Starting out in an expensive market

[Nicholas Doyon]

Hi all,

I currently live in San Luis Obispo, California which is a pretty expensive market. I moved here from Canada two years ago and left most of my cash invested in the market back in Canada since the CAD-USD conversion didn't make sense at the time since I will most likely end up back in Canada eventually. I started building up capital in the USA two years ago to potentially be able to buy a house hack or a live-in flip in the area. Although, with the median house price in SLO being around $730k, I'm realizing that, even with a savings rate of 45%, it is going to take a while before I can accumulate the capital for the down payment + renovations (if needed). I am looking at properties every day and am pretty familiar with the market. I recently started seeing some opportunities that could potentially make sense for live-in flips (may need more analyzing), but I always get stuck because of pricing. For example, latest deal is listed at $875,000. Comps in the area for similar houses sell for between 1.1M-1.5M depending on how remodeled they are. I feel like this could be a good opportunity, but I have not pursued anything further because I get stuck at the idea that I may need to put down 30k-35k down payment (3.5% FHA) (which I probably could), but then the renos would certainly be an additional 100k-150k.

My question is: what options should I look at to help me close on a deal like this when I have limited capital at the moment? Partnerships, hard money lenders, other?

I am tired of paying $2,500 in rent every month... (I'm currently saving $2,400/month)

Excited to hear ideas and/or connect with other investors in the area!

Thank you

[Patrick McCandless]

Hi there Nicholas! I feel your pain brother! I'm up in Paso which isn't quite as bad as SLO, but pretty damn close. My suggestion would be to either bring in a partner who has funds or ask about seller financing. I am literally waiting on signatures on purchase in Paso as we speak (hope to have back this afternoon) for an off-market 3BR/1.5BA main house with a studio/1br guest house in the back. I inquired with the previous listing agent about the possibility of seller financing and he said "Well I'm not sure, but I can ask." And sure enough they're open to it and we are putting a deal together. 10% down and only 4% interest and zero closing costs/points. Hard money will be upwards of 8-10% and a point or two, BUT if it's a fixer upper then they will typically pay for 100% of the rehab costs as well. If you're looking at a fixer you won't be able to use an FHA loan as they are super strict about the condition of the property at closing. Shoot me a message and I'd be happy to set up a phone call to discuss things further if you want.