All Forum Posts by: Bonnie Low

@Sean Mooney 60 is not old! If you're in good health, 60 is the new 40, lol. Seriously, though, what are your goals? How much are you looking to generate - enough to live on? To quit your W2? To supplement other retirement income? Are you looking to leave a legacy for children? What are your areas of interest or expertise that you bring to real estate? All of these can help you figure out what investing options best suit your needs. Without that info it's a little hard to point you in the right direction. I can share what my husband and I are doing. I'm 51 and he's 55. We wanted to be able to replace our W2 incomes (not there yet), to generate cash to grow our investing capital, and ultimately leave properties and a business for our 3 sons to take over. We both took our 401k loans to start with and bought our first flip. My husband has a lot of building experience so we did much of the work ourselves. Flipping was great and we really enjoy it, but it doesn't make a lot of sense from a tax strategy because we're both still high W2 income earners. Instead, we pivoted to BRRRRs. We like this strategy better because we don't get taxed on the income generated like we would if we sold a flip and we're adding properties we want to keep to our portfolio. The houses we buy are seriously in need of repair. We like that niche and right now it has significant upside where we're investing so we can get most, if not all, of our cash back out but I'd say this strategy isn't for everyone and doesn't work everywhere. Here, acquisition costs and ARV make it work and we have the construction background to be pretty accurate on our repair costs. While we're focused primarily on SFRs with ADU potential right now, we know we need to accelerate soon. We'll be looking to 1031 our properties into small multi-family in the near future. We also need to move out of CA - both our personal property and our investment portfolio because of taxes. My husband is now partially retired from his W2 job so he can devote more time to our REI. This is a good hybrid strategy that is working for us. Unfortunately, it doesn't unlock the bulk of his 401k yet and we'd really like to get that $ out of the stock market and into more properties so converting that to a self directed IRA will be our next move when he (hopefully) "retires" towards the end of 2021. Anyway, that's what we're doing - food for thought.

There was a recent podcast about this on the Real Estate Rookie podcast. The couple they interviewed is doing just that. They're very experienced in the space because she's an RN who has been an administrator at assisted living places. It would be worth listening to. 

What's your ultimate strategy? Are you looking to acquire buy and hold properties? If so, it sounds like you already have a good one if it's cash flowing great now, you've paid down the loan significantly and you know it's in a popular area. You could take a hybrid approach. Keep it, but do a cash out refi on your equity and use that equity to invest in more. Then you still have a rental property that someone else continues to pay off for you and probably still generates some cash flow.

I liked the book, but I honestly got more out of the BP podcast Chris Voss was on (is it just me or does he sound exactly like Al Pacino, LOL???) The book I'm really liking right now that feels more relevant to real estate investing - especially how to be persuasive with potential partners or funders - is Pitch Anything by Oren Klaff.

How is COVID and distance learning affecting the student housing market in your university town? Is this property cash flowing or did you buy for appreciation?

That's rough. Sorry that happened to you. I'd start by calling your insurance agent. We recently renovated a house that had been red tagged by the City. We had to take it down to the foundation and basically salvaged 1.5 walls. Our hard money lender required insurance on the property and, luckily, our insurance company (State Farm) was willing to write a policy for it. They came out and made a determination of what it was worth at the time (not a lot) and covered it for that.  With the wildfire situation in CA, we were very concerned about protecting our investment. We increased the coverage twice during construction to account for the additional value we put into it to make sure it wasn't under-insured. I don't know if this is relevant to your situation, but it's good to know it is possible to get a policy written when the house is all but torn down. 

Of course talk to your Realtor to see what he/she has to say. But my gut reaction is that this would not decrease your home value. While it doesn't sound like your older home is necessarily going to be comparable to the new homes (IOW their sales price won't get used as a comp for your future appraisal because the properties aren't similar enough) it still seems like you're buying a property that is in the path of progress and that makes the value go up. You're clearly buying in an area where people want to be. 

Is the zoning the problem or are there just not enough comparable properties for the appraiser to support what you think the market value should be? You might make a call to your local planning or building department to find out if your property is zoned correctly. Local jurisdictions tend to be very friendly towards mother in law units or ADUs  nowadays because they either want to encourage infill or because of the lack of affordable housing, or both. So it's possible the unit was added prior to changes in zoning that are more accommodating to ADUs and that's what the appraiser is going off of. Of course, it's also possible it was added without a permit...so there's that risk. Anyway, I'd at least spend a few minutes on the phone asking what the rules are. If it's all legit, it seems the appraiser should be taking that sq. footage and bedroom/bath into consideration so the problem may be that it just doesn't comp as high as you were hoping. 

Find a Real Estate Investors Association (REIA) group in your tri state area. There are always Realtors in those groups and you're far more likely to find one with experience working with investors if you go that route. You'll also find other investors who can share who they are working with.

Hi @Kelsey Gabhart! I'm not a wholesaler, but I am an investor who sometimes buys from wholesalers so I can offer you my perspective, which might be helpful. I have yet to meet a wholesaler who understands renovation costs, and I am 100% ok with that. In fact, even if someone did present me with their estimated costs I wouldn't pay any attention to them. We always do our own estimating. Hard stop. So, what I'm saying is that I don't expect you to be able to analyze a deal - that's my job. What I AM looking for in a wholesaler is someone who has the time to find off market deals, and the patience and the tact to develop a relationship with the seller. I don't want to knock on doors. But I'm willing to pay someone who is. I want to know that the seller is being treated professionally and with respect and that the wholesaler is trying to help that seller solve their problem by connecting them to me. In other words, I don't want to get involved with a seller who feels they're being pressured or taken advantage of. We typically buy really distressed properties and will take the time to sit down with a wholesaler and tell them what we're looking for. After looking at a few properties together, they start to get a feel for what we're looking for. So maybe you want to start by creating a buyer's list and developing a relationship with potential buyers. I don't expect a wholesaler to bring me a house they have under contract for a set $ amount - sometimes it works that way, but not always. What I really want comes before that happens. A house I would be interested in, a seller who is motivated, a ballpark range on the acquisition costs, a willingness to be flexible on their expected fee, then we can finalize all the details. We've walked through potential acquisitions with wholesalers and explained what we would and would not do and roughly how we would price it to give them some parameters. It's time well spent so the wholesaler can start to become part of the deal funnel. I hope this is helpful to you!