots of different people and personalities.  The question is can you work well with them??  Typically, I meet a lot of other investors, agents, buyers, sellers, bankers and wholesalers.  Not to mention the wannabes, scammers, con artists and frauds..  I work very hard to work with all different types of personalities and skill levels to improve my business and my relationship with each one.  If you feel you might need a little help in this area, I highly encourage to do some reading and some ‘self-discovery’  in this area.  It will pay of in the long term.
  2. Find Deals and Analyze Properties and Markets.  This is what separates ‘the men from the boys’ especially in the lead generation aspect.  Right now, in this market there are not a lot of great deals on the MLS, so especially rehabbers are struggling because there is now a lower margin between purchase price and sales price.  The increase home values on the purchase has not been reflected as much in the sales price.  So, the successful fix and flip investors have upped their marketing and are buying properties directly from the home owners.  Once you find a deal, analysis of it is critical.  You can do this manually, and the more experienced you are the easier it becomes, but in the beginning your need to ask someone with experience or you can purchase a software to help.
  3. Build a Network As you start investing in real estate the success real estate investors have a large network of professional.  They typically have people ranging from attorneys to landscapers and everything in between.  It important you have dependable professionals that due good work and will work well for you.  Again, if you are needing some professionals in your network. Ask around.
  4. Systematize the Process. One of the best things you can do for yourself to streamline your business is to develop systems as you go along.  This will allow the second time you do something to be easier than the first.  This will also make the tasks easier to hand off to an assistant or VA.  Activities you can systematize include: purchase, rehab, rental, tenant move in, tenant move out, repair of rentals, maintenance, looking for partners for deals and determining when to sell your property. This skill is especially important if you are investing around a full-time job.
  5. Always be Learning.  Most of the really successful real estate investors that I know are always learning.  From reading books to attending seminars, they are always adding to their knowledge base.  You need to be able to change with the real estate market, by having a wide range of skill sets you are more likely to be able to profit in any market.  Besides, the seminars and live events are get opportunities to network.