All Forum Posts by: Bill Henley

This is a beautiful story of buying a 4-plex with Day One equity of $70K while also pulling out all your up-front money. There might be a missing piece: the make-ready expenses and other costs (including vacancies) incurred in forcing rents to rise from $500 to $800. These usually go hand-in-hand: a long-term owner who has let rents fall 35% below market rates, deferred maintenance issues, possible capital expenses (water heaters, HVAC), and lack of the upgrades required to attract market rents.

I'm glad I logged onto BP today, which I rarely do. Although still a rank noob, I am experiencing real estate as someone once described battle: days of boredom punctuated by moments of sheer terror. In my case the boredom part has been on-going for about four months, looking for deals and not finding any. It's great to get me some Vitamin Z. @David Zheng you are my hero.

@Ariel Smith: In October 2015 we got a HELOC and my wife has used this source of funding to buy seven properties/21 units in her home town of St. Louis, Mo. The plan from the beginning has been to move to St. Louis and do real estate full time. We were originally thinking in terms of waiting till I turn 66, in 2020. However, the combination of my age, the pre-existing plan to move to St. Louis, and the possibility that the market for our Albany house will be worse in 2020 than it is now, have combined to persuade us to sell and get out sooner rather than later. Bay Area homeowners who are not at the age or other circumstances where it makes sense to sell out and move East should at least look into getting a HELOC and using it to buy properties in positive cash flow markets.

I was in court in SF Friday for a Case Management Conference and the judge said San Francisco today is about 5% African American, and that if he sees 100 potential jurors appear on a jury summons only one will be African American. This is the result of 30 years of gentrification. If that 5% demo number is correct I wonder if there is a more segregated city in America.

My wife and I are making a bet that the Bay Area market is about to nose over and are selling our little 2+1 house in Albany CA (between Berkeley and El Cerrito). It went on MLS on Friday. www.911evelyn.com. About ten agents brought clients through on Saturday. Open house #1, 2:00-4:30 on Sunday (yesterday), our agent says 200 people walked through and she handed out 100 flyers. It's either, "This *has* to be the high point of this market," or, "I sure wish we'd held on another 6-12 months." Time will tell.

@Wes Blackwell: Thank you for the lengthy and informative response. (Thanks to all the other responses as well.) It's too late to fire the agents now, we're on MLS as of this morning. (Check http://www.911evelyn.com/.) I do not mean to imply that my agents failed to give me the same briefing that you have done, because actually I had not asked them these questions. I posted these questions to BP because I hoped folks like you would chime in and educate the community. The impulse arose from reading something on BP about a loan that fell through in escrow because the property appraised too low. The crazy prices in my market seems to me raise the possibility, that an offer could exceed the market price by too much to get a qualifying appraisal. It also occurs that, while anyone can submit a $900,000 offer not everybody can qualify for a $900,000 loan. On the other hand, I wouldn't mind if some demi-mogul from Guangdong threw an all-cash no-contingency offer at us.

It is the case that we have commissioned a pest report, including punching holes in the stucco at about ten locations to check for rot, and a top-to-bottom general inspection report. We also spent two+ hours filling out a four-page seller's disclosure form. So buyers are either actually aware or on inquiry notice of all known defects before they bid. It is also the case that multiple offers are a certainty. The most recent 2 bdrm 1 bath in our little town, 971 sq. ft., 4000 sq. ft. lot, asking $650,000, got 14 offers, five over $1 million, and closed for $1,085,000. For all that, I fear this market could be a snake pit and all I want is a clean and fair deal for both sides. So thank you for the responses, and I welcome any further input.

We are selling our family home in the SF Bay Area. We expect to receive multiple offers, maybe as much as $1 million. Choosing the highest offer is simple, but I want to avoid two things: (1) a buyer who can't qualify for financing, and (2) a buyer who gets a post-acceptance inspection report and uses it to nickel and dime us with repair costs. I know I'm basically asking BP to read the minds of people who are not yet known even to me. But I wonder if there are any red flags or other tips that would persuade a seller to reject the highest offer in favor of a lower one which promises a clean and easy close.

What a great story! I am about to embark on the same adventure, to quit my job and go with real estate full time. The big difference being I'm 63, not 21! I'm adding to my brainstorms book right now, to try to organize construction workers and contractors like you have done.

I find the Kathy Fettke/Real Wealth Network ten-house formula persuasive. Essentially the young investor buys single family homes in serial fashion and concentrates on paying off one mortgage at a time. At the end of 20 or 30 years you own ten houses debt free. For a young person this seems like a foolproof path to early retirement and lasting wealth, provided you follow all the rules of good investing along the way.