All Forum Posts by: Alex Mao

@Tarik Hodzic

I literally just went through an iteration of this past month on a fourplex. Unless contrary to any provided disclosure or guarantee, seller has every right to say no to your request, which they did to mine.

So for a few hundred bucks I hired a structural engineer to evaluate the foundation, provide a report and scope for repairs. Sometimes, they'll provide a ROM budget if the repair scope isn't too complex.

I ended up purchasing with known structural deficiencies (it wasn't much in the grand scheme) and peace of mind. Of course, use your best judgement and try to get as much info from your home inspector as possible before hiring a structural engineer. If they're good, they'll usually give you a rough idea of extensiveness of the repairs, or note any bright red flags.

@Zuleidy Benitez

Hey Zuleidy, I'd caution against signing a dual agency agreement, especially if you're a newer investor. Some states disallow dual agency representation as it can very easily promote a conflict of interest.

In some instances, dual agency may have some advantages for more seasoned and savvy investors; never is it prudent for those not.

@Taylor Witt

Depending on vacant SF and condition of the units (are they cold shell?): CrossFit gym, karate studio, coffee shop or cafe, regional bank, nail salon are all service oriented ideas that I'd like to see when leasing in strip malls. Of course if you can get restaurant chain tenants that would be a home run.

@William Masters

Hey William, I have active NNN leases with hundreds of landlords so have a good sample size.

Most advantageously, landlords bill monthly for estimated out of pocket expenses (CAM, Ins., Taxes) then reconcile annually. If the tenant isn't a credit tenant, you may want to reconcile more frequently than that.

If you have national or global credit tenants, they'll maintain the premise and reimburse landlord for out of pocket expenses as the expense is incurred. This works to reduce administrative burden for all parties and landlord has added assurance due to the creditworthiness of the tenant.

@Jessica G.

If not ready to purchase for one reason or another, you and your friend could look into leasing with options to buy (ROFR and ROFO). Of course these don't guarantee a purchase if landlord decided not to sell, it just secures your right to offer upon if they do, and provides you the right to purchase at the offer price they would accept elsewhere.

@Hunter McCook

Hey buddy, I was in your shoes not long ago, with the similar income and aspirations. Sounds like you're an engineer of some sort, live modestly and are prudent about saving for the future. Great foundation.

I could give you specific real estate advice but (1) you'll learn a lot more from others on BP who've forgotten more than I've learned on RE, and (2) it wouldn't serve you that great right now. What I will say is continue on the path you're on now, continue to educate yourself on REI, and don't be afraid to jump in on an opportunity when you see one. The experience you'll gain on the first deal - and the desire to do it over and better again - will likely far outweigh any heartache or stress from the process. You have less to lose now than you would a few years from now. Oh and leverage your youth - it always inspires me when I read of guys fresh from (or in) college who aspire to make it big in real estate.

@Hunter Williams

1. Educate yourself on REI. You don't need much if any resources for that.

2. Start saving as much as you can.

3. Look into house hacking.

4. Wholesaling is an option that takes a lot of hustle and networking, but not much money.

5. Partnerships. Just remember you have to bring something to the table if you don't have money - a deal, expertise, etc.

6. Creative financing, i.e., seller financing.

I'm sure there are others to add....

Embrace your youth. I'm sure most of us wish we would've started earlier, I'd be the first to admit.

Good luck!

@Salvatore Lentini

In the Bay Area it's typically 5-6%, though I have seen and paid higher.

As @Joel Owens notes, it's not uncommon here for the percentages to reduce for months 120+. For example, for a 15 year lease, listing and and tenant rep broker gets 2.5% each of first 10 years of rent, then 1.25% each for next 5 years of rent.

Institutional landlords will have listing agreements with their listing broker(s) which dictate payout structure.

@Antwone Austin

Some great, detailed information here by others.

Institutionally and in short, my team looks at highest and best use (what our returns can be and resources to achieve) vs. current metrics (cap rate being one) to identify opportunity, and build our value add proposition from there.

@Huimin Zhang

Hey Huimin, if your investing goal is to accumulate cash flow, then OOS will provide much higher (or in other words, infinitely higher) returns than your current situation.

On the other hand if you're banking on appreciation, well that all depends on your outlook of the Bay Area altogether (many brokers I work with seem to think we're fast approaching the peak of the market).

If your goal is cash flow, probably best to sell and invest elsewhere. There are many solid and growing markets where you can cash flow positive with turnkey investments. The Bay Area is not on that list.

Consider your problem a good one though, as you've accumulated two MFU is the Bay Area which is quite the feat in itself!