All Forum Posts by: Bryan C.

@Arlen Chou Thanks for the wisdom. Sounds like you live a pretty busy lifestyle with activities other than real estate. I am in the same boat and reading about how you still manage to find time to drive around neighborhoods in Oakland during your spare time is very inspirational. That takes a lot of dedication, ambition, and discipline to do. 

At this point in my life, I want to be smart with my money, but not let it control my life. Not saying that your life is controlled by real estate, but I am sure it takes up a lot of your time. Perhaps when I am married and have kids I will have that same drive you have. But, for now, I am single and have no commitment to anything other than being wise with the money I manage to save up. 

My mind is made up on investing out of state at this point. When I do analysis' on homes out of state, it seem's like a no brainer. I am not completely against buying in California again; But, at this point in my life, I want something that is basically turn-key ready. I also have a personal bias that the prices in the Bay Area will see a decline in value sometime in the next five years. Thus, I would rather invest in a stable market until things settle down (if that ever happens) in this area.

@Cody L. Thanks I will check out Houston. I can definitely relate to where you're coming from. 

This whole out of state vs. in state argument is like the kobe vs lebron debate 5 years ago. There are pro's and con's to both stories. At the end of the day though, I think that as long as my money's leveraged through a mortgage and I benefit from loan pay-down by a tenant for the next couple decades, I will always be a winner.

@David Affonso ya man let's connect sometime. I like to go to Stein's when the Warriors are playing if you're into basketball.

I will send you a colleague request.

@Jay Hinrichs. Thanks for the advice. I do plan on speaking to banks and mortgage broker's before purchasing to ensure I can re-fi.

I did consider a house hack in Mountain View but the purchase price would be well over $ 2 million so I would not qualify. People do not realize how expensive it is here!

Check out this property 3br/ 2bth of $1,600 sq feet that just sold down the street from me for over $1.8 Million.

http://www.zillow.com/homes/for_sale/19515746_zpid/any_days/globalrelevanceex_sort/37.388903,-122.073971,37.386554,-122.079206_rect/17_zm/1_rs/

Thanks everyone for the comments. I now have a better understanding of how these forums work. 

I am still leaning towards going out of state; it just makes more sense to me when I look at the numbers. I already own a condo in San Diego and I am happy with it. 
See you all in other threads!

@Matt R. that was an extreme example. However, if you look back to 2008, REIT's got crushed and so did their dividends.

If you look at the REIT Index and the dividend history, you will notice that they just quit paying dividends after the financial collapse in late 2008. No dividends paid in 2009! When dividends finally started getting paid out again in 2010, the dividend payouts were half of what they were prior to the collapse! I don't know many tenants who just decided to quit paying rent in 2009. My parents own a lot of real estate and they did not feel the financial crisis of 2008 as their rental checks kept coming in and their mortgages continued to get paid down.

You can see for yourself here: http://www.nasdaq.com/symbol/rwr/dividend-history

When I purchased my first property, I literally dumped every dollar I had into the downpayment. I did a 60 day withdrawal on my IRA's to make it look like I had reserves in the bank, but once the loan closed, I moved the money back to the IRA's. This is a common tactic done as you essentially get a free loan for 60 days. Just make sure you get the money back to your iRA's within 60 days.

At the time, however, I was living at home with my parents which was a nice safety net for me. In a worst case scenario, I knew I could ask my parents for help. So, even though I used all of my money, I knew I had a safety net if I needed one. 

Getting a 0% credit card APR for 15 months helped a lot as it financed all the rehab work I needed done. I was able to leave the debt on that card until well after I got tenants in my property and eventually paid that card down well before the 15 months expired.

Having a cash flow analysis of your own personal finances as well as the property is very important to make sure you do not dig yourself into a hole.

I don't like the idea of a REIT because I am leaving the bookkeeping up to someone else who is most likely cooking the books.

I actually own Realty Income Corporation (Ticker symbol = O) and have gained about 60% in 2 years. However, if the stock market goes down, I am pretty confident that REIT's will go down with it. That means the dividend yields will go down as well.

If you look at rental prices during times of recession, they do not decrease much.

If I own $100K in a REIT and my net dividend is 4% per year, I collect $4K per year.
If market drops 50%, REIT is now only $50K, Dividend still 4 %, I collect $2K Per year.

If I own $100K House, net cash flow is 4 % per year, I collect $ 4K per year.

If market drops 50%, my House might lose value, but my net rental income will still be close to $4K per year.

Also REIT's, do not allow me to benefit from loan pay down and depreciation which are basically guaranteed returns.

@Andrew Davis Thank you for the information.

@Lane Kawaoka thanks for the input and challenging my view on California property. I think the forced appreciation concept sounds great; however, I feel that at this point in my life I do not have the skills or time for a successful BRRRR strategy. "Forced Appreciation" Seems like a pretty big risk for someone who doesn't have a whole lot of time to actively participate in the project. Sure, I can buy somewhere in California but I would never go to the property so what difference does it make if I buy in San Diego or Florida?

Furthermore Without forced appreciation in California, the cash flow will be negative with a 20% downpayment in all areas I know in California. Many other area's my cash flow is positive with 20% down. I currently do not have the means to take on a negative cash flow property. I went in with 30% down for my condo in San Diego and I barely break even.

Here's the elaboration on my three strategies originally mentioned:

- A Single Family home for cash with purchase price around $100-$120K; After 6 months I will re-finance to free up my cash again. I am currently not a good borrowing candidate as I have been paying a lot rent up until this month. The rent is crushing my debt to income ratio since I was paying $3,500 per month. I figure in 6 months, I will be a better borrowing candidate as my debt to income ratio will be back to a healthy level. When I'm a better candidate, I would like to re-finance in order to free up my cash in case I want to purchase another property next year. 

- 2 Single Family Home's with downpayment around $30K each and purchase price's around $100-$120K each: This strategy would actually involve my sister. She has a much better debt to income ratio than I do, allowing us to be joint applicants on the mortgage. I would provide the downpayment for one home while she pays the other downpayment. I was thinking I might be able to get a package deal in this scenario with the property management company because we will end up having two properties under management. Furthermore, my sister has expressed an interest in joining me in my real estate endeavor. Like me, she has some cash in the bank just sitting there and I was thinking we could partner up.

- Multiple Units (Triplex, fourplex) with $60K Down and finance the rest with purchase price around $200 - $240K. This strategy is pretty much the same as purchasing 2 single family home's. Only difference is buying a duplex, triplex, or fourplex, in place of single family homes.

I bought a condo in the marina district and it cash flow's okay. I had to go in with 30% down to make it work. I am from San Diego and decided to purchase there as I see a lot of appreciation potential. Plus, I might decide to move into it one day.

However, I see much better opportunities out of state for rental properties. 

Hi,

I have just finished reading Brandon Turner's Book on Rental Property Investing and I am brand new to these forms.

I have saved about $130K which is not enough for downpayment where I live (Mountain View, CA). The prices here are surreal and I have decided to not purchase here as I will likely not be here my to many years.

I have decided I would rather purchase some rental units out of state where I am investing for cash flow rather than speculation. The only problem is I am only familiar with the real estate markets in California which do not offer good ROI. I currently own a condo in San Diego which I rent out; I figure that's enough CA property for now.

Is there a section in BP for out of state real estate investors? I have a few friend's who have invested out of state (Boca Raton FL, Dallas TX, Tulsa OK) but I figure I would post here and get more ideas.

I am basically looking to either purchase:

- A Single Family home for cash with purchase price around $100-$120K; After 6 months I will re-finance to free up my cash again.

- 2 Single Family Home's with downpayment around $30K each and purchase price's around $100-$120K each.

- Multiple Units (Triplex, fourplex) with $60K Down and finance the rest with purchase price around $200 - $240K.

I will obviously have lot's of analysis' to do. However, I am hoping to get some insight as to what neighborhood's look attractive for landord's in the U.S. at the moment. This way I do not waste time looking at crappy parts of town's before realizing they are not ideal places to own.

Any insight will be much appreciated. Thanks!

Once I am done analyzing, I plan on flying out to the city I decide on to get the deal done.