All Forum Posts by: Arthur Garcia

I would refi at 30 years and hold. If getting properties free and clear is the goal, use the excess cashflow to paydown principal if you want - this is the most "safe" option as it will allow you to add more payments and also give you breathing room if you have unforeseen events (personal or in the portfolio).  I don't know the dollar amounts we're talking about here, but if you shave off 10 years, 1-2% points won't be very meaningful.  Also, make sure to factor in the implications of future inflation on your assets.  Do a little research in this area if you're not familiar, core CPI doesn't really show true inflation in my opinion. If you are factoring 2-4% inflation over the next 10-15 years, it actually makes a little more sense to let time, your tenants and inflation do the heavy lift of paying down your mortgage. 

If you need access to cash, I'd rather see you refi cashout if you need money than sell a unit. I think in about a year or two, people will look back at current prices and rates and wish they'd locked up more cheap debt.   Take care!

@Ryan Berry

There's some great markets locally as well - inland empire, high dessert, central valley, etc.

My portfolio is in Kern if you are considering other markets - good luck!!

Welcome to BP!  I'm also located in LA (San Dimas Area).  As far as resources, here are a few:

* BP newbie posts (here), ask a lot of questions and stay engaged
* One rental at a time (youtube and podcast) - I've pretty much modeled my investing career after Michael, as I have a full time job and it has worked out very well. 
* Dion Speaks (youtube) - he's got some great insights and thoughts on how to get started. 
* Rich Dad - I like his books, but stay away from his courses and paid training. 
* BP has a ton of books for getting started
* Bruce Norris - he's a local investor and has some great content out there, especially for CA-based investors.

I would also focus on markets that are not in LA proper, typically the best area for rentals is going to be 2-4 hours away from the city center.  I am active in the Kern market, but I also know a lot of investors that are active in the inland empire and high dessert areas.   Spend time learning the areas where numbers make sense then dive deep, learn the market and take action.  Good Luck!

I am probably in the minority here, but don't overly obsess with "rules".  There are other aspects to real estate far more important, consider the following:

- What is the average yield in my market?
- What type of property am I looking to invest in? Be specific - not just SFH or Multi, get more granular - sq ft, bed bath, zip codes, etc. More quantitative data you have the better you can measure your return.
- What is my time horizon to hold? 
- Are you factoring equity capture, or forced appreciation potential?
- Are you factoring mortgage paydown and interest deduction as part of your return?
- Are you comfortable investing in the areas that provide 1% rule returns?  AKA in a lot of markets these are in rougher areas

I only bring some of these up, because too often people get caught up in these "rules".  It is more important to understand your market, formulate a plan and pivot accordingly.  Just my .02.

My .02, 10K is probably the minimum.  I'd be looking for property in the 80-150K range and like @arron suggested rent out one of the rooms, or if your market supports it, buy a duplex.  Just plan on living in the unit until you can save enough to buy another property and hopefully rise and repeat.  Bonus points if you can find a house that needs some cosmetic TLC. 

When it comes to rehab I think it is kinda key to understand the demographic you're renting to.  I don't think either having or not having a fan will fetch more rent, but if you're in a nicer class unit, tenants tend to be less "hard" on properties and things like fans have a longer lifespan.  All my property is in hot climate, so I like putting low cost fans in all the rooms. 

As far as removing popcorn goes, we've done both painted the popcorn and removed it.  So far, the painted popcorn looks good.  At the end of the day it's a matter of preference, so long as the unit looks clean, that's what really sells the tenant.  The rental market is hot right now so it probably wont matter, but in normal times, I like to pay a bit extra to get a 2-tone paint (tan/white trim) to make the unit stand out a bit, but again, just preference - I don't think either get you more in rent. 

I'm pretty sure that the proposal "as-is' will not pass, but I wouldn't be shocked if some version of this did.  There are already multiple states and senators calling for something along these lines.  My guess is that everyone will likely see a jump in taxes and a few of the "goodies" us RE investors realize - mortgage interest deductions, 1031 and others will be considered.  I would also assume investors might end up with some sort of "investment" tax.  Things start to get scary when politicians start using wealth and net worth interchangeably, especially when we start talking about a Millionaire tax.

I don't live in Bako, but I'm very active in the market (flips and rentals). It is a great market to buy in and yes over the past 3-4 years, the appreciation has been quite significant.

Stay in touch.

AG

@Daniel Smilansky - I have my entire portfolio in Bako. That market is a very strong preformer, especially for Buy and Hold. However, just like every other market, you need to do your HW. There are low priced houses in the hood and there are low priced houses in good working class areas - knowing which property is in which area takes effort on your part.

I know a lot of LA investors buy out of state. I don't knock it, but I love the fact that this market is close and that I can pop up there as needed. If you do buy up there, I wouldn't reccomend managing rentals from LA. You can find property manager who will handle the your property for $60-$100 a door, depending on your portfolio size. The return on my time isn't worth it for me, especially if you factor in gas, time wasted in commute, etc.

There are still deals (I'm working on a few right now), but like every other market with low inventory, you just have to fight a little harder, margins are a little thinner, so I wouldn't advise trying to flip if you have never done it, as you will likely lose money. However, you could easily buy a few nice buy and hold rentals in a good area with the capital you have on hand.

PM me, if you have questions or you want to talk further.

I hope my .02 helps.

Welcome to BP!!