All Forum Posts by: Steve Vaughan

Welcome @Weston Knudtson !  Glad to have you!

My best lender when I was active was a private person.  He actually reached out to me during the GRC when savings yields were .5%  

Tougher these days to get private lenders with 5% risk-free money markets available, but you might try Randy Cooper. He's probably retired and/or extended with his son's development, but he was a hands-on HML meaning he was very knowledgeable and would help underwrite your deal as part of his DD.

You might also try WA Fed bank.  I think they hold all loans in house so could potentially be more creative.  

We've been very happy in our 'luxury' househack for 17 years so far.  'Luxury' because it's in an area of SFRs and the MIL apt in the lower quarter of the house isn't noticed that much. 

We would not have been able to relax (retire sounds so final) early without our housing and utility costs being completely covered as they are.  We also wouldn't have been able to relax early if we were in the hospitality business bnb-ing or midterm renting it out. Those are a lot of work. 

A regret I and many other Gen Z parents I know have is that we didn't think of buying land to build a compound for our young adult kids and their friends.  I will probably still do it.  The boys anyway just need a few tiny or mobile homes with a couple shops they can work on their cars, trucks and motorbikes.  Try to assist them with some independence in this world of insanely high rents.   

Get your 'appreciation ' up front by purchasing below market value.

Then value add and/ or repurpose strategically to highest and best use for additional equity capture.  

For example- median SFR here is high 400k. Long DOM nice houses after price drops of 6%+ are attractive, especially if they have full height walk-out 'basements' you can plex. Buy $475k, $35k conversion, $10k driveway widen for turn around, ARV =$650.

Don't buy and hope.  Get it up front. 

We're all peaches and cream compared to Bob Bowling the cap rate dictator, Thomas S the tenant and property management Nazi and Uncle @Bill Gulley educate the right way or no way.

Old school and in your face but competent. 

Thanks, Jay.  I have explored lending for sellers who neeed to retail their place up or local businesses to get off the ground/ expand vie lending or fair equity splits and consulting.   

The why has to be bigger than my ROI though so not done much.

We transitioned out of landlording and into being the bank on the larger buildings slowly. 

We began selling 1 to 2 smalls directly to first time buyers in 2017.  We still sell at least 1 per year this way, recently with seller financing since mortgage rates are so high. Part of our why is to give 1st time home buyers a hand up with a square deal.  All the commission savings are passed to them with concessions or price reduction. 

The larger apts we acquired by 1031-ing smalls into them essentially. You could do this, especially if you have a few that are vacant at the same time.  We ended up selling the bigs to out of area syndications on contracts/ seller-financing in '22.

I'd get with a tax pro that specializes in RE.  We didn't have to recapture depreciation all at once. My state doesn't have income tax, but verify how installment sales are treated in yours.  Probably not as harsh as you think.  

Bottom line for us was a tax-efficient exit plan takes time.  We don't acquire them all in 1 year.  Don't exit too many in 1 year either.  

I'm with you on the asset protection.  We started by having the kids cars in their own name the minute they turned 18. Don't want some attorney easily pulling your easy to see RE assets up if little Johnny gets in a wreck. Kids driving is our biggest risk. 

AP on the others was natural because we always held commercial assets in LLCs from day 1. The LLCs own no RE at all anymore (yeah!) but the contracts are through them and drip in through their banks.  Allowed us to exchange our getting very expensive umbrella insurance policy for contract service fees essentially and come out a little ahead. 

Our main risk is inflation since our contract rates are fixed.  We've laddered our balloon dates to happen every 2 to 3 years up to ten and will invest in REITs, ETFs and broad index funds as waterfalls hit and valuations appear attractive.   No annuities for us. And no rush with risk-free rates above inflation now. 

About the only thing I would do today is buy a nice home for cash in my back yard under market value that I could easily repurpose into a duplex.  Lots of nice homes with longer DOM and price cuts. 

Know density rules at your state and local level.  Some make it much easier than it used to be to plex a home. 

Flipping is just a job with higher risk, high taxes and high transaction costs. 

And using debt, even a 1st position heloc at <50% LTV can and will notify you of this 'for your records'...

@Arlen Chou  very cool.  Thank you for sharing this.  Your why that you got into RE and attitude towards your kids and investing is unique and most excellent.  Also I'm sure the reason they've dove in.

My older son painted his first closet when he was 9.  Just put a poncho and big goggles on him and let him go.  

My younger one was about 12 when he karate-kicked his first wall.  It fell mightily on the 3rd kick and is a happy memory for both of us now.  Thanks again! 

Maybe after another '194 units' the tips may say something new. 

I only check in once or so a week real quick these days.  Click bait.