All Forum Posts by: Ben Tilbury

@Tom Wolfe welcome to the forums, you know how the saying goes “Location, Location, Location!” This one doesn’t fit into that category so that’s one red flag 🚩While the price is attractive and I like how you are looking for the value add which would be the zoning, the Lot is only 6,600 sqft which at most with parking you’d be able to fit two units and maybe 3 if the were stacked and small with setback requirements which would be the 2nd Red flag 🚩 You only have one tenant who sounds like she’s old and isn’t going anywhere unless you jack up the rent but even at $1200 you will be far from cash flowing if you put 20% down which is the 3rd red flag 🚩 (See mortgage calculations below.) Let’s say you pay cash for it in order to get some cash flow, well that wouldn’t be a very intelligent use of cash because you could leverage $360k in much better ways in lots of various investments to get larger returns. But let’s say it’s paid off and you’re generating $1200 from rent, but to do your value add play which is developing the land, you’d need roughly 700k-1,000,000 in order to tear down the existing and build new units. Now you have to think about how you would finance that and if it would make any sense and how high you’re holding costs wouldn’t be while it’s being by built and also factor in that you aren’t receiving any income from the property fourth red flag 🚩 I like your vision but this house is at market price and you’re  banking on the value add development play which is a BIG one and something a developer would do is run the numbers and see this doesn’t make much sense. Do you have a building or development background? Cuz that’s a big project to start off with. I’d opt for house hacking and renovating it and then renting it fully and then doing it again and again for starters. 

Sorry don’t want to sound like a downer I love that you’re looking for ways to make money in real estate and how to add value. I just don’t like seeing people lose money on deals. Hit me up we can grab a beer and chat. 

Hey @David Maldonado welcome to BP! I'm a local here on the Central Coast, I'm a realtor & investor currently doing flips throughout SLO County and down into SB County or Santa Maria when the deal and opportunity arises. We are working on scaling our flipping business currently and I'm working on building my buy and hold portfolio as well with some multifamily units. I'm not sure in what capacity you are looking to be involved in apprenticeship or mentoring but let me know what your strengths are? And what you'd like to Help out with or learn? And maybe we can link up. Also if you come across any potential flips or multifamily deals in your neck of the woods we are buying cash and I'd be happy to bring you in on a deal in some form or another or give you a finders fee. Congratulations on the House hacking and ADU! I'd like to hear about the process and build out specs for your unit and costs involved for Santa Maria?

@Joel Montoya I love the serve others and pay it forward mentality! That will definitely come back in return for your efforts in more ways than you can imagine. My partners and I flip throughout San Luis Obispo County, we are always looking to network and meet new investors or contractors. How’d you get into doing remodels and construction? Investing, flipping and real estate in general is an amazing business because no matter how much experience one has there’s always something new to learn on each deal. Im a realtor and investor up here in SLO so let me know when you’ve got some time and we can meet up for lunch or something. Also if you come across any potential deals in your area or anywhere on the central coast let me know and we can work out a deal that benefits us all. We are always looking to buy new deals! And as we scale our business we are looking for more skilled contractors and subs so I’d love to see some of you or your companies work. Have a great Easter! I look forward to chatting 👍🏻

I’d have to agree with @Patrick Fraire even though I’m from SLO and would also highly recommend Cal Poly as a great school with a lot of companies recruiting from the Bay Area and Fromm SoCal you would have to travel. My friends who were in CM would intern during the summers in other cities and then return to SLO for the school year. If you can get the same/similar education for 1/2 the price in your own state then go for it otherwise if you’re set on going to Cal Poly find a way to make it work! There’s a solution for every problem. Find grants, or scholarships you can apply for, or go to a Junior college locally to get your G.E. Out of the way and then only go to Cal Poly for the final 2-3 years cutting your cost back down to the same level. A few of my friends  graduated as CM majors and  we are doing deals together and there’s plenty of work, you’ve just got to be willing to go find it. “Learn by Doing” one of my favorite slogans...sorry don’t know as much bout Seattle other than it’s a great city as well and I’m siren UW is amazing as well and I’m sure you wouldn’t succeed there’s as well! 

@Austin McCall just finally getting back to responding. I actually was in Paso today touring my friends properties and he’s got some renovations and new build additions going on very similar to what you’re referring to except I think he was in a commercial/residential zoning with  that T-3F-Flex zoning which may slightly differ from you. His front house was originally an office but now it’s been renovated and converted to a vacation unit with a back house rental and will be getting permits to build another’s house in between them all with a residential loan so it can be done but that may be due to the use. If your Victorian technically is a residential home at one time there may be a way around this, I’ll check with my residential lender tomorrow who’s a ninja when it comes to anything creative. But don’t get your hopes up chances are you may have to go with a commercial building loan secured by the real estate. 

Hey @Austin McCall I think I'm familiar with the property you are referring to. If it's zoned commercial, even if it's mixed use it still falls under a commercial loan. FHA is only for residential 1-4 units. Not all banks will do commercial construction loans and not all lenders are familiar with doing them if their bank doesn't do that type of lending. I can put you in touch with a few local ones that do, not guaranteeing they will lend on your project but they will lay out your best options and give you a better understanding of how to get it funded. For a construction loan there are a lot of requirements especially if you aren't a seasoned builder or licensed contractor. Shoot me a personal message and let's chat.

@Katie Sylvia-Shea Great question, first off what market or city are you in? If you're nearby I'd be happy to sit down and run the numbers with you after just completing a flip here in SLO. Not sure what the home needs but $40k seems like a very small budget rehab which may or may not suffice. It really depends if you're just talking paint and flooring or full on remodel with kitchen and baths. On to the part how you structure the deal so you avoid PMI, well there's a few ways to go about it and it helps since it's a family member who may be willing to work with you. The easiest would be a purchase option contract in my opinion. In this scenario you'd agree on a purchase price and then you would start paying the remaining mortgage and assume control the property to do your renovations, then when complete you excercise the option contract and transfer title simultaneously with your new financing and they fund the deal and pay your mom at closing and transfer of the title. In thos scenario you were able to get you're 20% sweat equity from your renovations and improvements to the property so with the right loan option you won't have PMI. Although it really depends on what sort of loan you get since you will not be "owner occupying" longer than a year I'm assuming and in some or most cases you need 25% for un owner occupied rental properties. I do know you mentioned you'd be doing a live in flip but depending on time and your intentions it wouldn't technically fall under the investment property loan category. Check with my lender @Mike Poyntz with Coast Coast Lending as to the best loan program for what you're trying to do since there are so many ways on make this work, you could even do a rehab loan and get the rehab costs worked into the loan amount. Id be happy to help out to in any way I can so feel free to contact me.

I like @Tim Kunz’s insights. If you buy right it doesn’t matter what market you are in and always have multiple exist strategies because sometimes things can go not as planned. I find a lot of real estate is just problem solving, if you’re flexible and creative with your problem solving you’ll get through the tough deals and the tough times. Also don’t get emotionally attached to a property. Maybe you, Tim and I can meet next week depending on your schedules? 

@Sander A Swenson Welcome to the BP family! Where in the Bay Area are you from? You remind me of myself about 4 years ago, I’m also a licensed agent here in SLO specializing in investment properties whether it be residential or commercial. I’d be happy to grab some coffee or lunch sometime if you’d like to discuss more but I’ll try to answer a few of your questions although realize this is just my opinion and I’m sure someone else will have a completely different view point. That’s one piece of advice I did receive when it comes to real estate everyone got a different opinion so if you try to follow everyone’s opinion and advice you’ll go nowhere. So my recommendation is find a mentor that coincides with your goals and who’s readily available to answer questions you may have but also think about what value you can bring to them. 

1.) Where in the broadly pacific coast would be your opportune place to invest for cash flow? You’ll get 100 different answers like invest somewhere cheaper but I believe and was taught invest in your own backyard. On Foothill there are some new apartments that charge up to 1200-1600/room so that tells me if I have a nicer or similar rental product and rent it to college students I too can get someone near that. Right off the bat you’re thinking that’s impossible but if you have a newly renovated 4 bedroom home with shared bedrooms (two beds 🛌 🛌) in each and charge 600-650 you’re almost at that high market rate. Plus there are deals all over you just have to know where to look so if you buy right that would be a better cash flowing property than somewhere even in another state.

2.) How do you do your dd for a state or city before deciding to invest in it? Go there. Google. Go on the cities website. Check what large companies are located there. Call brokers and as for the most desirable areas to own rentals. Research their colleges and student rental options. Build a team and have boots on the ground. This is harder to do just starting out because you really have to partner with people you can trust yet there are lots of crooks out there so be weary.

3.) What do you do, rather than rent out properties, when renting is just not a good option for a location? I’m not sure I understand this question right, I wouldn’t invest in a market that didn’t have a rental market or high vancany rates. I’m not even sure a place like that exists though since everyone needs housing but there are obviously better markets than others. Simply put, don’t invest in a ****** market that you don’t understand unless you have some insider knowledge that you’re investing directly in the path of progress and then still think twice about investing there...

4.) What do you do to invest when the housing market begins to fall or level out? I think you’re referring to another housing shift such as the recession or just the cyclical market which is inevitable, if you have cash reserves this can be the best time to buy! Although lending regulations and money tighten up and is harder to come by. But when people start losing their houses to foreclosure guess what? They turn to renting. So it’s a win win for you if you’re ready for it.

I hope that was semi helpful. Just my two cents. 😎🤙🏻