All Forum Posts by: Becca F.

On #3 I agree with buying primary residence and building an ADU. House hack if possible. ADUs seem to be really popular in California, depending on location. San Jose it's the first city where you can sell an ADU as separate property, not sure how the land value is divided up from main house. This is what I see younger high W2 earners in the Bay Area doing.

For #2 buying land- is that only specific to Texas? Does this work better for certain states than others?  Hold onto the land then sell myself in a few years or 20+ years and let my kids inherit it, when I die, take step up basis and sell it. I just Googled this and it said an average acre of land in Texas in 2023 is $4670, depending on location and more if near urban areas. Are the property taxes on the land very minimal? What are other costs associated with buying land? 

I know CA investors buying in Dallas and San Antonio, specifically apartment complexes and an Austin investor (who lives there) buying land to build retail. Wow... no zoning in Texas? I've never even been to Texas and I can seen the appreciation and economic growth - might need to take a trip there 

Hi @Amy Atkinson

I was in the same situation 6 years ago when I moved back to California. I kept my home in an Indianapolis suburb with 3.875% rate and rented it out. It appreciated significantly and also pulled out a cash out refinance during COVID (to pay for renovations on another rental). 

I didn't get an LLC but got an umbrella policy and talked with my insurance agent about the amount of coverage on the home.

The one thing to look out for is that you probably get a homeowner's exemption (called a homestead exemption in some states) so your property taxes are probably reasonable. My property taxes more than doubled once the county found out I was renting it out and not living there - they mailed me something and it bounced back showing them California address (mail forwarding lasts a year). I still cash flow positive but I have held onto this home more for appreciation - it's in a nice suburb with great schools and lots of development. 

I have a great tenant and very few repairs issues (I put in a new HVAC and water heater a year before I moved out) but will eventually need a new roof (house was built in 2005). If think you'll have capital expenses I'd factor those costs in. 

I don't know anything about the South Dakota market but if your home is in an appreciating area, I would lean towards keeping it. 

Sorry you're having problems with maintenance charges. Are you local to Indianapolis? 

I'll DM you. I'm OOS and have talked to several investors in California who use different PMs in Indy. The investors living in Indy are self managing. 

To help out new investors and the many DMs I've gotten from Californians looking to buy OOS, I have many questions for our experienced investors. I bought from a primary homeowner in Indianapolis metro area who took really good care of this home (I did live in this house and rented it out when I moved back to California) and from a flipper in Indy more recently.

As far as primary homeowners, they can range from taking really good care of the house to someone who has a lot of deferred maintenance - I renovated a local property that had a lot of issues.  

With the Indy house I bought from a flipper, I have had 9 repair calls out of 12 months from the tenant. It went through a full inspection and there were minor repairs ($1500) - in retrospect, the inspector missed some things. 

I was told by contractors that a home may pass an inspection but once someone is living in it and putting daily stress on the house, things will start to malfunction. And that it takes 12 to 18 months for a house stabilize (no repair calls for 4 months so far). I didn't walk the house prior to making an offer and prior to closing. I won't ever close on another OOS property without walking it first but that involves paying for lots of flights and hotel/rental car costs if flying out there to make an offers but the $1500 to $3000 would be worth the cost to me to save on future headaches. 

Another investor said I shouldn't buy properties from flippers since you don't know how good the renovation. But if do a BRRRR from far away that's risky too, without a really good and trustworthy team in place and lots of checks and balances (security cameras, someone local to check on your property) and the ARV and refinance aspect can be challenging.

 When interviewing inspectors, what questions should we be asking? Should a sewer line scope be done on all properties or those that were built before a certain year? If we have reasonable assurance that the pipes are PVC, can we skip the sewer line scope? 

If we are checking property tax records, should we not buy a home where different LLCs (investors) have owned it and sold it every 2 to 3 years? Some investors own in their personal name so that might be hard to tell if it's primary homeowner vs. investor.

Would you recommend to new investors to not do a BRRRR unless they've done a local renovation or know a lot about construction? Thoughts about buying with a turnkey company vs. with an agent if buying move-in ready?

 Bought with an agent. Home was built in 1920, renovated by a flipper and on the market for 80 days. I think I got a good deal as far as purchase price. The house went through a full inspection with some minor repairs costing $1500. The HVAC and water heater estimated to be 6 to 8 years old by the inspector. AC unit is brand new. After the tenant moved in the repair calls starting coming in 9 times in 12 months - backdoor was stuck again (that was part of minor repairs), heat went out, AC not cooling, kitchen sink leaking,  etc. And the new AC unit (seller put in) was stolen right before move in - thieves climbed a 7 foot fence. No one told me to get a cage around it until I started asking questions after the fact. 

I was on the phone with the Maintenance Coordinator multiple times asking what was going on and if the tenant was breaking things or was it my fault as the owner. My net income is $71 a month now (if no repairs) after the recent property tax increase. For all the talk about cash flow, I'm cash flowing way more from my high yield savings account. 

I was told by contractors that a home may pass an inspection but once someone is living in it and putting daily stress on the house, things will start to malfunction. And that it takes 12 to 18 months for a house stabilize (no repair calls for 4 months so far). I didn't walk the house prior to making an offer and prior to closing. iI won't ever close on another OOS property without walking it first. 

Another investor said I shouldn't buy properties from flippers since you don't know how good the renovation was - is this an accurate assessment? This is going off the original topic - I could post as a separate topic.

 Lots of great comments. I had 3 solid appreciating properties and was looking to grow my portfolio. I listened to some of these gurus (including a few people on BP) about acquiring doors to have "financial freedom" and bought 2 Class C properties in Indianapolis, not hating the city just my choice of property purchases - that cash flow on paper has turned out to be -$300 to -$500 a month. I decided to stop buying and re-assess. 

These gurus leave out of a lot of information and were lucky to scale that quickly from pre-2012 to 2021, which is really hard to do now in 2024. I do know 3 people who scaled quickly, 7 years, but they had a lot of capital ($400,000+ W2 income which most people in the USA don't earn) and benefitted from the huge run up in property values. Most of the California investors with substantial net worth that I know have owned properties for 15 to 30+ years. 

I'm not sure why the current trend is to hate your W2 job especially for someone in their 20s/30s and quit ASAP become a RE investor or entrepreneur. I started to change my mindset, and figure out ways to work efficiently and reduce work stress. As Thanksgiving approaches, I'm very thankful to I have a W2 job with substantial raises - it could be a lot worse. 

@Edward Suess-Hassman

I invest locally and out of state (Indianapolis metro area). I used to live in the Indy area so I didn't pick a random far away market and I have had mixed results in Indiana. If you read some of my previous posts, you'll get a sense of what I'm talking about. Know the difference between Class A, B, C and D properties and areas. 

I would recommend attending local meet ups so you can talk to investors who buy in California as well as OOS. We all have different financial situations, lifestyles, risk tolerances and goals so what would be a good investment for one person might not work for someone else. If you're looking at OOS talk to local investors (someone who isn't trying to sell you something) and property management companies, who could potentially be your long term business partner. The PMCs know what median rents are in different areas and tenant base. Talk to contractors and experienced investors to know what you should look for before making any offers. And fly out to the locations you're considering investing in. 

Have you considered looking in Sacramento or the Central Valley? Manteca, Fresno and Turlock were mentioned to me. Tracy is technically Central Valley but unofficially included as the Bay Area. These are within a 2 to 3 hour drive and you could start networking and looking at properties. 

Feel free to DM me if you have any questions :) 

Great advice about the security cameras. I'm starting to notice that more investors (specifically Class C areas where one of my Indianapolis rentals is located) will advertise that "appliances and AC unit to be installed upon move in" for their rental or flip for the tenant or buyer. I had an AC unit stolen - thieves climbed a 7 foot fence on my Class C house (I didn't have security cameras on this house). Is this something we should be doing for all properties regardless of Class A, B or C? Or mostly for Class Cs? 

I used a business credit card to pay for a new roof and will use it going forward for all repairs and replacements of items. 

Hi Taylor, I sent you a DM. I'm not an agent but I'm also looking at Vegas and planning a trip out there. I agree with Nathan's post on looking at Facebook and Meet Up groups to connect with agents and investors. 

Great list! I've done a local major renovation. I made 36 payments as each job was done. There were several change orders. New electrical and plumbing were needed after doing the demo of the kitchen and bathrooms

On the buying materials, I did buy the kitchen cabinets (in-stock), countertops, bathroom vanities, tile and plumbing and light fixtures (not the recessed lights which the contractor bought). The delivery of the cabinets, countertops and vanities was a little problematic. I had to hire someone to deliver those to the site. The contractor didn't want to pick them - it was a 15 mile drive (in California traffic, this would take a lot of time). It wasn't a huge deal and it went well for being a first renovation after two other contractors flaked out on me and the third one wouldn't give me line item Scope of Work

The contractor bought everything else. So I shouldn't be buying those things listed above?  

I've seen two other contractors I talked to do this: it'll be $50,000 to re-do the kitchen, $20,000 to $30,000 for each bathroom (California) and "what's your budget? I'll make the numbers work" (Indianapolis) with no line item bids. For the California one, he wouldn't give me line item SOW - he literally wrote those numbers out on a detailed email I sent him. I could see the costs skyrocketing so I told him no thanks and kept looking. On the Indianapolis one, that's why I didn't do a BRRRR. Those seem like questionable practices to me.