All Forum Posts by: Adam Sanders

The biggest concern I would have is the allowance for capital expenses and repairs given that the home is 117 years olds. There can be some expensive time bombs in old homes (old and outdated wiring, plumbing, etc. that would need to be completely replaced) that you would want to fully vet. Other than that it looks like it has potential.

Try to find a local real estate investors organization to join. That is a great first step to meeting other people with an interest and experience in real estate as well as a great opportunity to learn.

Timing a market crash is incredibly hard to do and is very risky. Ideally, you would sell your investments ahead of the crash, sit on that cash, wait for the market to bottom out, and then reinvest at the bottom of the market. People have been predicting a second crash since the last one and if you had tried to time the market you would have lost a lot of money. 

If you want to be in a good position should the market crash invest in cash flow producing assets in areas with strong economies. Analyze the numbers on your deals and ensure that you leave yourself enough margin that should the economy have a setback you are still in a strong position.

It really depends on the size of the deal, how much cash is required, and how much work is needed for the flip. 

You can use hard money for the deal but a lot of lenders max out at 70% LTV for a refi and most require a seasoning period even if owner occupied. If you look around at smaller banks and credit unions you might be able to find more flexible terms but it isn't guarenteed.

Finding properties with good cash flow can be very challenging in real estate markets that are strong. When you are looking for new investments it isn't uncommon to have to look at a lot of properties (like 100) before you find one with potential.

There are a lot of blog and forum posts that cover this. Spend some time reading through those posts and searching the forums for any specific questions you might have. Many of them have probably already been answered.

Both are important. Real estate investors tend to focus on cap rates more because it makes evaluating and comparing potential properties easier as the number is not influenced by how the property is financed. What return or cap rate investors look for is highly dependent on a large number of factors including the size, risk, and type of the investment.

The bay area is a tough place to get started with how expensive it is. A few thoughts on your questions:

• How long can you afford to lose money on a duplex every month? It could take years before the rents cover the mortgage and then years after that before you even break even on expenses. Your only real chance of making money is on appreciation of the property.
• You need to look at the total cost of ownership when comparing renting vs. buying, not just the cost of a mortgage. That means taxes, repairs, insurance, etc. which can add up really quickly.
• Have you looked at investing in less expensive areas? Sitting on your cash for 3-8 years is a long time and really hard to say is a good idea for you without knowing what your other options are.

Where did you come up with the 8% refi rate? That seems awfully high.