All Forum Posts by: Brad Jacobson

Hey Jacob,

No one can predict the future of interest rates so I'd look at the opportunity by seeing how long it would take for you to save the $1,500. 

I've found that the return on buying down your rate typically begins at year four or five, not adjusted for inflation.  If you plan to hold the loan for at least six or seven years, it's probably worth buying down.  If you think you'll sell or refi before that six or seven year mark, it's probably not worth the buy down.

Good luck!

Hi Girish,

Most states have some sort standard state form that is available with a Google search.  Search for the CA apartment association or something to that extent and you'll likely find a good, attorney approved, state form.

Other lease agreements are legal but aren't always tested.  Examples include the lease agreement that comes in Brandon's "The Book on Managing Rental Properties" can be used but if you want to have best practice, have a local RE attorney review any other lease you use.

Good luck!

Hey John,

You know this already but don't get paralysis from analysis.  If you're in the right financial position to start investing, do it!  

Worry less about the market and more about the deal.  Get in touch with agents in every one of the cities you mentioned and get them to set you up on a daily drip feed so you can analyze properties every day.  

Also, I'd recommend prioritizing the house hack because cutting your living expenses by a $1,000 or more with a hack will yield a net cashflow to your bottom line much higher than any simple rental property deal you're likely to find.  Use that income to springboard you into letting your wife leave her job and invest in more traditional rentals down the road.

Good luck!

I agree with Charles in that all the standard formulas are still applicable but I believe that the most commonly used metric used when purchasing cash would be the cap rate (annual net income/ purchase price).  

All these formulas still work and they'll do a good job of showing you that your return will always be lower when buying outright then when financing the purchase.  

Though not as profitable, I think owning properties free and clear is totally cool.  If you value security over marginally higher gains, go for it!  I plan to sell off half my portfolio at one point and use the proceeds to pay off the other half of portfolio until it's free and clear.

Good luck!

Hey John, 

We actually discussed this at a local REI meetup a little while back and the group came to the conclusion that it would be better to simply wholesale a fire damaged property due to both the liability and extremely narrow potential buyers.

I'd recommend finding one of the bigger wholesalers in your market and partner with them so you have access to their buyer's list and can have them blast it out and do a controlled open house.  That way you can compare the offers from the investors you'll get with the wholesaler with the offer from that fire damaged property company and then go with the best offer from there.

Good luck!

Hey @Nancy Lim,

I have helped multiple clients purchase and setup Airbnb properties in the Bear Lake area over the past year.  They've continued to preform excellent despite only having a four-month vacation window.  The majority of the 2,500sf+ homes will gross $60-70k per summer which, after a 30% management fee, leaves about $45k per year to supplement a mortgage or in your case, potentially pure profit.  

There are a lot of good PMs that way who can also assist with the decor, linens, setup, etc.  I'm definitely a fan of that investment!

Good luck

 Slightly differing from the other two responses, I think I would still start with a house hack in your local area.  You don't mention what your current living situation is but you're probably either paying a really high CA mortgage or CA rent and a house-hack is likely to provide you the most cash flow because it directly cuts into your massive monthly spend on housing.  

Even if your rent is $3,000+ per month and your new mortgage would be $3,500+, if you could house hack away at least half of that ($1,750 or so but a good hack can usually do the majority of the mortgage), you're not going to get that return with an out of state rental unless you find a wicked deal to start out.  Start out by seeing if you can buy a house with a bunch of extra bedrooms, good mother-in-law suite, or a small multiunit locally to take a hefty chop out of your living expenses.  

I'd suggest using your skills to do a live-in flip and house-hack so you build both equity and cashflow in your primary residence.  Then pull out that equity you built and the additional monthly savings you're making as a house-hack and use that to then start building an out-of-state portfolio.  

Good luck!

Does Zillow not do an income confirmation?  If not, legally there should be no issue if you want to ask for pay stubs or W2s on top of the application they did through the site

Hi @Ramki D.,

If you go through a website like Rentler.com, it will do all of that for you!  Most websites charge about $40 per applicant (charge the applicant, not yourself), these websites verify income, do a background check, and provide prior landlord contact info.  Using a website like Rentler really removed a huge amount of the headache for me that included trying to verify income and do background checks myself.  

Highly recommend posting your units for rent on the major websites!

Good luck,

Deal Machine is the best I've used.  It's simple and fast, plus the skip tracing feature is nice so you can follow up in more ways than just with the direct mail.

Good luck!