Sailing Landlords

[Saleen411]

Originally Posted by belizesailor

Texas is an easy landlord State. California is a nightmare.

A single family home, I would likely sell rather than try to rent. In most cases you dont make much net cash flow on single family...mostly you are betting on appreciation...single family is usually only worthwhile in a market that is expected to appreciate significantly.

If you've had good appreaciation on your home, and dont expect a big upside in the area in the near future then sell it...no cap gains tax on your primary residence...if you rent out then its no longer your primary residence and taxes will be due on cap gains.

If you don't mind me asking....Are your rental properties in Texas?

Years ago I bought a single family home in Austin......great rental rates but the property taxes took a BIG bite. Way more than my Las Vegas property.

I wrote off Texas because of the high property taxes and low appreciation.

[belizesailor]

Originally Posted by Saleen411

If you don't mind me asking....Are your rental properties in Texas?

Years ago I bought a single family home in Austin......great rental rates but the property taxes took a BIG bite. Way more than my Las Vegas property.

I wrote off Texas because of the high property taxes and low appreciation.

Yes, in Austin. Property taxes can be ugly in Austin, but its a great rental market and appreciation can be dramatic...if you have a property in an area that pops...and many are in Austin. Ive done very well on both SF & MF in Austin.

Another upside to MF is you can increase valuation by increasing revenue. Cant do that with SF. Did that w my previous property in Austin: renovated, increased rents, then the area really popped...SOLD!

Property taxes are not so crazy everywhere in Texas. I also have an interest in properties in the Dallas area...not so bad, but same landlord favorable State laws.

[Woodland Hills]

Originally Posted by keepondancin

I have had income properties for many years, and a mix between residential and commercial. I like commercial. If a triple net lease, you get rent plus expenses, but not mortgage. Generally the tenant is responsible for repairs, other than replacing full systems. They fix the hvac, plumbing leaks, electrical repairs, like fixtures. They also pay for renovations. Residential tenants can be either great, or whining p.i.a's. Also the judge is usually way more sympathetic to a residential tenant than a commercial tenant. This is just based on my experiences.

What he said! Triple net is the way to go. That’s what pays for our cruising: a 14 unit shopping center with a good anchor tenant at one end and a bank in the pad on the street. Add a good management company and life is good.

[Saleen411]

Originally Posted by belizesailor

Yes, in Austin. Property taxes can be ugly in Austin, but its a great rental market and appreciation can be dramatic...if you have a property in an area that pops...and many are in Austin. Ive done very well on both SF & MF in Austin.

Another upside to MF is you can increase valuation by increasing revenue. Cant do that with SF. Did that w my previous property in Austin: renovated, increased rents, then the area really popped...SOLD!

Property taxes are not so crazy everywhere in Texas. I also have an interest in properties in the Dallas area...not so bad, but same landlord favorable State laws.

Thanks for the informative response......obviously you've done quite well for yourself in Texas. Good for you.

I must say, my Austin property did do well appreciation wise....I thought I'd just gotten lucky when I sold... then the evil tax man had his way with me on capital gains.

[belizesailor]

Originally Posted by Saleen411

Thanks for the informative response......obviously you've done quite well for yourself in Texas. Good for you.

I must say, my Austin property did do well appreciation wise....I thought I'd just gotten lucky when I sold... then the evil tax man had his way with me on capital gains.

1031:

https://www.google.com/url?sa=t&sour...CZ8_N23IwLd1im

[Chotu]

Any resources in getting started with this? Anyone selling commercial or multi unit apartment buildings do seller financing? Would really like to do the triole net leases. I don't look great on paper income wise but have deposit and capital.

[belizesailor]

There are loads of learning resources out there from books, to YouTube, to web sites (like Bigger Pockets below, no affiliation).

https://www.biggerpockets.com/

Owner financing deals are not uncommon. A mortgage secured by real estate is a good income producing investment. In the USA a "Deed of Trust" gives the mortage holder an easy to execute security mechanism.

[Chotu]

Originally Posted by belizesailor

There are loads of learning resources out there from books, to YouTube, to web sites (like Bigger Pockets below, no affiliation).

https://www.biggerpockets.com/

Owner financing deals are not uncommon. A mortgage secured by real estate is a good income producing investment. In the USA a "Deed of Trust" gives the mortage holder an easy to execute security mechanism.

Thanks for the link. I'm going to have a read of this site. Lots to pick up and learn here.

[belizesailor]

Originally Posted by Chotu

Thanks for the link. I'm going to have a read of this site. Lots to pick up and learn here.

Yes, lots to learn. I learned most of it the hard way...by doing everything that could be done wrong on my first rental property.[emoji849] In the end, it was still profitable, but it was a long bumpy learning experience.

If you really want to get into real estate investing then you need to build a virtual team of reliable professionals: realtor (an investor's realtor, not a soccer mom selling SF homes on the side), PM (solid pro PM company...managing properties on your own is not only hugely frustrating, but potentially creates legal liabilities for you due to direct tenant interaction, and sucks up time you could be using to evaluate your next deal...or cruising! Not using a good PM company ends many people's venture into real estate investing), banking (financial institutions which are also investor oriented. The bank I use for my personal accounts is not investor oriented for example, so I work with other institutions who specialize in that), bookeeper, accountant, attorney (sooner or later you will need one, best to have that relationship already in place than making random cold calls in a crisis).

Best to consult with accountant and attorney about your specific situation before persuing your first deal.

If you really want an adventure...then diversify into international real estate...oh the stories I know! Some of which are my own! [emoji37]

[Chotu]

Originally Posted by belizesailor

Yes, lots to learn. I learned most of it the hard way...by doing everything that could be done wrong on my first rental property.[emoji849] In the end, it was still profitable, but it was a long bumpy learning experience.

If you really want to get into real estate investing then you need to build a virtual team of reliable professionals: realtor (an investor's realtor, not a soccer mom selling SF homes on the side), PM (solid pro PM company...managing properties on your own is not only hugely frustrating, but potentially creates legal liabilities for you due to direct tenant interaction, and sucks up time you could be using to evaluate your next deal...or cruising! Not using a good PM company ends many people's venture into real estate investing), banking (financial institutions which are also investor oriented. The bank I use for my personal accounts is not investor oriented for example, so I work with other institutions who specialize in that), bookeeper, accountant, attorney (sooner or later you will need one, best to have that relationship already in place than making random cold calls in a crisis).

Best to consult with accountant and attorney about your specific situation before persuing your first deal.

If you really want an adventure...then diversify into international real estate...oh the stories I know! Some of which are my own! [emoji37]

Thanks, Belize!

I'm evaluating it as a path. Currently I have one successful small business and I'm trying to create new income streams. I'm kind of stuck, truthfully. Looking at
buying existing small businesses,
looking at mult unit buildings,
commercial with triple net leases,
trying (and did try out) a couple ideas I had for new small businesses, but the profitability on the little ideas I had isn't all that great.

I'm kind of stuck on how to get to the next step as an entrepreneur who is trying to add income streams. So this seems like a possibility.

Note:. I was actually going to charter my cat as a main plan (already had a successful charter operation in the past) but life has changed and I'm looking to just keep sailing as something personal and fun.

[belizesailor]

I declared a ban on small business involvement years ago. Small biz really requires an owner who is 110% dedicated...not compatible with cruising.

A medium to large biz can support hiring good pro leadership, a small biz cannot...thus you must be hands on w a small biz...and you must love it or you will hate it!

By contrast, MF and commercial property, with good pro PM, can be very close to hands off. You will need to be able to communicate with the PM occassionally, but barring a crisis, thats about it.

Mortages can be very hands off too with a reliable borrower, but you will need legal & accounting in place should things go wrong.

If you want to go cruising, or other absentee activity, then I suggest focussing on preparing your small biz to sell. Work on increasing its value and attractiveness to a potential buyer. Ive started, bought, and sold small business too. Owner financing can work in this scenario, but its much riskier than a mortgage...if they fail you will likely just lose the entire note value.

[Chotu]

I should be more clear:. Small businesses that can run on autopilot. Ha ha ha. I have a knack for taking businesses people never thought could run with low owner involvement and creating business processes and tech systems for employees to rely on to make that happen. I'm trying to find more of these to add to my portfolio but kind of want to wait until the next downturn unless something special comes along.

I already have one that's doing nicely. Takes maybe 8 hours a week of my time. On average. Some weeks require more time.

I figured real estate may be interesting as it can run on autopilot to an extent too, just as you've described. Only thing is, I know next to nothing about how to run it and have avoided it all my life thanks to growing up in a house full of real estate. Lawyers wrecking deals, escrow and deeds and appraisals are all I heard growing up at the dinner table. Ha ha. Family owns a real estate company.

[Nucopia]

Good topic..
I have also been thinking about how I can finance my dream to go cruising.
We have a small family trust that owns 5 houses in Australia , 4 investment properties , 2 x 4 bedroom and 2 x 3 bedroom homes property managed giving us a good return each month plus our primary place of residence.
In the Philippines we have 2 x 3 bed room homes managed returning a modest monthly income as well as a comercial warehouse no income as yet , hardware store variable income ( but growing) a small piggery 50< 80 head of breeding sows plus 10 hectres of agricultural lands that we plant with rice corn and vegetables. We have 3 mortgages over 3 of the Australian properties at 275k, or about 22% of the equity for the 5 Aus properties. Everything in the Philippines we own outright and is self funding income used for development building etc
I am on an army service pension and my wife works part time, which is enough to cover our living exspences. Whats left over we try to save as much as we can. Now our children are working part time and studying(paying their own way) I am trying to pay down the mortgages as fast as possible.
I was looking at borrowing and buying another property in Australia to renovate and or rent/sell. But I am also thinking to just save for a boat I can sail a few months of the year and spend the rest of our time between Australia and the PI as we do now, 2 six weeks trips, twice a year.
I would love to sail a boat to the Philippines spend some time on our farm and some of our time sailing the islands,then fly back to Australia . Thats something I could happily do for the next few years until the kids graduate and can have a bigger role in managing things . Then we could go cruising to other places and see more of the world while we are still young enough to enjoy it.

[Nucopia]

Joined the bigger pockets forum yesterday

[Qismat]

We live aboard our boat full time and rent out our SFH with a basement suite that nets us around $1,600 a month from both sets of tenants after mortgage and taxes. That does include repairs/maintenance which is fairly minor.

I've thought about selling but the cash flow generated monthly from the rentals is too good to give up. We plan on keeping the rental while we cruise so we'll need a PM as I handle the tenants myself.