All Forum Posts by: Annie Li

@Mark Freeman Trust me, I'll try anything to make a deal work.  I offered $72k initially being the comps are so high (I have no problem giving low ball offers at all :-), seller countered $75k and was very clear he wouldn't go lower.  Yes, I looked at Bakersfield and it doesn't meet 1% rule, which is one of my entry requirements.  Furthermore, high crime rate in that area is a turn-off to me.  But thanks for mentioning it.  

I agree with you that I could learn from anything I try in REI; asking questions on BP also expedites my learning curve. I was hoping to start from my beloved LA area, but if that won't work, I'm flexible and am willing to sacrifice for a better outcome in the long run.

@Sterling White I'm indeed seriously looking to buy out of state CF properties in December using my left over vacation days.  Indy is one of the options.  If you know any good wholesaler/agent/TK provider, please kindly let me know.

@Matt R. I have located a good PM specialized in that area. I've thought about exit strategy: having so much equity and nice interior, I thought I could sell it for at least $110k if rental wouldn't work. I'm estimating vacancy rate and ARV pretty conservative in this case. It's a nice & quiet small town with military people being about 30%, so chances of vandalizing are slim. I don't know if you've heard of 29 Palms.

@John D. I guess you are right, especially when 3 of 4 bedrooms are extremely small.  I've looked at Palm Springs area, but prices are much higher so the numbers don't look good, it's challenging to even meet 1% rule unless you are open to big rehabs.  I just quickly looked at Big Bear, long term rental cash flow is definitely a challenge, not sure about vacation rental as I have no experience in that.

It's frustrating to give up this deal as this is my first try in SoCal after doing all types of research for a while. With 1.33% rent/value ratio on a SoCal SFH, no interior rehab, lower property tax/insurance and within driving distance, I thought it was a great opportunity for me. I guess I need to put aside my emotions and be prepared for a better opportunity ahead of me.

I'm new and in search of the same...one way I can think of is to find out which areas have the most turnkey providers and review their numbers.  This may give you a rough idea about whether the area is worth looking further.  Please take into consideration of neighborhood class/property tax/home insurance cost/vacancy rate, they can all affect your decision making process.  Good luck! 

I really appreciate everyone's quick and helpful responses.  This is exactly why I posted this question on BP.

@John D. My angle is this is a 4 bed house with new interior; the majority rentals are 3 beds with older interior.

@Christopher Brainard, Vacancy rate is my biggest concern, but I have above angle, and even adding up all CapEx, I still have quite a bit of equity.

@Jeremy S. Seller disclosed the roof condition.  He bought it for $47,000 so didn't make much profit from it.  I guess he either didn't have enough money left to finish the roof or he just wanted to get rid of it ASAP while the holidays are coming.  I would looooove to find something closer to where I live, but being in Los Angeles county, it's almost like a miracle to find something that can cash flow with 20% down. 

@Ward Mcdaniel You are absolutely right, I'm ready to let go the "deal", but with all the reasons mentioned above that I'm struggling with, I turned to you guys for emotional support.

@Michael Olesky I plan to leverage financing with 20% down.  If it's all cash, the cash flow would be more than $300.  I agree the flipper did a lousy job by having profit margin so thin, missing dishwasher for a big family house, using wrong exterior material, lacking curb appeal, etc.  It's almost like a text book case of flipper no no. 

I'm a new investor and would love to hear your opinion on my 1st rental property purchase attempt in Southern California.

The good:

1. 4/2/2 1600 sf SFH with big yard;

2. flipped house so everything is new;

3. comps with smaller square footage or not so good condition are all over $100k (ARV is around $120k-130k), and seller countered for $75k;

4. it can rent for $1000/month;

5. it's a relatively safe and quiet area.

The bad: 

1. vacancy rate is like 20%-30% in average for that area because it's rural and has lots of rental properties;

2. roof is in very bad shape and will need to be replaced in a year or 2, which will cost about $5000-$8000;

3. no dishwasher, will cost about $1000-$1500 to alter kitchen cabinets and add dishwasher;

4. only has vinyl siding, not a good choice for high heat area and will stretch and sag, cost $5000+ to replace with stucco;

5. no separate garage door connecting main house, will cost about $1000 to add it;

6. house is about 2.5 hours away from where I live;

7. almost no appreciation.

Expenses: 

property tax: $1541

insurance: $570

property management: 10%

maintenance: 5%

tenant replacement: one month rent

I understand how hard it is to find cash flow properties in SoCal, so I'm struggling on whether to proceed with this deal even though cash flow is only about $100/month, not to mention cash on cash ROI is less than 5% considering all the capital expenses in the near future.

I welcome any input.  Thanks in advance.

Thanks, Brian. But I prefer to learn REI through real projects. I have been learning online for quite some time.

Appreciate any info shared. I am a remote worker with flexible hours, so I can move around in Southern California (between greater Los Angeles area and San Diego) depending on where the farm area is. I'm more interested in flipping and wholesaling at this point of time in order to gain various experience in REI.

I'm new to REI, but have experience on remodeling and as a landlord. I hope I can become a full-time investor as early as possible, so I'm looking for someone that can coach me through the process. The more I learnt from different online resources, the more eager I am to start my first project.

I can move around in Southern California area, do all the leg work and I am very flexible on the terms.  I am a hard worker, fast learner and have extensive experience in project management.

I am bilingual (English & Mandarin) and have connections in Chinese community.

Nice meeting you here.