All Forum Posts by: Craig Cecin

@Craig Cecin

I'm also in California. I've heard good things about San Antonio and know Bay Area investors buying multi-family there. I invest locally and in Indianapolis. I did a local major renovation where I was on site at least once a week. I thought I knew enough about renovation to attempt one out of state...nope. I agree with the above comments on trying to BRRRR or flip OOS, very challenging.

I bought a turnkey (with an agent, not a turnkey company) in Indy 6 months ago since I didn't have team in place. I have a team in place now and have been attempting to do a BRRRR, put in at least 5 offers. Long story I'm finding it very difficult to hit the numbers right. The Hard Money Loan rates and interest payments scare me. I also put in 10% to 20% contingency on top of my numbers to be extra cautious. I'm leaning heavily towards a minor rehab, more cosmetic instead of major rehab - less value add but less risky for me. At this point I'm buying more for tax benefits and property appreciation than cash flow with these interest rates.

On a move-in ready home that's been sitting, you might be able to ask the seller for help with closing costs to do a 2-1 Buy Down on conventional loan (e.g rate is 7.7%, Year 1 it's 5.7%, Year 2 it's 6.7% and Year 3 and remaining term of loan goes back to 7.7% original rate). This is one strategy I'm seeing where I could positive cash flow and raise the rent every year but the 20% down is not a great way for me to scale. 

Ask real estate agents if they're investors themselves and what percentage of investors they work with. I've found many agents (locally and OOS)  focus mostly on primary home buyers. Some of the questions to ask contractors are about change orders, do these numbers include permits, etc. Some contractors will give you a low estimate to get the job but do lots of change orders which will drive up your cost. Get feedback from local investors about the neighborhood and talk to people who do construction management in your local area. Have multiple people go through your numbers. Also don't give large amounts to a contractor. I've already seen a remote investor lose $20,000 when the shady contractor walked off with the money and now this investor is seeking legal action. I paid my Bay Area contractor $1000 down payment then made many payments as the tasks got done after I inspected them. Vet your contractors. 

Highly recommend flying out to the city which is what I did recently - seeing areas and properties in person look much different than photos and videos. Do a Google Map view of the prospective properties but sometimes those are out of date. MLS pictures don't show the busy noisy street, neighbors overgrown lawn, beat up cars or the factory right next to the neighborhood. Good luck!

 You're asking the right questions, but you're a bit ahead of the game with them. Glad to hear you're putting together your team, though!

What I'd ask myself first is, which market should I invest in and why? Then you identify the property you want to invest in, and finally figure out the strategy. 

A lot of people attempt to use the strategy as their guide when in fact it's the market, property & circumstance that guide you to which strategy is best. 

That said, what markets have you identified and what indicators are enticing you to invest there?

@Craig Cecin Tampa area prices are inflated and insurance is getting tougher and more expensive. A lot of insurers are requiring to put a new roof on before they will bind insurance! It’s only going to get worse here, my money is moving North.

I'm not sure about the other markets you've mentioned but I do know Charlotte. Finding a cash flowing long term rental is very, very difficult in the Charlotte market right now, however, the equity potential is huge and our vacancy rates are very low compared to a lot of other markets.

I have clients that do well in OH but look to Charlotte for the faster equity growth and less risk due to the growth and vacancy rates. I think it depends on what your goals are, what your budget is, and your risk tolerance.

Hey Craig! I think you should look into the the surrounding cities of the cities you mentioned! These are all big cities and there is a lot of competition. You can usually get better cash flow on smaller towns. The market I live at has good cash flows (it has gotten difficult with high interest rated though) and has had a solid 3-4% appreciation.  

I love Texas and think you should invest here. We have one of the best economies in the country and more companies keep moving here. Of course, I live here and my opinion is biased.

Hi Craig. Have you considered using a VA loan to purchase an investment property here in California? As a fellow resident and investor, I feel you - the prices can be much higher, but the down payment and closing cost benefits of a VA loan plus the use of the rental income to help qualify for a higher purchase price could be worth considering. I mention California because you would have to occupy the property for at least 1 year before you could refinance and use a VA loan elsewhere.

If this strategy doesn't make sense, what are your top investing goals? Is cashflow, appreciation, or tax benefits most important? Are you looking to do short, medium, or long term rentals, or focus on a niche like student or corporate housing? The more you learn about each of these options, the easier it will be to pick a market that best suits you.