Building a real estate portfolio

#The entrepreneur of the week Menachem Kleer# Post 4
I am very happy to know that the readers continued reading the previous posts and came to this post. This is my personal journey in the intricacies of real estate in the USA. If I was able to inspire you readers to embark on your own journey, that is the success of the posts.
I don't want to teach how to operate in the real estate field. I believe that my experience and knowledge will contribute to the members of the forum to make more successful transactions.
An important tip for new members who enter the forum and want to enter the field of real estate. There are suggestions in the forum for classrooms that will give you the basis, whether it is in choosing the location of the property,
The type of property, financing, feasibility or risk analyses, etc. go study!!!
The field of real estate is a dynamic field and is affected by global events. Therefore, it is very important to be informed. I can tell from my personal perspective that during the years in which I have been active in the field, there have been several crises in the real estate industry. One in the early 90's and then another acute crisis between 2008-2012. When we follow the developments and show vigilance for the next, we will be able to deal with the crises and stay with our heads above water.
Let's go back to my first property that I sold in Atlanta and made a nice profit. After repaying the mortgage and the money I borrowed from friends, I have a capital of about $250,000 left.
Using this capital I decided to continue to purchase a new multi-family property together with my children, taking advantage of the American tax section 1031 to which I dedicated the previous post.
I deferred paying the tax and was left with capital that allowed me to purchase a larger property.
I started looking for properties on real estate sites such as MLS, local LOOPNET, TRULIA and others. As part of the search, we also examined environmental data such as employment status, local economy, crime level, reports of positive or negative movement of residents and the existence of academic institutions in the city.
It should be taken into account that the schedule is very tight. There is a total of 45 days to identify a new property after the closing of the sold property. There is no postponement. The IRS is waiting for you around the corner.
And so we rolled from 12 apartments in Atlanta (remember?) to 45 apartments in Austin - Texas, to 100 apartments in Seattle - Washington and finally to 170 apartments in Oklahoma City.
We held each property for about 3-5 years. With the rent increase and the upgrading of the apartments, we were able to increase the value of the property, sell and TO MOVE ON.
I will not deny and say openly that there were also failures. Failure is also part of the game. A number of properties that we bought cheaply during the crisis years in the industry in the early 90s of the last century, we unfortunately sold at a loss, just to stop the "bloodletting" of current losses.
I should note that all the properties we purchased were CLASS C with monthly rent ranging from $300 to $600. It is difficult to get high yields in CLASS A properties which are mainly bought by insurance companies, REITs and similar companies.
We are looking for the winning number 10%.
We managed the properties ourselves without a management company while employing a manager at the property itself with a maintenance team.
Each asset and its stories. And there were many. Here is one of them:
A tenant who was not satisfied because he received an invitation to an eviction trial for non-payment of rent, took a mattress, set it on fire and burned 12 apartments.
This is the place to talk about what is called SECTION 8. This is a section of the US Housing Act of 1937 that authorizes rent payments to low-income residents. Most of our tenants were those for whom the state paid the full or partial rent depending on their financial situation. It has advantages and disadvantages, here are some of them:
Advantages:
1. The payment arrives like clockwork on the first of the month
2. Tenants must pay their share on time, otherwise they may lose their entitlement.
3. The behavior of the recipients of the support is relatively normal in the complex because otherwise they may lose their eligibility.
4. There are many tenants on the waiting list and it is relatively easy to find tenants of this type.
Cons:
1. Causes high maintenance costs due to multiple stays in the property (disability or unemployment).
2. Annual inspections by the State on the integrity of the complex as a whole and on the specific apartment.
3. The amount of rent is conditioned by the State guidelines, which are difficult to adapt to the free market situation.
It is important to note that I did all of these actions while I was a US resident. Israelis operating in the USA under an LLC, and investing in Multi Family should check the feasibility
The deferment of the tax in the USA due to the taxation problems in Israel.
12 years ago I returned to Israel. I will tell about the continuation of my activities from here since my return to Israel in the next post.