All Forum Posts by: Becca F.

@Brian Quo

If you can afford the $900 to $1000 loss each month, it could work out. I talked to a couple of Bay Area investors who bought in the last 4 years and they're negative but they can afford it. 

Have you talked to any property management companies in Tracy, Lathrop and Manteca and asked how much they typically increase rent each year in different neighborhoods? Would your -$1000 decrease in a  few years as you raise rent? You would need to factor in property tax and insurance increases and future repairs/cap ex. 

Other areas you could consider are: Sacramento, which is within a 2 hour drive. I don't think Sacramento is on the table for me after looking at the numbers. I'm starting to look at Reno/Lake Tahoe which is about a 4 hour drive and Las Vegas but my goals are different from yours - I would buy this house to rent out and in the future, move into it as a primary when I decide to retire/semi-retire (Nevada has no state income tax unlike CA). I'm just now exploring this option so I don't have any numbers yet. 

I understand your hesitation with OOS investing - I also invest in Indianapolis metro area. Feel free to DM me with any questions.

Quote from @Adam Bartomeo:

You should be more afraid of buying a rental in CA!

 I invest in the Bay Area in one of the most pro-tenant law cities (San Francisco, Berkeley, and Oakland). Yes, there are nightmare stories but the majority of investors don't have problems - the ones who bought going way back to the 1970's and 80s and those that got deals in 2008 (and didn't sell in panic and have to foreclose) have achieved incredible appreciation and wealth. And these weren't high income earners, unlike the buyers today. I have to read the handbook on landlord-tenant laws before I do anything and just to be safe call the Rent Board, like my recent rent increase with lease renewal. 

The cities he picked are skew towards being "a little more landlord friendly". My advice to new Bay Area investors is not buy in the 3 cities I listed above and go for the suburbs. 

 SFHs aren't under currently under rent control in California and be careful if buying multi-family which are under rent control and know what tenants you're inheriting. As an aside, I'm voting no on Proposition 33 which is on the CA November ballot - they are trying to limit rent increases between tenants. Right now, if an old tenant moves out of a unit (an apartment which is rent controlled) you can charge market rate rent to the new tenant. (E.g Long term 30 year tenant with rent control is paying $1200 a month moves out, new tenant is now paying $3200 market rate rent on 1 bedroom apt). Prop 33 is trying to limit this rent increase. Didn't mean to get political but I generally vote no on anything that will cause more rent control or increase my property taxes (all the special assessments).  

I invest in Indiana also and I recently sold off one of my homes. My experience is that I don't think it's worth the headaches (documented in my many previous posts) for much slower appreciation than the western states. I'm keeping my Bay Area properties to pass onto my kids. My goal changed from acquiring more inexpensive properties to looking at real estate as a store of wealth - quality over quantity. I don't plan to buy in the Midwest anymore and am looking at the asset - if buy OOS it would be Nevada or possibly Arizona.  I do a know a few CA investors that buy all OOS (Texas is still a popular place to invest) but the majority of investors I've talked to at meet ups and friends and family still own in CA. There's not one right answer for everyone. 

Quote from @Priscilla Chin:

Hi Becca. I am looking to buy in Indy and your examples are so helpful for me to think about. If you're open, would love to connect. If you have any recommendations for realtors and PMs in Indy and are open to sharing, please lmk!

These threads with a thread give me a headache. I would say after my experience and I think several experienced investors would agree that it's important to look at the asset now more with higher prices in 2024 and higher interest rates make cash flow difficult. The market was much more forgiving and easier to find deals if you bought in 2012 to early 2022 and more so prior to 2012. 

I will DM you about Indy. 

Quote from @John Morgan:

@Tyler Bilinovic

It’s simple to do yourself. You will be showing a paper loss on your rentals so you want be paying any taxes off them. I have 29 properties and use turbo tax to do my taxes. It walks you through everything. And it keeps track of all your capitalization from year to year with each property.

 Wow I'm impressed. You have 29 properties and you use TurboTax. I have 4 properties and I'm getting a CPA for 2024 since I sold one (that was the 5th property) but I held it for less than a year, sort of like a did a bad flip but I did intend to rent it out (very long story).

I'm guessing the OP has two single family rentals and not some large apartment complex, if OP is still there. 

@Josh Edelman

Thank you for the updates. I'm starting to look at the Vegas area as a possible place to invest and move to in the future. The no state income tax in Nevada appeals to me vs. high state income tax in California for retirement or semi-retirement. My California investor friends love Vegas. 

@Tyler Bilinovic

I do my own taxes on Turbo Tax Premium and I have 4 properties (had 5 properties but sold one recently). One is a multi-family with co-owners. I've been scolded many times for doing my own taxes. I'm a W2 employee with long term rentals. I don't have any short term rentals, no S Corps or C Corps, no cost segregation. It was pretty straightforward when I had one single family rental but has gotten more complex especially with the multi-family. When I called TurboTax for help, it depends on who the CPA or enrolled agent is helping you - some know more about real estate than others. I'm not recommending that you use TurboTax just sharing what I did. 

I interviewed 5 CPAs, three were firms recommended by other real estate investors. In my case, the quotes were about $2500 to $4000 for the filing (federal and 2 states) and $5000 to over $6000 for tax advisory/planning. Two of them wouldn't do just the tax return filing but I would have to pay for tax advisory, more like a holistic approach. I felt that almost $10,000 was a lot. Your situation would likely be less even if you paid for tax advisory since you have 2 properties. I did have a CPA review my previous returns and he said everything looked in order. 

Going forward I'll be using a CPA since I sold one of the homes this year. Someone pointed out that I call a plumber or electrician when one of my rentals has  issues and I don't try to fix it myself. 

Whichever way you go, do your own taxes or get a CPA, make sure you have a good bookkeeping system for each rental and I'd recommend getting a business checking account - when I had my rental income and expenses mixed in with my personal account, it took a long time to sort through which was personal and business (rentals) with pages of bank statements. I also got a business credit card for buying things related to the rentals. 

 I'm a property owner on BP and a W2 employee (nothing involved with real estate). I've only been on BP a little over 2 years but my understanding is that when Josh Dorkin, the founder, sold BP, it started to change. I watch a lot of David Greene's YT videos and have messaged him directly and he gave me solid advice - if I'm going to buy outside of California, to go for appreciation states and look at the asset. That's come full circle because that's what I should have done  (no offense to anyone investing in the Midwest but I'm doing the slow exit out of Indiana, already sold one property).  I've watched very few of Brandon Turner's videos so I don't have an opinion of him. 

James, I watched your YouTube video referencing this post. I've spent a lot of time posting on the forums as in hours. I don't receive a dollar for any advice or for any referrals I give to agents, contractors, etc. I started to scale back on my comments, partially because real estate for me has gotten very stressful and I'm taking a break from buying anything. I get a lot of messages from investors in the Bay Area and I'm happy to talk to someone for an hour but as far as ongoing advice, I don't think I'm the best person to advise them since my properties fell into my lap pre-2013 (California and one Indiana property). I don't have time to mentor someone unless they want to compensate me, which I don't feel right about. 

Quote from @Jay Hinrichs:

or the opposite they don't really know the terms.. Like they want to file a Quiet deed

RE is becoming over run with OOS BRRR ROI COC etc etc.

This type of thing is very common though in Aviation there is an abbreviation for nearly everything you do in Aviation. TOD FMS VOR VLOC LOC etc etc.

To be honest I find newer investors come up with abbreviations I have never heard of and I have to query them as to what they mean.. 

 I didn't know what quiet deed or quiet title, had to Google that. 

I agree with that real estate is overrun by acronyms. When I first started posting on here I had to look up the definitions of Return on Equity (ROE), Cash on Cash Return (COC) and Internal Rate of Return (IRR). My investing journey literally started with properties falling into my lap pre-2013 so when I started hearing all these terms I was confused. Then I've seen more experienced investors on BP explain things using finance terminology and I'm not a finance major or work in any part of finance, trading etc - maybe I'm just dumb and am sharing two brain cells with my cat LOL

I am guilty of using LTR (Long Term Rentals), MTR (Mid Term Rentals) and STR (Short Term Rentals). From now on I will not use acronyms especially when responding to new investors. I try to post or comment in a way that a 6th grader can understand what I'm talking about.

Quote from @Mike Dymski:

Does that type of marketing actually work?  It's obvious and a big turn off to smart people (for them, it's anti-marketing).  It's all over the forums; so, it must work or it is just a waste of time for the poster and readers.

I think this type of marketing does work, sort of like the old school telemarketers. For every 100 hang ups or no answers, they might get one person who will listen to them and be able to sell them something. 

All the DMs from agents, licensed real estate and a few from disposition (something involving wholesaling??) agents, that I've received, they are always the ones to initiate the contact with me on BP. A few of the more "out in left field"  messages include someone double messaging me within a 24 hour time period asking if I'm interesting in investing in STRs - my answer is no and I think that's a bit aggressive, not even giving me a day or two to reply to the first DM. A more recent one is asking if I want to buy on the East Coast...no again. For the areas I may be interested in investing (Nevada, Arizona, and Sacramento) I have talked to a few agents. 

 I try to look past the sales pitches. I've learned very valuable information from the experienced investors on BP - some of whom I've talked to by phone or gotten on Zoom calls and they have saved me from making offers on anymore bad deals. 

@Samuel Koekkoek

I agree with the comments above on Option 1 or buy a single family home and add an ADU.

Option 2 with buying an townhome with monthly HOA fees and a high special assessment doesn't seem like a good option. HOAs can also put restrictions on rentals such as the percent of rentals vs. owner occupied. Most communities with HOAs such as townhomes or condos (also single family homes which have HOAs) or don't allow any type of STR, if you were considering that as a future option. If you lived in it as your primary home then wanted moved out and buy a new, you would be stuck if wanted to rent out this townhome.

Option #3 to move and pay even higher rent doesn't sound a great option. 

Good luck with your decision.