Looking for a mentor in San Diego

[Thomas Hopkins]

Hey guys I am a 23 year old recent graduate from San Diego state. I live in San Diego and I have a good job as an engineer. I really want to make my first deal on a buy and hold rental. I have done research, looked online at houses for sale and ran the numbers I just need advice on how to actually initiate an my first deal and how to fund it. I make good money and have great credit. The only problem is I have about ten thousand in student debt I am working on paying before I can start saving for a down payment. How can I get started sooner than later and not have to wait until my debts paid and I save enough for a down payment. I've heard of low/ no money down loans and things like that but is that smart and how to do that. Any advice helps. Thanks for reading Tommy

[Dan H.]

In certain neighborhoods you can still find cash flowing duplex to quads on the MLS (even after the recent rate hikes) but the best deals are often found not on the MLS and often take quite a bit of work that is often at risk work. For example there was an off market purchase of a unit in Escondido fairly recently that required significant title work. The investor was a large investor who has a team that could help in this area. However, it the title issue could not be fixed the effort would have been nothing.

Make sure you are educated on values and be patient. Good deals hit the MLS but it is not every day so patience is required to get the good deal.

Alternatively drive for dollars, targeted mass mailings, bird dogs (sources), buying from a wholesaler are other options.  Be very leery of wholesaler comps as the wholesalers typically use the highest comps and the bank appraisers typically avoid the highest comps and are more likely to use the lowest comps.  I am currently disputing 2 bank comps - both bad but one was real bad as they added $10K for a triplex versus the duplex comp ($10K for a whole extra detached 2/2 unit); the $10K was on top of the adjustment for overall footage.

I know in my market I am better able to judge price than the appraisers because I have had the luxury to have seen each competitively priced property (at least from the outside) when it hit the market.  The appraisers also seem to under appreciate number of units, bedrooms (typically a $2.5K adjustment), and bathrooms (typically a $5K adjustment for a full bath and a $2.5K adjustment for a half bath) compared to the market place.   I know of no investor in my market that would not purchase a duplex that is 3/1 versus the same duplex 2/1 if the price was only $5K higher (both duplexes in this case are same condition, footage, and similar locations but one has a floor plan to have an extra bedroom versus the other floor plan).  I track each sale in my market.  I can almost always tell in my market a duplex to quad that will have an offer accepted in the first week versus lingering on the market (i.e. I can tell that the RE is priced so that it will sell quickly).

Good luck