All Forum Posts by: Carlos Valencia

Hello Alex, 

Not sure how far your into your real estate investing journey. Is this your first investment? or you have some already and looking for your next deal? 

In this current market its more challenging to find a cash flowing deal. Especially in CA as almost all of Cali is expensive. Therefore in this market you need to get creative on how to add more value to a property. Few ways to do this is to look for the ugliest house out there to get at a discount preferably off market. Rehab it and decide if you want to keep it long term or just flip it. If you keep it long term find out if you can add more units in the property like ADU, DADU basically an attached unit or detached unit on the same lot. Look at market rents as well to see what's the most you can get. Overall the more people you can rent out the property the better and max rent you can get out of that property. House hack is also another way but the house needs to be at least livable to finance using conventional money none of this hard money for househacking. Continue with your research and run your numbers to see the overall picture of your next deal. Will it cashflow as soon as you buy it or after some rehab and adds?

@Albert Bui

Using Hard money or private money as they lend you based on your experience, and if the deal makes sense to finance. This lenders look at your assets and credit and use the property and what you present to them on the cost of repairs and acquisition and after repair value. If it meets their guidelines then they will lend you the money. Just know that if you don't have experience flipping your interest rate will be around 12-13% depending on the lender and their guidelines. When you start getting more experience and have multiple successful flips then they will offer you lower interest rates maybe 9-10 %. Hope this helps and good luck on your future deals. 

@Albert Bui @Matthew Kwan

Hello Sia, 

House Hacking is a great way to get your foot in the door as this allows you to be an investor and also have a place to live in the while you learn. Also allows you to enter the market with as low as 3.5% -5% down depending on weather your using FHA or Conventional financing. There's Pros and cons to each program. Make sure to compare those options with your trusted mortgage advisor. Its important to plan ahead and find out what is your max borrowing power and do you even want to max on your first deal. Which is not recommended because you will limit your options on your exit strategy and make it more challenging when moving to your next house hack deal. Figure out what kind of property you prefer to start house hacking with single family, 2-4 units? If house hacking a single family look for the one with the most bedrooms and big enough lot and see if you can also build and add more units too and increase the value of your single family lot. The goal when house hacking is to be able to live there at low cost to you while your roommates pay for the majority of your mortgage. Then be able to leave the property and cash flow so you can have a clean slate and go on to your next property with flying colors. Rinse and repeat. Hope this helps a little on how to begin house hacking and what to look for on your first deal. As for credit if you have 780 + that gets you the beat pricing when shopping for a mortgage loan.

@Albert Bui @Matthew Kwan

Hello Malik, 

When trying to house hack you need to first find out what is your max borrowing power to see how much if the PITI your income can handle. Do you want to max out on your first deal? which I don't recommend you ever do especially on your first deal. Its important to plan ahead on how you want to approach your first house hack investment. Now there's two options on acquiring 2-4 units without having to use 20-25% down. You can use FHA 3.5% down or Conv 5% down. Its not much of a difference and I would recommend going with 5% down conventional as there's less restrictions when you decide to leave the property and no upfront mortgage insurance.

Do your research on the property you decide to make an offer. Find out what's the maximum rent you can get for each unit and will you be cash flowing once you leave the property or break even. If not then what kind of added value can you add to the property to maximize rents. Rehabbing adding more rooms or can you build more units on the lot. The goal is to look at a property and analyze how much juice can you squeeze before moving forward. Once you set up your house hack correctly where you know it will cashflow then you go and move on to the next one. After the first one you will be more experienced and now you will have a better idea of what to look out for on the next one. Putting 20-25% down can help save you some money on your rate allowing for a little better pricing. You have to also ask yourself what the best use of your extra money can be used for in order to maximize. Pencil out both scenarios when mortgage planning and look at the big picture to understand what the best option for you will be. 

@Albert Bui @Matthew Kwan 

Hello Sino, 

I would agree with you getting started is challenging. There's so much noise out there and people trying to sell the dream of investing in real estate that its easy to see everyone's success and ask your self why not me and take action. Once your in it then you begin to see all the bad of real estate investing that not many people like to share because no one is proud of sharing their bad investments or fails. They only share the good and not enough of the bad. Out of state investing is very risky as there's so many things to consider to make sure you made the right investment. I would highly recommend to invest in your area first to gain the experience and so you can be involved in the whole process and not have to rely on realtors, property managers etc.. because their opinion will be bias as they obviously want your business. There's also so many ways to invest as well that it can be overwhelming to take the leap on one strategy. What many of our new investor clients tend to do is go the house hack route as its the least risky investment to get started and begin really learning hands on. House Hacking is when you buy your primary and you intend to rent out the other rooms or units if its a multi family 2-4 units. Why new investors like this strategy better is because you can invest as little as 3.5 % to get in, you'll have a place to live, you can rehab the property while living there. The goal is to find out how much value can you add to maximize your rents and be able to move out and cashflow or at least break even then rinse and repeat. After gaining experience via house hacking then you may start feeling more comfortable taking on greater risk for investing out of state because now you have a better understanding of what it takes to do it but this time without you living there. Something to consider. Hope this helps shine some light on the topic. 

@Albert Bui @Matthew Kwan

Hi Rashawn, 

Most of our clients use the hard money to purchase the home and rehab. Then they will refi if they cannot sell the property in time before their Hard Money note is due or if they decide to keep the property as long term. Do you think the rehab will take too long? how long do you expect the property to be ready? Keep in mind that if your using a conventional loan to refi the property also needs to be livable it can be to the studs another thing to consider before refinancing. This will depend on what kind of loan product your trying to use to replace the Hard Money loan. As a flipper the goal is to get rid of the property asap so you don't lose too much profit margin during the rehab and hold. Hopefully you can complete the rehab as fast as possible and the market has the demand for your property to sell fast. 

@Albert Bui @Matthew Kwan

Hi Parker, 

In my opinion if keeping this property is going to begin costing you money every month when you leave then I would recommend selling it since HOA and property taxes are just going to continue going up and rents will not really increase over the years then there's only so much you can do to continue justifying the rent increase. Wait until April and take your money and invest it an another property doing the same strategy house hacking but this time get a single family with future potential to add more value like an ADU or DADU to maximize your future rental income. What's great about this is that now you have experience house hacking now your not new to this.

I live in a condo myself and HOA just keeps going up every year. If I was to move out right now I would cashflow but not by much based on my area. For me I would consider renting out for the experience on managing my tenants and once I start being negative I would get rid of it. Use that money for another property that has more potential.

@Albert Bui @Matthew Kwan

Congratulations! Now the fun begins figuring out your exit strategy. How much can you rent it out for to move on to the next project and hopefully not affect your buying power too much for the next one. What area are you looking for your next project? Are you thinking of using the same strategy house hack? Will you look for another condo or single family? This is how its starts by house hacking your first property or simply rehabbing it while you live there and rent it out to go to your next one then rinse and repeat. 

@Albert Bui @Matthew Kwan

Hello Kyle, 

I would highly advise not to invest out of state from where you live if your a new investor and never done this before. There's many things that can go wrong and if you don't have boots on the floor it will become very stressful for you and you will have created a nightmare and maybe throw in the towel and never want to invest again. Good contractors are hard to find and if they know you wont be around there's a high risk that they will just take your money and not get anything done. I believe this is probably the biggest challenge when investing out of state. You will want to make sure your on top of your contractors to make sure they are working. 

I would highly recommend to  find a deal in your backyard if possible. Not sure where you area you live but try to look for properties that are in your budget and that will make sense for you to invest. You can start with a small project like a condo, mobile home with affix land those two projects usually are not as expensive to do depending on the area. Rehab cost can potentially be lower. 

Ways to finance these projects are using hard money, you can also use conventional loans where you can finance as owner occupied but they cannot be properties that are not livable they need to be properties were you can actually live in. Many of our clients including my team use the owner occupied strategy to acquire the property with as low as 3.5 % down and rehab their property while living there. Once its completed you can either rent it out, sell it or continue to live there and house hack it meaning you basically have roommates to help you pay for your mortgage. Hope this helps and good luck on your search. 

@Albert Bui @Matthew Kwan

Hello Pedro, 

If you have properties that are paid off and you want to have money ready and available for your next project. I would suggest doing a cash out refi or if there is a loan maybe Heloc assuming theres enough equity to take out a line of credit. It will all depend on how much line of credit your looking to have ready for your future projects. 

@Albert Bui @Matthew Kwan