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The number one question I get as a CPA:

Should I open up an LLC?

Choosing the right business entity costs a bit, but can save you millions over the life of your business.

Time for a thread 👇🏼
This thread will mostly center around tax structuring and planning for Federal Income Taxes.

One thing to understand in selecting an entity type - It's complicated.

There are different issues in all 50 states, and loads of legal considerations.

Seek qualified counsel!
For Federal Tax purposes there are 3 main entity types I'll cover.

Disregarded - legal entity that doesn't file a return.

Pass through - Entities that file tax returns but don't pay, passing activity to owners through a K-1.

C-Corporations - Files return and pays tax.
Read 23 tweets
The yield curve is wrong more than it is right. 📈 Yet many banks nowadays are requiring rate caps on loans which in this volatile market are incredibly expensive. 👇🏻

wsj.com/articles/risin…
Important to note that the cap really only protects against a rate rise above the curve, which is even a lower probability event than the curve itself.

At some point investors need to underwrite risks in terms of probabilities and be prepared for swings.
Swing can go multiple ways - huge profits or capital calls… however if you are buying at a cap rate lower than your interest rate, the swing for you can only really go one way.

That’s negative leverage.
Read 4 tweets
So you want to be a real estate investor?

IMO real estate is the single best risk-adjusted investment on 🌎—the ultimate compounding vehicle.

And it ain’t rocket science...

Here’s a simple 5-part framework for RE success. Think of it as "LP 101"...

🧵👇
The assumption here is that you’re interested in investing in real estate as a passive LP. If you’re not familiar with the basic GP/LP structure, there’s lots of info about that on #REtwit and elsewhere.

We’re going to look at 5 criteria for evaluating a RE deal as an LP:
1. GP ➡️ Look at track record & longevity

2. Asset Class ➡️ Align with macro trends

3. Geography ➡️ Seek strong economies w/population growth

4. Model ➡️ Bias to in-place cash flow

5. Asset/Deal ➡️ Look for desirable properties & fair deal terms
Read 17 tweets
If you own land and want to develop multifamily housing on it, you could get an 85%+ LTC construction loan that might even allow for cash out. How? Land equity and an often unknown HUD detail: BSPRA 🧵
What is BSPRA? BSPRA stands for Builders/Sponsors Profit Risk Allowance. It is an option under the Section 221(d)(4) program which requires:(1) an established identity of interest between
the borrower and general contractor and (2) the GC’s profit to be satisfied outside of loan.
In exchange for this structure, the recognized costs in a development (not including land) are artificially increased by 10%. The 85% loan to cost calculation is then made on
the higher cost figure, resulting in a higher insured loan amount (roughly 93% of recognized cost)
Read 7 tweets
Voxtur Analytics $VXTRF $VXTR.V $VXTR
will screen well very soon

THE EV/TTM Rev X will compress materially in next 5 wks with Q4 and Q1 filings

~11.5X EV/TTM Rev will drop to ~5.7X EV/TTM Revs

$RDFN $Z $OPEN $DOMA $MTTR
#ReTwit #Fintwit #Tech #SaaS #Fintech #stocks #Cloud
May 2nd: Q4 / Annuals filing deadline
Revs will increase Q4'20 to Q4'21 from $5.9mm to ~$39mm
So the $5.9mm will drop off from the TTM (Trailing Twelve Months) revenue number
So TTM Revs will go from $63.2 to $96.2 which means that at $1.50 share price the EV/ TTM Revs multiple
So TTM Revs will go from $63.2 to $96.2 which means that at $1.50 share price the EV/ TTM Revs multiple will compress from 11.47X to 7.54X

May 28th: Q1 '22 Filing deadline
And a few weeks later the Q1'21 of $14.5mm will drop off and be replaced with a new Q1'22 revenue of
Read 4 tweets
Last week, my group closed on a 12 acre short-term rental / Airbnb property in Woodstock, NH - this deal is a culmination of 2.5 years of STR learnings.

🧵on the thesis, location, value add & guest experience plan, financing, partnership structure, & preview of what’s next.
1/ Property

-Currently 3 BD, 2.5 BA, 3100 sq ft
-Converting to 6 BD, 4.5 BA, 3700 sq ft
-12 acres, mountain views, private pond, & river frontage
-Deck, covered hot tub, and fire pit
-No zoning in Woodstock so no reg risk

zillow.com/homedetails/55…
2/ Location

<2 hrs of a top 10 MSA (Boston)

<15 min to two top 5 ski resorts in NH

Direct access to snowmobile trails from the property

<10 minutes to two golf courses

10 minutes to 1000s of hiking trails in Franconia Notch State Park

<30 minutes to Mount Washington
Read 18 tweets
Build in Public 101. Everything you need to know:

🏁 14 Players
🔮 2 Predictions
☁️ 4 Opportunities
🏔️ 3 Risks
🔑 3 Key Lessons
🔥 2 Hot takes

Let's dive in👇
💎 Why It Matters

Building in public helps you:

• Validate ideas
• Stay top-of-mind
• Get fast feedback
• Build connections with stakeholders
🔍 Problem

You need to break through noise to share your story.
Read 28 tweets
HUD multifamily finance is the best kept secret in the industry. Many believe that only affordable/subsidized/rent restricted properties qualify, but this is not the case. 🧵
HUD MF financing is often the best option for medium to long term holders that are looking to build generational wealth. Not only do HUD’s programs offer the best terms in the business, they also offer the lowest rates as well. forbes.com/sites/forbesre…
HUD’s 221(d)(4) program for the construction or sub rehab of market rate multifamily housing includes terms such as: 85% LTC, non-recourse, 40 year term + construction period, fixed rate, fully amortizing
Read 6 tweets
Was just listening to a podcast this morning about how much pricing has blown out on interest rate caps

About to buy a cap on a $22M loan in the next hour

Any guesses from #retwit on how much this cap will cost?
@phil_mcalister, been reading your killer interest rate tweets recently. Everyone should take a look at those and follow if you haven't already.

Curious on your guess if this is in your wheelhouse
Cap is for 2 years or 3 years. Will decide before we go live with the bidding.
Read 4 tweets
Why I went from Yale and McKinsey to managing mobile home parks. A thread. 🧵👇
This thread is personal. Trying to shed light on who I am and why I've made certain choices. Inspired by @financeguy725. >> I hope this might help other folks who are aspiring to leave W-2 life and take the #Entrepreneurship plunge. #retwit
I come from a scrappy immigrant family. My mom grew up on a chicken farm in Israel. My grandpa (who's like a 2nd dad to me) moved the fam to America to get a better life. He bought wrecked cars at junkyards, fixed them up in his backyard and sold them at a profit. Pure hustle.
Read 22 tweets
I post a lot about why I think Opportunity Zone investing is by far the most tax efficient method of investing in Real Estate. The incentives were meant to be powerful.

The goal of the legislation was to bring a wave of patient money into left-behind communities

Thread below:
There are blighted areas of most cities and towns. Unemployment, lack of access to healthcare, education, groceries, and general disinvestment

The big economic growth since 2010 has been uneven and that disparity can be stratified clearly by zip code (and census tract) Image
In 2015, Jared Bernstein, then VP Biden’s chief economic advisor, & Kevin Hassett, Trump’s future chief economic advisor, began advocating long-term private-sector investments in low-income areas as the solution to the reality that American communities were being left behind
Read 14 tweets
I received a bunch of requests from #retwit as to what qualities make GPs successful. Here’s my top 10 based on my 22 years of representing GPs, LPs and being a GP and LP investor myself….let me know what’s your top 10.
1. Put the interests of your LPs over your own.
2. LPs judge GPs as to how they handle tough times….not how things are going during boom times. Be upfront when there is bad news. That’s when you are really judged.
Read 11 tweets
I’ve owed you all the next benchmarking thread for a while… here we go!
Now that we’ve been through benchmarking, let’s look at a “live” example of a hotel deal – how would I use this to see if a deal is worth chasing?  Thanks to a member of the #ReTwit crew for offering up a hotel – I’ve anonymized so it shouldn’t be recognizable.
First let’s take a look at performance in 2019 and 2020. Worth noting – the hotel underwent an addition in 2019, so it’s a particularly tough historical data set to use! Also, some funky project-specific things we’ll ignore for now (e.g., no property taxes) to protect anonymity
Read 19 tweets
Opportunity Zone investing is VERY tax advantaged. It has been called a tax shelter...

I've seen some people have 💡💡moments about this but not enough people “get it” yet. The 10-year basis step up combined with cost seg and bonus depreciation is wild.

Follow ⬇️⬇️for more
Beginning steps that I'll gloss over for this thread which I’ve written about previously:

**You had a short/long term capital gain
**You created a “Captive OZ Fund” and contributed all/part of the gain
**Your OZ Fund invested directly into RE or into a GP’s QOZB
Before you jump into OZ investing please check with a CPA and/or tax attorney (I am neither). It is complicated and you need good advice.

I am going to use some of the examples and language that @sweatystartup introduced last week since it was clear/concise.
Read 22 tweets
What types of Real Estate projects can qualify as Opportunity Zone deals?

There are a lot of rules. I’ll give a high level overview…please check all of this with a CPA and/or tax attorney before doing a deal (I am neither)

Thread below.
TLDR:

•Real property
•Located in OZ
•Purchased after 12/31/17 thru QOF or QOZB
•From unrelated party
•Original use must begin with fund or fund must substantially improve within any 30-month period (addition to basis must exceed initial adj basis)
The property needs to be located in an Opportunity Zone. There are more than 8,500 in the US. They are based on Low Income census tracts from the 2010 census data and designated by governors in 2017
novoco.com/resource-cente…
Read 12 tweets
So, you have a bit of liquidity and are ready to invest in private real estate deals as an LP (Limited Partner)

This thread is the playbook 👇
1. There are many GPs (General Partners) who are raising capital through a syndicate structure. This means that you can participate in the property alongside them as an LP. Yet there are risks. Keep reading to learn what to look for.
2. Avoid any GP (General Partner) who is doing their first R/E deal: There are countless pitfalls in this business, first time GPs should be using their own cash, and friends & family money on the first few deals. Not yours.
Read 28 tweets
Following up with a Quick thread on some pros and cons on certain types of condos for breaking into RE investing in today’s environment. Multifamily cap rates/returns have fallen as institutional money has flooded in RE. Many areas people are priced out of SFR and MFR already…
For people who are experienced and/or intend to do deep value add obviously you don’t really want to touch condo’s. Dealing with hoa’s is generally a nightmare especially if doing extensive renovations. However for buy and hold with modest touch ups there can be some sweet spots
Although hoa fees are generally an inefficient use of capital I do find I get some return when it comes to condo rentals. Not having to coordinate logistics of lawn care or snow plowing removes pain points. The grounds are always nice to show a new prospective tenant
Read 10 tweets
I’m Gabe, I’ve been lurking #retwit wanting to engage more so I’m going to give this a go. I’m small potatoes compared to @realEstateTrent and some of the giants here but figured I would give a little background and current thoughts in case anyone finds it interesting.
2021 was a big year for me! I cashed out some crypto profits and had a great year of poker in a challenging environment with Covid. I paid off my first property (cool feeling) and bought 2 more which are rented and cash flowing well.
My wife and I welcomed our second son in October as well so it’s a full and blessed year. (I can’t wait to sleep why I am tweeting 🤣)My motivation in RE is building passive income to supplement my poker income and eventually pay for kids kids college/our retirement passively.
Read 9 tweets
In most STR markets, a 1BR requires as much as work as a 5BR but makes around a 3rd of the income. Lots of markets are undersupplied by larger homes. The biggest barrier to entry is purchase price.

Here's how to buy a large STR without a ton of up front cash and make a killing:
Find a secondary or tertiary market (that isn't specifically a vacation rental market) with STR occupancy greater than 65%. I'm talking markets like Austin (68%) Orlando (67%) Portland (83%) Salt Lake City (77%) or Charleston (76%). Identify the general target area for STRs.
In Austin, it's downtown near 6th Street, Rainey St, or East Austin. In Charleston, it's The Peninsula or near Kiawah Island. These are the areas that the occupancy rates hold true no matter how many guests your home will sleep. You don't want to buy away from the action.
Read 21 tweets
1/ I spoke to 120 #retwit investors in the past 4 months as part of a paid consultation program to teach & advise about the workflows & software systems & staff outsourcing solutions that make it possible to acquire off-market deals w/o brokers.

This is what I learned.
2/ [I'll try to convey as much as I can while of course respecting the confidential nature of these business-sentitive conversation so I'll anonymize everything]
3/ Office as an investible asset class, to my group at least, is dead. 120+ conversations and not one about office.

Of course my group self-selected itself for my help and office deals are more available then others, but to me this bit of info is noteworthy.
Read 17 tweets
Two days ago we closed on our first self storage property. Here’s why we bought this deal & why we want to buy as many as we can in the next few years 👇
Self storage facilities in rural markets are dinosaur businesses. Paper ledgers, fax machines, no software or revenue mgmt, and lots of handshake deals. This presents an opportunity for high upside with proper mgmt.
The facility: 19.8k sf. 123 units. Built in the late 90s. 97% occupancy, and rents haven’t increased since it was built, no joke. Rent a unit by signing a paper lease & mailing it to the owner Image
Read 11 tweets
I had a great conversation today with @moseskagan and got inspired to introduce myself. A 🧵 about me:

I’m the “placemaker in chief” of @CampNorthEnd, a 76-acre site, 1 mile from #Charlotte’s CBD. (1/12)

camp.nc
We are building a place through the adaptive reuse of some amazing, giant industrial buildings, one a 1924 Ford factory designed by Albert Kahn and five built by the US Army in 1940/41. (2/12)
(And yes, the US Army built 1msf of warehouse buildings in less than two years. There is something to calling them the #GreatestGeneration.)
Read 13 tweets
Here's a story on how my brother and I closed on a $3.2M retail strip center #retwit Image
It was off-market. We've been pursuing the owner for a while now and timing was never right. We stayed persistent and the owner finally gave us a call letting us know he was ready to sell and do a 1031 Exchange. Extreme persistence worked here!
The current weighted average rent is $15.07 per sf. ft. CoStar indicates that the average submarket rent for strip center properties is $20.80. This gives us plenty of room to increase rents. Here are some comps we looked at: Image
Read 15 tweets
I’ve been captivated/fascinated with the idea of creating a new podcast for the real estate Twitter community with a build-in-public model.
I’m thankful (and a bit overwhelmed) with the response to my post this week about the search for a podcast co-host. Having not been able to keep up with messages, I figured we would add a fun twist to the next step in this journey.
I thought @camp4’s idea to do a trial episode with potential co-hosts was great. To make it even more fun we are going to do a competition in here so that we won’t miss out on any great people who might get overlooked.
Read 8 tweets

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