All Forum Posts by: Becca F.

Quote from @Scott Allen:

@Becca F. You should visit Columbus if you're interested in the market (you should visit any market first prior to investing there if you can make a weekend for it). I always recommend clients to come here first and see neighborhoods in person if they can prior to making offers. You get a better sense of where you're investing and what all is going on in the city in general. A main thing that everyone should always do during their inspection period on a property is connect with at least 2-3 different property managers so they can get a better rent range/run numbers more other than listening to an agent that might not be as conservative in their numbers on projected rents. 

In Columbus, C Class properties are typically the 1% Rule and can cashflow more but it's highly recommended to not try and self manage them - use a property manager that is well versed in getting those units filled or kept on tract, post notice if necessary to prep for an eviction. In a gentrifying area, you can also find BRRRR's and flips - if the value is there, it can be worth pursuing. A Class properties - you usually don't need a property manager, you just need a leasing agent and contacts to call if something needs fixed/as well as the ability to be cashflow negative for 2-5 years. B Class properties - they usually can breakeven on paper, don't necessarily need a PM but if the deal can still work with them, then they're beneficial to keep on.

Are you self managing a C Class property in Indianapolis or did you need to find a property manager/leasing agent afterwards? Prior to investing where you did in Indianapolis, were you able to visit the market first or did you go based off of neighborhood graded maps and opinions from agents/property managers. I've heard it's a really good market for cashflow but don't personally own anything there. All the best!

I used to live in the Indianapolis metro area then moved back to California so I knew the area but not on a detailed level. The Class A home is in a great suburb and I rented it out instead of selling it. It's done well with appreciation over 10 years and is still cash flow positive but my property taxes are a little high relative to home value.

I went off neighborhood maps and opinions from agents and other investors (one local and the others were in CA) for the Class C homes. I flew out there and did drive around the neighborhoods - they look much different in person than in photos and video tours (I do know a few CA investors who buy sight unseen in multiple states but I think their risk tolerance is higher than mine). I interviewed PMs after I went into escrow on Class C#1. I don't self manage any Indy properties - it was going to too much work screening tenants, showing the property and coordinating repairs from 2000 miles away with a demanding W2 job. I self manage one local SFH (Class A) here that I'm about 15 miles away from - that's enough self management for me.

Quote from @Mike Dymski:

Government actions are unpredictable and scare me the most.  Absent them, risk is controllable over time.

I self manage a SFH in the Bay Area in a very pro-tenant city (some cities are a little less pro-tenant than others). Here are the new rental laws in California for 2024. One of them being you can't charge more than one month security deposit. Providing relocation assistance to tenants, for example, if I want to sell the property or move back in - this can range from one month's rent to thousands of dollars (e.g tenant has a disability, minor children, elderly it will cost you more), depending on the city. Kind of like a cash for keys

https://martinezlawcenter.com/new-rental-laws-in-california-...

Most of the long time investors I know haven't had problems but if you get a "professional tenant" in look out and call your RE attorney.  SFHs are largely exempt from many regulations such as rent control. There are so many local ordinances that can get confusing. 

Agree with @Bruce Woodruff on the losing money - I was going to attempt my first flip OOS (Indianapolis). The hard money loan interest rates scared me, renovations were going to go over, ARVs probably overestimated, got out of it. I've done a local renovation where I was on site at least once a week and thought I was ready to do a flip or BRRRR OOS...nope.

Quote from @Jonathan Greene:

As I said in the opener, I have been on here for 10 years and never once even mentioned I am an agent or I can help. That is for people to figure out and I don't want all the spam calls anyway. I am here, and have been for years in the forums, to help save people from disaster and give them honest advice, not back pats.

Another major problem is that BP made BP verified agents and sold that as a thing, but you need no experience to be in that group. I think it was a bad move. Agent spam is not terrible outside of Columbus, but the general spam from lenders is CATASTROPHIC and I report all of it.

Speaking of catastrophic lending, I was almost scammed by this guy, Justin Nguyen, who contacted me on BP. He wanted to do a double close (I would receive my money back plus the 7% or 12% interest within 24 to 48 hours), and have me wire his fake title company money. He literally harassed me over the phone after I told him multiple times that I wasn't loaning him money. Thanks to @Jay Hinrichs who reviewed the documents the fake title company sent me and said there were so many things wrong. Unfortunately other people fell victim to Justin's scheme. Not sure what happened with this case - hopefully he's prosecuted and convicted. 

https://www.biggerpockets.com/forums/49/topics/1168199-fraud...

I've talked to at least 2 aspiring California investors in the last 2 months, who said they were DM'ed by Ohio agents, one of whom received 12 DMs from ReafCo.  I've posted on here for over 2 years and I would consider that spam. Person #1 has now deleted his account. Person #2 said they were going to just ignore the Columbus agents DMs. A while ago another CA investor said he felt like BP sounded like it was becoming like a sales convention.  

I even started a post 2 months ago asking the Ohio agents, particularly the Columbus agents to give me specific examples with numbers, not giving out client's names or property address instead of the same spammy comments we've all seen. I gave my own specific example of one of my properties (Indianapolis) and this is what I was asking for

https://www.biggerpockets.com/forums/12/topics/1203206-quest...

Notice who comments, especially the one who says "tons of examples of 1% cash flow" but can't name one. 

I was also DM'd by a ReafCo agent recently and politely said I will no longer be investing in the Midwest and not interested in buying in Ohio

I commented very recently on a someone asking about Bay Area investing, giving very specific information my local area to help this person out and no surprise... a Columbus agent comments on this post. 

Quote from @Shelby McKean:

Becca-Thanks for explaining this. I was mis-using the term "turnkey" and did not realize there was this type of property. I was actually referring to rent-ready properties and trying to decide if there are still benefits to buying something at its peak value. It is helpful to know that many HOA's don't allow STRs…I am also trying to source information about the STR regulations in this area to target the right small house. Appreciate the info, though!!

I think the word "turnkey" can mean:
1) property purchased through a turnkey company with a tenant in place
2)  property purchased through a turnkey company, no tenant, but they may have in house property management or refer you to PM companies
3) property bought off the MLS, usually with an agent, that is move-in ready/rent ready

With #3 I bought what was almost turnkey/move-in ready but after the inspection it needed about $1500 worth of repairs. An important point is that if you didn't do the renovation or weren't on site checking frequently as the property was renovated, you never know how good the repairs done were by the seller or previous owners (this requires a good bit of construction knowledge).  I bought sight unseen out of state (Indianapolis) - I don't recommend this but I do know experienced investors who buy OOS and never see the property in person but they have a  higher risk tolerance than me. 

This "almost turnkey" house has had the tenant calling for repairs most months, was -$300 to -$500 a month. A number of contractors have told me though even if a house can pass most points of an inspection, but once an occupant (the tenant) is living there and putting daily stress on the house, things start to malfunction. And get a sewer line scope - if the house is newer and you have proof that it has PVC pipes, you might be able to skip this but to be cautious always get a  scope. It's around $250. 

@Kyle Fitch

I'd recommended attending local RE meet ups in the Detroit area. You'll get to talk to investors and have conversations. If you decide to house hack or start off by buying a rental property you'll need to know different areas, which are Class A, B, C or D (definitely don't do Class D as new investor). Would also recommend talking to property management companies who know the neighborhoods, median rents, tenant base etc. even if you decide to self manage. 

Right now, we're a bunch of strangers commenting on your post - we don't know your background, financial situation, W2 job, lifestyle (single, married, kids, etc), risk tolerance etc (not that you should share all that information on a public forum). Since this is a RE forum many of the responses will be tilted towards RE. Many of us started way before 2023 and 2024. The market isn't as forgiving buying in 2024 with high prices and higher interest rates as it was buying in 2008 (deals to be had back then), 2013 or 2020. 

@Travis Biziorek has invested in Detroit. Maybe he can shed some light on this? 

Quote from @John Clark:

My thoughts on turnkeys is simple: get your head examined. Peruse all of the threads/posts here on BP about turn key properties that weren’t turn key. Never buy any property without physically inspecting it and its neighborhood yourself, AND having it thoroughly inspected by a great inspector who YOU select and pay for. Don’t forget to get title insurance to, and get the owner’s paperwork showing that all contractors, subcontractors, and materialmen have been paid.

As for short term rental of a condo you buy, most condominium associations don’t allow that, and for good reason. Also, it can be very difficult to get financing for a unit in an association where a percentage of units are not used as primary residences full time.

I completely agree.  I considered buying turnkey (meaning renovated home with a tenant placed in there) with a company that buys properties in Detroit area, Cleveland, and a few in St. Louis and got on a call with them. The numbers look good on paper and I still get their emails - one of them said "stress free ownership". There's nothing stress free about real estate investing. I decided against it because I didn't know those markets or neighborhoods in those cities. Since then I've heard mixed reviews about that company. I've heard turn key companies can range from terrible to good. I wouldn't buy a property based on numbers from a turnkey company, agent or wholesaler, but fly or drive out and look at the property and neighborhoods. Seeing it in person looks much different than video tours and Google map images 
 

I also agree on buying a condo. HOA fees can increase with no limit and you can have special assessments. I sold a condo in the San Francisco Bay Area, really wanted to keep it but the badly managed HOA and all their HOA increases with a large special assessment, decided to get out of it. And most HOAs won't allow STRs.

Quote from @Nicholas L.:

i will say though that i am actually heartened when a new investor does some math and figures out, correctly, that a miscellaneous deal with conventional debt will NOT cash flow.  this is better than using rosy projections of $10.50 a month for capex and 6% rent increases every year until 3100, and pretending there is no such thing as closing costs or rent ready costs.

100% agree. When someone tells me that "you won't have repairs or cap ex for a while since the seller just renovated it"... well that property is -$300 to $-500 a month from repairs called in by the tenant most months. And the stolen AC unit. This was a 0.88% rule (close to 1% rule = I really dislike that guideline now). As an aside, a contractor told me that a property can pass an inspection but once someone is living there and putting daily stress on the house, things can start to malfunction. I hope this house is finally stabilizing after owning it for over 18 months, no repairs called in for 2 months so far. 

To the OP, if you're considering buying out of state (not sure where you're located), there are risks with OOS investing if you're looking for a lower priced market. You're not on site or within driving distance and even with a property manager, lots of things can happen. I can give numerous examples of California investors I know losing money from buying in "cheaper cash flow on paper markets." 

Quote from @Dan H.

On a long term hold, the rent growth is much more important than the initial rent growth.

If I invested $100k in the year 2000 using the same leverage and no extraction of value in both San Diego and Cleveland, which investments do you think would have the better cash flow over the hold? Which do you think would have appreciated more? If the answer is not obvious, remember the relationship between appreciation and rent growth so the answer is the same for both questions.

 The point is that San Francisco RE is likely to do outstanding overs long hold period.  

good luck

I completely agree. Coastal CA (Bay Area, LA, San Diego) has land constraints and it's very difficult to build new and continues to have high demand, despite the 300,000+ people who have left CA. The property values have dipped with San Francisco since COVID when people left to move to the suburbs, but the prices are still high. There are some people coming back because there's a segment of the population who love living in the city and being walking distance to restaurants, stores etc. 

San Jose and Santa Clara are in high demand since they're in Silicon Valley. Prices will be extremely high - I don't think most investors are buying in these areas unless you have a lot of money and plan to house hack.  In general the Peninsula will be higher priced than the East Bay. Some East Bay cities I've seen with more reasonable prices are: Concord, San Leandro, Hayward, El Cerrito, Pinole. These are all on the BART line to S.F. The last two cities I did see move in ready SFHs listed for around $650,000 to $700,000 in 2022 or early 2023. They were snapped up quickly by primary home buyers, I would guess. 

I'm keeping my Bay Area properties because of the appreciation and passing on generational wealth to my kids. My kids are old enough to understand RE investing. When I die, they can keep renting out the properties or move into the SFH, or take the step up basis and sell it with not as high of a capital gains tax hit (I hope they wouldn't choose the 3rd option). I may consider selling off my Indianapolis area SFHs to 1031 exchange to Nevada (Reno or Vegas, looking at those 2 markets) - I think my kids would rather have another home in Nevada (future primary, vacation home or rental) vs dealing with rentals 2000 miles away. Those goals are very specific to my situation and not necessarily applicable to other investors.

I recently talked to a Bay Area investor who sold her SFHs around 2020 to buy OOS (I think her markets were Dallas, Atlanta, and a few other cities) and now she's regretting the selling those. Most of the CA investors (Bay Area and SoCal) I know have kept their properties. There are a few that sold them and bought OOS. My own thoughts are that you can own fewer properties in CA to built long term wealth vs. buy a lot more properties in other states. There's not one right answer for everyone since we all have different financial situations, different ages, timelines, family situations, risk tolerances etc..