All Forum Posts by: Becca F.

I know a CPA in the Bay Area who works with a lot of real estate investors and does tax strategy. He's even doing an educational webinar soon. You could probably meet him in person since he does in-person workshops for free sometimes.

I could also give you the name of another CPA (not local) that I talked to extensively that I think would do a great job.

DM me if you would like more info. 

 100% agree with this. To the OP, Shyla, I invest in California and also out of state, in the Indianapolis metro area. To put this in context, I also lived in Indiana so I didn't just pick a random market 2000 miles. I rented out the Indiana home (Class A, nice suburb with great schools) I lived in when I moved back to CA. This went well then I started making mistakes. 

I wanted to scale faster and bought "cash flow on paper" Indianapolis properties (Class C) in 2023. To be fair, I'm not dogging on Indy but I should have bought higher quality properties. I have literally put in $70,000 or more that I regret, two 20% down payments (about $58,000 total) and all the repair costs and capital expenses (stolen AC unit, new roof which was partially paid by my seller, new water heater). I've posted about this many times. I'm uncertain of how much this property will appreciate (sold one recently to cut my losses sooner). I think these types of properties are better suited for locals who can be hands on, do their own repairs and check on them frequently. I would have been better off putting that money into a HYSA earning 4 to 5% interest or some index funds for far less stress. 

I don't know SoCal very well but some of the more affordable areas in California: Sacramento and the Central Valley, Fresno, like Nicholas mentioned but these might a little far for you. You will care about and take care of your property more than an agent, property manager etc. who's over a thousand miles away. 

I'd recommend attending local meetups in the LA area to ask other investors where they invest in with SoCal and OOS. I have nothing to sell you and I don't  benefit financially in any way from helping you.

Feel free to DM me if you have questions. Good luck!

 I didn't do any creative financing, any subject to deals, or work in any RE related services. I started by buying a home using 10% down, moved, then rented the house out. I did a cash out refinance when the interest rates were low then used that money to help pay for a renovation for a different property. 

I did the college path then went back to school to get a Master's degree to increase my salary and opportunities. I job hopped and I've been able to increase my W2 salary significantly in a relatively short period of time. This helps with just having more money to buy properties. Nothing exciting and no magic formula. I'm a low risk investor and after making some mistakes learned to not rush into decisions. Someone else might be willing to take on more risk, which works for them. 

If college isn't the route for you, I'd suggest looking at trade school or doing an apprenticeship in a construction related field: plumbing, electrician, carpentry, etc. There's a shortage of great tradespeople. 

I'd recommend attending local real estate meet ups so you can talk to investors. I'm still learning a lot now when I attend meet ups. 

Totally agree! Real estate investing is a long game.  To address the "scaling up quickly" the fastest I've seen someone scale up is 7 years to a substantial portfolio. These are friends who both worked in tech - husband was earning $400k a year in his mid/late 20s, don't know the wife's income but it was high (guessing $200k+). They have amassed a significant portfolio and turned real estate into a business in their early 30s but they also took on risks (that I wouldn't do). The other friend (not a high W2 earner) lucked out and bought in 2014 to 2021 (not in California) and has a decent portfolio (10 doors). We're at 7%+ interest and higher prices now. 

I attend a lot of real estate meet ups and I'd estimate 90% of young investors (20s to 40), I talk to are software engineers, engineers, or tech sales with high W2 incomes. Interestingly haven't met any doctors - seems like a stressful job and adding on RE investing would be more stress, that's my theory. I'm in the tech hub of the USA with Silicon Valley though.

To the OP: will you attend college/trade school? I'm assuming you're currently living at home with parents. I would look at going into a high paying career field. There are different statistics on this but so many people become real estate agents and very few become top earners. Lenders love people with stable W2 jobs especially for getting conventional loans. 

I think that's great that you're thinking of this before you even turn 18 - good luck on your journey!

I replied about a month ago but here's an update after talking to a few California investors who bought recently. I'm assuming you're in the Bay Area or LA. 

- Sacramento: buy duplex, do Long Term Rental on one side and Mid-Term Rental on other side. I think you could find $500k to $800k range (I was looking at closer to $500k range about 2 years ago and doing 1031 exchange of Indiana properties, too many moving parts for me so didn't do 1031,  higher property taxes didn't work for me).  A bit more landlord friendly than Bay Area. Follow the money where Bay Area people are moving to and I think this area will appreciate a lot. 

- Nevada: Las Vegas or Reno, lower property taxes on equivalent value CA property. Range is $400k to $600k when I looked in Reno. Higher quality tenants at high range. 

- Utah: know CA 2 investors buying there, doing new builds. One will do rent by the room/co-living to get more cash flow. One is doing long term rental and knows it won't positive cash flow for a few years.  Purchase price $399,000 for LTR. The rent by the room investor didn't share purchase price but my quick Google search said up $900k to $1+ million. I didn't get into a deep conversation yet but they must see economic growth, etc. 

- Colorado: recently visited there, not for for real estate reasons. Denver and surrounding area out 4 hours, nice appreciation and beautiful state. Don't know about their property tax rates and increases for investors. 

- Arizona: low property taxes, haven't visited there personally and don't know about local economy but I have seen price declines with the areas I considered near Phoenix. 

Thoughts on rent by the room, if it's college town or young single people, you'll usually get more than renting to a single person/couple/family but the dynamics of roommates may need more management (e.g. how to split water bill if one person is taking 45 minute showers)

OP is you are still here, please update us on your journey.

ACTIVE investor (mostly), but if we're getting down to details, PASSIVE investor (very small part - REITs)

Am I BUSINESS participant if I'm self managing? Since I'm the property manager for two properties. Is there overlap with these categories? Just curious. 

Great points about the syndication and the different roles! 

For one of my properties, I also pay for trash/recycle and sewer. The city will only allow the owner to pay because they said if a tenant stops paying, they will put a lien on the house.

I add the cost onto the base rent. It's a fixed amount but goes up about every 3 years or so. 

That's great that you're getting started so young! Agree with the househacking strategy and buying the right property in the right location and getting your finances in order. 

Things I'd wish I'd known earlier: don't sell off a California property because it's getting a little rough (it was rented out then market declined). Now this property is worth a lot of money. I didn't have a real estate investor mindset back then. 

Learn more about construction and renovation costs and how to analyze inspection reports. Network with investors and contractors at meet ups - some may let you walk their projects. 

You don't mention your location but are you in the Nashville or Chattanooga area or close enough to drive there/do a short flight? I considered Nashville but decided to look closer to home (Reno or Las Vegas because Nevada has one of the lowest property taxes in the country and good appreciation) but don't have kind of capital you do and I'd be taking out a loan so not making any offers for now.

Talk to local investors (someone unbiased, not trying to sell you anything). Where are these Class A properties and new builds in the Nashville area? You mentioned being on a 45 day time line to identify properties because of the 1031 exchange so you have a little time to fly/drive out to your prospective markets.

Some suggestions:

- real estate debt funds (would need to vet the organizations). I looked at two of them that had 7.5% to 9% return. I felt that this was a little less risky than being a direct private lender but I'm not involved in lending to anyone so I could be wrong. 

- Delaware Statutory Trust: I considered selling properties and doing a 1031 into DST (the idea being to be less work than managing rentals). There are fees and the downside is not having direct control like your owning your own property. Again need to research the organizations.

- rent by the room/co-living. You can usually get more rent than renting to a single person/household. This would depend on the market

- mid-term rentals: could get higher rent but you would need to furnish the home, pay for utilities and WiFi, depends on the market. People who travel for work (travel nurses/medical workers, business people), people displaced from their homes for insurance reasons (e.g. fire, flood victims), etc. 

Could diversify with a combination of long-term rentals, mid-term, real estate debt funds, other types of investments (REITs, index funds, etc) - not sure of the tax implications with 1031.

 That's a good point... wish they would cap these gasoline price increases here lol

As far as rent control, I'm against rent control and generally vote against any local or state measures would be anti-landlord. I'm going to guess it's mainly renters voting for these measures. 

I feel like this thread is going off topic from the original post. 

- OP bought the property 2 years ago so in 2023. Tenants have lived there since 2011. 

- At the time there were 2 adults and 3 kids so 14 years later, the kids are working adults. With 5 working adults, they should be able to pay more rent.

- OP said he raised the rent from $910 to $1000. He asked if there is a way to increase this to $1500 (he said $1900 is the market rate rent)

- According to CA laws, he could theoretically raise the rent 8.9% (about $96) unless LA has a stricter local rent control law. $500 increase is not in line with this increase. 

- So it seems like maximum occupancy is not a violation since it wasn't stated in the lease. I think if he tries to evict them via some reason (did they violate the lease in some way?) or loophole (especially threatening to call ICE), this is going to turn out badly for him without proper legal advice. 

- Just Googled this: landlord in LA can offer tenants cash for keys to vacate property but it's voluntary and must follow all the local regulations.

- People commented to talk to the tenants and talk to an attorney and LA Housing Dept. This is best next step to take