All Forum Posts by: Danny N.

> next I will be surprised if you can add a ground up ADU in Bay Area at $200k unless you do some of the work.

Maybe I'm too optimistic here at $250/sqft. Also from doing some reading, it seems spending $200k doesn't add $200k to the home valuation, so that's a big negative.

> It appears you purchased in mid 2020. The chart shows ~$200k gain. Selling costs will consume about 50%. Maybe $120k profit . Prop 13 is likely saving you over $150/month and if you loan us from 2020 it is likely less than half of todays rates. I would hate to lose the lower rate loan and not be thrilled to give up the prop 13 savings. What would you do with the proceeds of the sale?

Bought in 2018 and have over $500k in equity (through principle pay downs and appreciation over time). My loan rate is at 3% which is pretty sweet, but still doesn't help enough with the cashflow situation. If I sell, I'd probably look to reinvest it elsewhere (probably out of CA) for combination of cashflow (or break even at least) and appreciation.

If I do keep it, the only other way I can think of improving performance is to add another bathroom (becomes 3 bed/2 bath) or another bed and bath (becomes 4 bed/2 bath). However, this is pretty much doing a BRRRR now which I've never done, don't have the time and is capital intensive (plus, I'm out of town) which doesn't seem too appealing.

While I could just weather out the cashflow and bank on the appreciation over time, I feel my return on equity is poor, and that equity can be put elsewhere to be more productive.

Hi everyone

I have an investment property in the Bay area (South San Francisco specifically) which I'm currently renting out to long-term tenants. It is a 3 bed/1 bath single family home and has a sizable backyard. 

Currently it is not cash flowing, and after mortgage/taxes/insurance/maintenance, it is probably losing ~$1,300 per month (eww). Looking at Redfin's data, it is appreciating over time (probably more than $15,600/year), but probably not as fast as other highly desirable neighborhoods in the Bay.

I previously lived in this home before I moved and converted it into a rental property. I have till mid-late 2025 to sell without capital gains tax (< $500,000 couple).

I'm trying to figure out how to improve the performance of this property and have some thoughts about it, but would love to get feedback from other REIs.

Option 1

Add a ~800 sqft ADU in the backyard which I think costs ~$250/sqft (total $200,000) and I think could rent ~$2,000/month. That's ~12% Cash on Cash return which seems pretty good/decent.

My concerns are by doing this, it would reduce my rent price on the main house (most likely since they'd be sharing with other tenants on the property) and also I'm unclear whether adding an ADU would negatively affect the value of the property.

Option 2

Consider converting the property into a short/medium-term rental, specifically to travel nurses. The property is very close to 2 hospitals: Seton & Kaiser. I have always heard there's a shortage of nurses and high demand for them, so thought this could be interesting. However, I have no experience in this and would not know how much rent is projected for this setup.

Option 3

Sell and redeploy capital somewhere better.

Appreciate any feedback on this situation. Thanks in advance.

@Brad L. just to address your point about fit, that's the thing, there was no attempt to explain anything besides general information which anyone could've read on a website or a brochure, without needing to share any financial information. The only indicator of how the financial information was used, was to generate a pricing quote -- and the perception of that is depending on you have little or much you have, you pay more, or less (I could be wrong here, but that's the perception).

Hi all

Just wanted to chime in and share my experience here. Reached out to WA after hearing about them on the #569 podcast. During the application process, they'll ask you a lot about your financial situation (e.g. income, investments, 2 year tax returns) which I happily answered.

I was looking forward to my first scheduled call, hoping they would give me some idea on how they could help specific to my situation (since I gave them a lot of that information already). However, the call to be honest was very underwhelming -- the guy just mainly explained how they worked/operated and asked a bit about my background/financial goals -- there was zero information on anything pertaining to my financial situation (even though they have this information).

After the call, I was sent an email with a PDF brochure, outlining generally what they do/how they operate and a link to pay for $23,750. I had no idea what I was getting for those fees and no specific information on how they could help me (it's all general). I responded and expressed these dilemmas to the rep (I actually wanted to be sold on this) and was essentially informed I have to pay the fees first before I get any tailored information, and kept mentioning the 30 day money back guarantee (which you do not see any mention of this on the payment page or the PDF -- makes me question the legitimacy of this and the enforceability of this in the event of a dispute). It seems the purpose of them getting all your financial information beforehand is mainly to quote you the price.

I decided to withdraw from this unfortunately -- I didn't think they did a good job of explaining why their services was worth what was quoted, despite giving them the opportunity to do so.

With that said, I'm looking for a CPA who is licensed in CA and has experience in REI (preferable is a REI him/herself) - feel free to DM me :)

Thanks @Senate Eskridge for your input. We're currently refining our criteria to be more specific and narrow, or to quote @Brandon Turner - crystal clear!

Interesting re: the DSCR - what's the ratio commercial lenders typically look at? Also re: appraisal, do appraisers look at cap rate comps, or something else?

Would definitely love to connect to a real estate attorney, and ideally a REI him/herself.

Hi all

I'm new to the multifamily space and have a bunch of newbie questions to ask:

1. Looking into out of state investing and planning to partner up with someone on the commercial side (5+ doors). I believe most agents/brokers will want you to sort out your financing first, but I think lenders will want you to identify the property first - seems like a chicken/egg situation. To me, it seems more logical to sort out the financing first with a lender. If so, does anyone know/recommend lenders that can service nationwide, or specifically in TX, FL or AZ?
2. On commercial loans, my understanding is the lender will underwrite the property's financials. However, since we're planning to come up with the deposit, what criterias will lenders look for in us, besides the usual (e.g. tax returns, paystub, liquid assets, DTI)?
3. Has anyone successfully used a SBA 504 loan to purchase multi-families? If so, could you please share the process and the pros/cons of it (besides its a recourse loan)?
4. The property will most likely be held in an entity (e.g. LLC) between myself and a partner - what are some key things to incorporate in the operating agreement (not in cookie cutter entity formations)? Or does anyone have a recommended reasonably priced attorney that could help with this?
5. While we've been speaking to some brokers/agents, wanted to see if anyone had recommended brokers in TX (San Antonio, Houston, Austin, DFW), AZ (Phoenix) and FL (Tampa)?

Would greatly appreciate any advice on this. Thanks!

Hi BPs

I'm an accredited investor and somewhat new to REI. I already have an out of state rental investment under my belt, but am looking to get into the multifamily game.

I'm based in SF Bay Area but probably looking for something out of state for affordability and higher chance of cash flowing (appreciation bonus).

What I'm interested is connecting with a community (not just via BP forums) that's focused on multifamily investing, to learn about different markets and to potentially partner with brokers/agents/property managers in those local markets, as well as to learn in general.

Are there any strong and reputable meetups locally or virtual that you would recommend checking out? Thanks.