I've talked with Susan Arcadia, the COO of the company. Some of what she says makes sense but it seems too good to be true. I know someone plugging a lot for them on some facebook forums. Like you I am skeptical and want to hear some first hand experience, not just "testimonials". as Tom mentioned, their website has grammatical errors, many many grammatical errors which is a red flag. I am curious to know more as well
https://q13fox.com/2020/02/10/seattle-city-council-unanimously-votes-to-ban-evictions-in-winter/
this popped up for me today. Wondering what peoples thoughts are on the effects this will have on the Seattle market. Hopefully no other city follows but unfortunately once one starts it can set off a chain reaction.
I was at a family get together over christmas and a number of aunts/uncles/cousins were floating around the idea of buying a family ranch and I am now wondering how financing for properties like this work. The situation I'm looking at would be to buy land and then lease part of it to a ranching operation and use the lease money to make the payment on the property. This is not something i've researched in depth and just a rough idea. Wondering if anyone has any experience in buying raw land/ranch land/farms and what kind of financing there is for a property like this and how it works? What do lenders typically look for/require?
I question how many of the people who posted in this thread have owned RE in CA for at least 5 years.
CA RE has historically achieved outstanding cash flow.
Actual cash flow is the cash flow over the hold period. This is not the cash flow at purchase nor is it the projected cash flow. Ca RE historically has poor initial cash flow, moderate projected cash flow (due to conservative projections - projections should be conservative), and outstanding actual cash flow due to rent appreciation.
In my market, SFH average rent has gone up over $500/month in the last 4 years. This implies that a purchase of a cash neutral home in my market 4 years ago would have ~$400/month positive cash flow today. In addition, they would have outstanding market appreciation of the SFH.
The higher rent appreciation market will always eventually have better cash flow than a lower appreciating market as long as the higher appreciation market Rent appreciation is greater than the expense increase which is virtually certain in Ca with property tax being basically a fixed price and most mortgages being fixed rate.
Good luck
CA does have outstanding actual cash flow, this is correct.
The problem is to achieve this actual cashflow you need to have the ability to hold the property until rents appreciate. The issue I suspect many others besides myself have is the ability to hold the property until that point. Many properties I see (SF Bay Area) would be cashflow negative at purchase even just on PITI and not accounting for repairs, capex, etc
Real estate in California has always appreciated, but its not always just a straight line up, like any market there are peaks and troughs with a general trend line up. If you can't hold the property through the trough then you're SOL.
I can only speak to my personal situation, but my issue with buying local in the Bay has been holding ability. I may be able to hold a property for two years being slightly cashflow negative while I wait for appreciation, but what if the market tanks after 1 1/2 years and I don't see that rent appreciation for another 5 years? Mind you this is only for one property, what happens when I have 5 or 10 properties doing the same thing? If one has a very high W2 or very deep pockets this may not apply, but for many of us who work average W2 jobs this winds up being a huge risk.
CA real estate has been great if you look at the trend line from 2011-Present, but that is cherry picking a very short period of time during an unprecedented upswing in rents and property values. If one is going to take on a 30 year mortgage, they should look at what to expect over 30 years. Not pick the best 8 year run and say that this is what you should always expect.
@Andrew Brewer after reading your post I realized that I need to apologize. I forgot to put down the more blatantly obvious aspect of the millennial mindset, the snowflake belief. Snowflakes are amazing. Each one is unique and they are very delicate and sensitive to almost anything. Heat and wind can easily damage them so you must be very carful with them. If you touch them wrong, you can damage them forever because they are very sensitive.
It sounds like you would like to be treated or thought of differently than being part of the millennial group. You would like to be seen as an individual rather than being lumped into a group with a specific name because you are your own unique person and therefore should be treated uniquely and not stereotyped into a group based on your birthdate. That is a huge part of the millennial mindset: I’m unique and therefore should be treated uniquely.
It’s ok to make comparisons and to compare generations. Doing so helps people see trends. The generation of the 50s was different then the generation of the 60s and also the 70s and the 80s. That’s why at school, when kids got to dress up like they were from the 70s, students would come to school in bell bottoms and afros. Because that was a big thing in the 70s. Now did everyone wear bell bottoms and have afros? No. But when you describe a group you point out the things that they have more in common. And yes, there are beliefs that are more common in certain groups then others. Republicans and Democrats are good examples of grouping together common beliefs.
I get that you would like to be looked at differently and not stereotyped into a group. So would everyone else in the millennial generation. That’s part of the millennial mindset.
From what I am stating, I hope you don’t think that I think that every millennial is bad. That’s not the case at all. There are many millennials who are not entitled and that know how to work hard. Just because you are part of a group doesn’t mean you have to act like or be like the average person in the group. However, from what you wrote in your post, it didn’t sound like you were too far off.
You can take my words for what they are worth and disregard them if you would like. Or you can consider them and while you are considering them you can ask yourself, do any of these stereotypes fit me. If you ask yourself sincerely, and if you don’t like the stereotype, you can change that for yourself. Or you can reject and refute privately or publicly everything that I stated and go on with your life.
Everything you said about snowflakes is true, however the recognition that a snowflake is unique, and the fact that a snowflake is delicate are different characteristics. All people are unique, however I personally do not believe people are quite so delicate as some people claim (they may act delicate but I believe the human mind and body is very resilient if truly tested). There is also a huge difference in recognizing that someone is unique, and treating them differently because of that. Just because someone believes they are different does not mean they believe they deserve special treatment. Am I different? Yes. Should I be treated differently? No.
The desire to be seen as an individual I would say is an American desire that is rooted in our cultures history with classical liberalism. It is the basis for the idea that we should be judged by the content of our character and not the color of our skin. It is the idea that we should be locked up for crimes that we personally commit and that we should not be help accountable for the sins of our fathers(historically a prevalent idea in many societies). It is disingenuous to pretend that this idea of individuality and wanting to be seen/judged as an individual is limited to millennials. In fact, I think if you look at the twitter trolls and vocal minority you'll see that many millennials don't believe in being seen as an individual. The spread of identity politics and the grouping of people into "privileged" or "disadvantaged" groups based on immutable physical characteristics is evidence of this.
I don't mind being lumped into the millennial generation, I acknowledge that I am part of it. My point is that to say "This generation believes/is XYZ because some members of it on twitter said XYZ" is a mischaracterization, just like saying "all landlords are rich" or "all tenants will destroy your property" would be mischaracterizations.
I am curious though as to what part of my original post triggered your millennial radar. After rereading I don't see anything that screams "snowflake" but perhaps I am blind because they are my words. I would be grateful if you could point out what it was that made it sound so entitled to you.
I've found most of my "mentoring" success in informal relationships and through partnerships like many others here have stated. Develop friendships, network with people, ask questions and you'll find the answers you need. If there is something specific you have a question on, look for someone that has experience in that and ask them, it doesn't have to be a long formal ongoing thing.
Most people that i've seen offering more formal mentoring expect something in return whether its free work, money, or whatever. These can be beneficial, but there are so many idiots out there that don't actually know what they are doing. I would be pissed if I spent a bunch of time or money with someone only to not learn anything. Just as there are many wannabe mentees with no drive, there are just an many wannabe mentors with no knowledge.
Adding value is a great way to make connections, but remember that YOU are the one adding value to someone else and their business and they should be adding value to you as well, not just taking what you have given. The value that is added to you may simply be goodwill and connections, you never know what will come in the future from that.
There is a fine line that you will need to find between putting out goodwill and work without expecting anything immediately, but knowing that something will come at some point -- and being taken advantage of.
@Caleb Heimsoth I am sure you of all people are aware of what the millennial mindset is. So it is interesting that you would be asking me to define it other than trying to disprove it defend it. Most millennials don’t like the term millennial mindset. And while it is not true of all millennials, I certainly is descriptive of that generation. So here is the stereo type of the millennial mindset:
I’m certain I have offended many people and the above is not true of all millennials but it is generally the millennial mindset. Where you’ll you say you fall on this mindset?
Shiloh,I think that some of your points are off base and some contradict others. In forming an opinion of an entire generation I would say be wary of listening to the news and the twitter trolls and taking the voices of the vocal minority as a baseline for all millennials.
-All information doesn't have to be free, no one should be forced to teach you and give up their knowledge if they don't want to, but I think that there are people that do enjoy teaching and sharing. They recognize that at some point someone helped them and they want to give back to the "community". I don't think that wanting to keep your knowledge is selfish, however the nature of a mentor/mentee relationship ought to be one more akin to a student/teacher relationship and not an employer/employee. A mentor teaches you, an employer pays you for a job. If your mentor is just having you do jobs then they should pay you for it. This point seems to contradict your point 3 about looking out for the general welfare of others.
-I agree with point 2. I personally don't agree that the vocal minority are correct however
-Looking out for number 1 is the top of the priority list for most people, this is not just millennials. I find it interesting that you list looking out for #1 as a negative, however then imply that people should be looking out for the general welfare of the community. Isn't providing mentoring to the community looking out for the community? Are all mentors that say "What's in it for ME?" embodying a "millennial mindset" ? Are all investors that make money embodying a "millennial mindset" because they are looking out for their pocket? If you choose to really look at things and be honest, everyone is looking out for themselves. No one is going into real estate without thinking about themselves. You may provide a wonderful service to the community by providing safe housing, but you are expecting to be paid for it and wouldn't be doing it if there was nothing in it for you. You are looking out for yourself first, not the community, at least be honest about this fact.
-Work ethic depends on how you're raised and how life pushes you. I've met many driven millennials and many loser millennials. I've also met many driven boomers and many loser boomers. I've met a lot of boomers that were very lucky (especially in California) to have been able to take advantage of crazy home appreciation. They are not financially secure because they invested wisely and worked hard, but because they were in the right place at the right time and the rising tide lifted their boat also. I think it is unfair to compare two generations at a single point in time given the age difference and knowing the effect that time has on wealth creation, earning, compound interest, etc. Many millennials are still in their early earning years while many boomers are at the end. Remember, negativity sells. No one wants to read the story about the millennial that aced the job interview and does his job without incident, they want to read the story about the millennial whose parents had to evict him for being a leech.
-I agree that many millennials want a fulfilling job, anyone does given a choice, however lets remember that there are many millennials that were not raised with a silver spoon and are out working less than fulfilling jobs to pay bills. Lets not pretend that the loser living in his parents basement and not working because its "not fulfilling" is representing the entire generation. Lets also not pretend that all previous generations, given a choice, would have chosen an unfulfilling job over a fulfilling job given a choice.
-Entitlement is high for certain parts of the millennial generation, however I think when it comes to the need for skewed fairness, lack of personal accountability etc, be sure you are not listening to the social media vocal minority...there are many idiots on twitter that don't represent the entire generation.
-isn't "fake it till you make it" a big thing in REI ? I've seen many discussions on building credibility and a following to increase deal flow and private money, most of which hinges on posting like an expert until you are one.
"His attitude thigh was like that if a previous poster and he wanted to get paid well for everything he did." ---I never said people should be paid well for everything, people should be paid at whatever the going rate is for the work they are doing. Someone learning to do roofing should be paid what an apprentice roofer is making.
As far as your family friend goes, if he was enrolled in school but not really going or passing his classes then that is a major red flag already, the drive was not there at first so I'm not surprised to hear that it didn't work out. He sounds like someone with a "millennial mindset". I wouldn't compare this guy to someone who is driven to learn and expects some form of compensation for all the work he is doing. I would go out and spend more time around driven millennials like Caleb or any of the other ones on this forum making a real go of it.
Most people that are in training positions to do drywall or roofing get paid while they learn, this is very standard and the basis of the long standing apprenticeship model. Apprentices are paid less than a journeyman to make up for the fact that they are not as experienced or fast as a fully trained worker, but they are still paid something because everyone has to eat. If your family friend expected a full journeymans wage or higher, then it sounds like a personal problem with unrealistic expectations and not an issue with someone wanting some fair compensation for their work. I work as an apprentice now, I make half of what my chief makes and 1/3 less than what the journeymen make, I don't expect to be paid the same as the guys with more experience, but I do expect to be paid something for the 40+ hours I spend on the job.
Unpaid internships are great if mommy and daddy are paying your bills while you work for free. Most people don't have the financial freedom to work for free.
You say he was living with you, were you paying for his food and other expenses as well, or was he supposed to have another job to pay his bills while working for you for free? Were you actively there teaching him or did you just hand him some drywall tape and tell him to figure it out?
I take issue with mentors who expect lots of free work without adequately compensating those doing the work. If a mentor is going to treat you like an employee then they should pay you like an employee.
The mindset of someone that reads sensationalist news stories about a few bad apples and then wants to paint an entire generation as being the same comes across strongly in your post.
In my opinion, mentorship is more about teaching someone else, paying it forward and not expecting a whole lot in return. Too often I see people saying "Whats in it for me if I mentor someone? What can you do for me?" I find this to be a selfish attitude. The reality is there is not much in it for you, you should be mentoring someone because real estate gave you a better life and now you are helping someone else the way someone helped you at one point.
@Brett Goldsmith is correct that mentees should be willing to put in work, there is no point in mentoring someone who won't help themselves. The good mentees simply need to be placed on the path and maybe need some help overcoming obstacles, they should do all the walking themselves.
As a mentor, if you are going to require someone to bring solid leads, investors, or knowledge then who is the real mentor in that relationship? It seems the person with the leads, investors, and knowledge to increase bottom line profits should be the one teaching. Why do they need you if they've already figured that out?
@Mike Morris sorry this post is more of what I feel a mentor should be and thats not what you asked. The advice I have for you is to beware of people asking for leads, money, or time to help their business up front. The relationship should be a student/teacher relationship, not an employee/employer. If a mentor asks you to do work for them, be sure it is work that you can learn from and work that will propel you forward, not just busywork that they are too lazy to do themselves or too cheap to hire out. If you are going to go work for someone then get paid for it as an employee would. Time and money are valuable and are best spent building your own business, don't give them away and build someone elses business for free. It may take you some time to find the right mentor and it may take you some time to find the right one.
I recently severed ties with a "mentor" because I wasn't learning. He wanted me to increase his clientele, run the operation, and write up operating procedures for free in addition to bringing him my personal lead and investor lists. After two months I realized his business wasn't making any money and he didn't even realize it because he didn't keep track of expenses or income very well. Although he talked a big game, turns out he didn't really have anything to teach.
If I was mentoring people, I would want a glorified annoying shadow that showed some passion and dedication. In the beginning I wouldn't mind a lot of questions but I would hope that over time the questions would become fewer, further between, and more complicated as they learned the game. I might ask them to do some small tasks for me if I felt the tasks would benefit them, but would not rely on them for cheap or free labor. If they had leads or investors, I would ask them to partner with me on those projects.
Hope this helps, and remember that your time is valuable, don't waste it on fools.
contrary to what others have said here, I would say your time is definitely worth something otherwise why would you put in the time and effort to find properties when you could just passively invest for the same percentage equity stake?
The capital partner is just that, a capital partner, if finding and setting up deals was so easy then everyone would do it and there would be no passive investors.
Remember you've put in the time and effort to become educated on the subject matter and theoretically could have analyzed many more properties than just the one you're buying which means your overall time output is higher than just what you've done on the one property you buy. In addition, it sounds like you will be taking the time to structure the deal, and after closing you probably will be the one managing the manager.
If you aren't worth more to the deal than the money you're putting in then you should just be a passive investor and save yourself the headache. People are compensated based on what they bring, this could be many things: Money, deal, expertise, sweat equity, co-signing ability, ability to get a loan, etc the compensation for all of these things is negotiable.
That being said, holding to a specific equity split without regard to your capital investors return is not advisable. I recommend running numbers and looking at what the return would be to the capital investor. An investors potential return is going to be the most important factor in determining what percentage of the deal you can take. Figure out what you think it would take to get someone to invest with you, look at deals others are doing and what they offer investors. Is it 8% cash flow/yr? Is it 12% cash flow/yr? I would recommend using your capital partner as a co-signer on the loan, or have you co-sign on the loan they take out to show that you have "skin in the game"
Another thing to consider is the timeline of the deal. Do you plan on holding the property for five years and then selling? Or are you planning on holding indefinitely. When will your investor(s) be cashed out and what will their return be?
Running these numbers will also give you an idea of whether the property is actually a good deal also.
If you are getting the money from family, they might be willing to give it to you interest free or for a low rate for a period of time as a favor to help you get started, but I would strive to offer them some return. Remember -- money in the bank or a CD right now returns less than 3% so offering them 6-8% on a solid deal could be a good incentive.
@Andrew Brewer if you read through the complete contract, there's a maybe 2 line item that states if the contract is "assignable" or not. What I've done is I usually send an addendum to the broker/realtor stating that I have the right to assign this contract (this includes a line for seller's signature). Once the seller accepts my terms, I can assign it without a problem.
Let me know how it goes.
I've read through the entire contract again and there is no mention whether the contract is assignable or not. Buyer is listed as myself and/or assigns, and the contract refers to "buyer" throughout.