All Forum Posts by: Eric Black

Hi Branden,

Welcome, potentially, to California! I live in Santa Maria so I can give you some feedback.

Lompoc: A relatively small community that is a heavy agricultural area. People either love living there because it's a small town, or they hate living there. It's often windy and/or foggy but it can have plenty of beautiful weather as well. 15 minutes from Vandenberg, 30 minutes from Santa Maria, 45 minutes from Santa Barbara. Not a whole lot exciting going on in Lompoc. More affordable than most of the other places.

Santa Maria: About 100,000 people and many more amenities than Lompoc. Lompoc has WalMart, Home Depot and a bunch of smaller stores. Santa Maria has those plus Costco, Target, and pretty much most everything else you're looking for. Also a heavy ag area. It is often windy and foggy as well but primarily in the spring. More affordable than most of the other places but also not a lot going on. 15-20 minutes to Vandenberg, 30 minutes to Lompoc, 1 hour to Santa Barbara, 20 minutes to Pismo Beach.

Buellton: Also a smaller community but centrally located between Santa Maria, Lompoc and Santa Barbara. It will cost a bit more to live here but it's a nice community. The smallest of the areas you mentioned so most people from this area have to travel to either Santa Maria or Santa Barbara to do their major shopping (Costco, Home Depot, etc.) Great weather, a little hotter in the summer as it is more inland. 30 minutes to Santa Maria, 30 minutes to Santa Barbara, 25 minutes to Lompoc, haven't driven direct to Vandenberg so not sure but it's a little out of the way.

Goleta: Goleta is nice, close to Santa Barbara, far from Vandenberg, and extremely expensive. The people who can no longer afford Santa Barbara have been moving north to Goleta and pushing up the prices there. Near the beach, 45 minutes to Santa Maria, probably 35-40 minutes to Vandenberg, 25 minutes to Buellton.

Hope at least some of this helps.

Eric

Hi Vincent,

Mold can be a very serious issue and it sounds like it is in this case since it's in every room. I think more important than figuring out how much getting rid of the mold will cost is finding out what is causing the mold. It does no good to remove what's there but not solve the overall cause.

That being said, we've only dealt with mold in one instance and it was a small case. A water heater had been leaking in a SFR we own and the wood stand it was on and the drywall behind the water heater had mold an area about the size of the water heater, so not too major. To get that small area cleaned by a licensed mold remediation company was over $2,000 and that didn't include replacing the drywall, stand or the water heater. Cleaning up mold, especially in a widespread situation like that can get VERY expensive. Also, since it's a condo, I'm not sure how it would work if the mold was found to have spread to any neighbors who may share a common wall or ceiling/floor. That could get very complicated.

If the owner will allow you to I would recommend having a few licensed mold remediation companies come in to give you estimates. Even then, for me having so many unknowns would be too much of a risk to take, even at 50% ARV. That could go away real quick.

Cheers!

Eric

Hi Christopher,

We did this. We took out a HELOC on our primary residence and used the funds for a flip in Florida. After we sold the house we paid off the HELOC and then used the profits as a down payment on another buy and hold property because we were having a difficult time finding another flip that made sense. We still have the HELOC available if we find another project.

As far as paying off your residence in 5-7 years, I guess that depends on a lot of factors. How much do you owe on your house? How much are you anticipating making on each flip? How many flips are you expecting to do in a year? I guess it could be possible.

I can tell you it can definitely be a good way to help you increase your RE portfolio!

Cheers!

Eric

Hi Matt,

This can be a pretty loaded question and we don't know how much we're talking about but in a nutshell I would say you have to ask yourself this:

If you use the HELOC as a down payment and something happens in your life where you need to use your savings up, will you be comfortable having a fully financed property and little to no savings?

Second, if you get financing on the house and use your home equity as the down payment so the house is technically 100% financed, will it still cash flow?

We have used this method to purchase a few houses now so it can be done but you have to decide your comfort level.

Cheers!

Eric

Hi Shawn,

This is a tricky situation, especially if the bag came from outside which it sounds like it did. You are correct, you didn't put the baggie in the yard, but the tenant may not have either. It may have blown in from the neighbors or somewhere else. You can't prove that the tenant was "negligent" because 1 bag somehow got into the yard and sucked into the heater intake.

We all understand the type of tenant you are talking about, and while eat does eat into your profit, $275 isn't the worst repair cost so I would just eat it and politely remind the tenant that it's their responsibility to keep the yard and area around the heater intake clear and that if this happens again it will be at their cost.

Cheers!

Eric

Hi Sergio,

The first question is, how much will you be borrowing? Those terms aren't unheard of for hard money but it doesn't mean you can't find better terms either. Depending on the size of the loan this could eat a big chunk of your net profit.

Cheers.

Eric

Hi Yader,

The rules may differ from state to state however I would get confirmation that the contract with the agent has been cancelled prior to signing anything. You can discuss the terms with the seller but I believe he, not you, may be able to be penalized if it is determined that he was making other arrangements while still under contract with the realtor.

Cheers!

Eric

Hi Dave,

I'm not sure you need an "expert" to deal with the issue. Find a few reputable contractors (licensed and bonded!) to come out and give you bids. You can either have them do the entire job including replacing the windows or you can have them just repair the damages and then have the window company install the new windows once the repairs are complete. Once the damage is repaired, whoever installs the windows should then be responsible for any leaking issues going forward.

Cheers!

Eric

Welcome Ryan!

Turnkey, duplexes, SFRs and triplexes can all be good ways to start but it depends on your situation and your investment philosophy. Keep reading and listening until you figure that out and also figure out what you'll be most comfortable with. No matter what anyone else says, one of the most important rules of investing is to do what you are comfortable with. 

Cheers!

Eric

Hi Larry,

I just want to confirm that your mortgage insurance will be going away because you will have reached a balance of less than 80% of your original mortgage amount and not because you think it will just fall off after 5 years. 

Each lender may have their own procedures and many, or dare I say most, likely will not catch it right away. My advice would to call your lender the month prior to when your balance will hit the magic 80% mark and confirm with them that the PMI will be eliminated. You can request the PMI be dropped at 80% LTV but your lender is required to drop it when your balance reaches 78% LTV. Then you can decide if you want your payment to go down or if you want to add that extra money to paying down the principal, whatever is best for your situation. Don't forget to check the following month to make sure they actually removed the PMI as well.

In addition, check out my blog post here on BP to see if you can eliminate your mortgage insurance even earlier with, potentially, no or very little out of pocket costs. 

 https://www.biggerpockets.com/blogs/5991/42054-thi...

Cheers!

Eric