All Forum Posts by: Dale K Poyser

Sounds like you need a new property manager. 

Can anyone recommend any good Property management companies or realtors in that area?

I have heard of deals like this happening before. For the same reason you mentioned, it seems too good to be true.

What I do know about some of these auctions is that sometimes the banks will bid them up to get to what is a fair price. So it really depends on the state you are in. Also educate yourself on the laws for that county, you may or may not be required to pay fees to clear the title.

Also if you are able to research the property (google maps?) do so.

Lastly, as hot as this market is I would be surprised if several other investors are not looking at this same property and planning to start a bidding frenzy. 

I think you can also look at past sales. If past properties have sold for those prices then you may have stumbled upon a gold mine. 

At minimum I think you should go to the auction even if you don't bid.

Look into REITS, Bonds, Dividend stocks

Definitely look into things like the specs of the flooring you will be getting. Might be worth going to Home Depot and looking at the different types they have. 20mil wear layer is the best and SPC seems to be better than WPC. As you get a feel for the specs you will have a good idea of whether or not you are being hustled or getting really crappy materials.

Also if this is a condo or upper floor having some extra underlayment is a good idea. I did have a property manager tell me that he could get me flooring for about $5 per sq ft installed. The average labor rate seems to be $2.5 - $3 that means that this contractor is charging you $.5 for parts. Questions I would ask

What kind of reviews does this contractor have?

What type of flooring are you getting? Ask for a brand and model number, tell him/her you want to pic colors and specs.

Are additional materials included? Baseboard, demo, painting base board, haul away.

Maybe he has excess materials from another job so it's a win win for him. If that is the case it might be a good deal. Otherwise sounds too low.

Dillon,

Just looking at the way you wrote your post, it seems like you are leaning towards Out of state investing. The con you listed is probably something you would deal with if you were to invest in state and at some point decide that you want to grow your portfolio. It's not a strong enough reason to NOT do OOS investing.

I have a friend that started Real Estate by house hacking, he was telling me to do the same but I wasn't ready to be locked down to a place or have roommates.

He bought a large duplex, rented out one unit, lived in the other and rented out each room in that unit. From there he slowly did renovations, increased rents every time he got a new tenant, and then started buying other places out of state and in other cities in CA.

In lieu of getting a duplex, get a 3-4 bedroom house and rent the rooms individually OR get something with a floor plan that allows you to convert it into separate units - think something with multiple (front and back) entries.

You could also look at other cities in California in lieu of going out of state. For example Taft is a pretty cheap city, there are many others. just accept that you will be in the middle of nowhere. So you could rent an apartment for now and then buy a house in a cheap city like Taft. That cashflow will put you in a better position to qualify for SD.

I'm looking into out of state investing as well. I'm finding that I can get a nice 3-2 for 140k or less that will cashflow well. I think when first starting out priority should be placed on cashflow. Ideally, you should try to get both cashflow and appreciation, but if a place will not cashflow don't do it.

I'm debating renting my place and moving into an apartment, just to get the mechanics (of managing a rental property) down. But I am seeing that I could also easily just get a cheap place out of state which will FORCE me to learn how to put processes in place.

When I watch a lot of Youtube videos I notice that most of the rehabbers ultimately decide to outsource and put processes in place to allow them to "scale" their portfolio. Otherwise you can burn out.

To answer your other questions

1. Anyway around the self sufficiency rule? (seller carry?) - you can look into Subject to or Seller financing, or get some private or personal loans to make up the difference.

2. Is something like BRRR strategy possible in San Diego? - I'm sure it is, you'll have to do some digging for off market deals. Keep in mind most hard money lenders will want something with at least 30% equity ARV and they may want you to put some money in. If you have good credit you can get a personal loan for that amount.

3. Is it worth looking at SFH's and maybe adding an ADU? - That is an option but I have seen ADU additions run as high as 120k on the forums. So run the numbers to see if that works for you, or shop around. Just make sure it is properly permitted.

That's all I have for now, good luck!

A cancellation fee seems common from the property managers I have spoken to so far but the fee they are asking for seems uncommon, that is a lot.

A good property management company will have separate fees for the different services.

1- Fee for placing a tenant

2 - Fee for ongoing management

3 - Fee for prepping the property during vacancy (cleaning, painting, etc - not necessarily a part of 1)

When you cancel during the contract it should be a percentage of the gross rent or something like that. But I think you should keep interviewing until you find something that works for you. Companies have different packages. Try Yelp, Thumbtack, etc.

Your best bet is creative (non-traditional financing)

1 - Partner up with someone on a good deal - be willing to split the profits

2 - Get a hard money lender

3 - Seller financing

But I agree with the previous post, you need to have a strong foundation financially as you risk losing a lot.

You can find a lot of hard money lenders by doing a google search for that area. There is a chance that you can even find a hard money lender in texas that would lend you money for a deal in Michigan.

If you're getting a good deal on these properties you will have no problem finding a hard money lender. They will be looking for 75-80% LTV (Loan to Value) and may need to see some cash out of pocket. So you will either need to come up with the remaining 20-25% or get the properties at a discount.

Also, work on your sales pitch, instead of going for 4 large properties why not start with one or two, secure the funding, get the process down and then go after the others.

Build a reputation for yourself on biggerpockets and other forums, share your deals, and people will come to you. It won't happen overnight.

Good luck!

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