All Forum Posts by: David Gonzalez

Congratulations! How did you find the deal?

I agree with @Shayna Nadeau. The San Fernando Valley has lots of potential. As a Real Estate Agent/Property Manager in Ventura County I have seen (from a distance) the SFV change. With the new construction in the Warner Center, new/expanded metro lines and the rehabilitation of the LA river lots of interesting things are happening with the SFV. As my generation ages and start their family (ie Millennials) they will want a more suburban lifestyle which you will find in spades in the SFV. You will need to talk to a local agent about the specific neighborhoods and areas but on a Macro level the SFV has upside. If Amazon goes to LA for the new HQ it will more than likely be placed in the old Rocketdyne property near Canoga Park in the SFV.

In California I feel that a lot of people are waiting for the "next crash". I have heard from buyers and sellers that the reason they aren't buying/selling is that they are waiting for prices to drop. Which I feel won't happen. Due to time I am not going to list all the reasons I feel Real Estate is cheap but I feel that every single property you buy today will be profitable/valuable in 15+ years. The Real Estate Market today is comparable to the stock market for tech stocks in 2008. After the tech market busted in 2000 people were waiting for the next "tech bust" which never came. The best deals were to be had immediately after the bust but the second best deals were to be had around 2008 (before and after the market crash). If you had bought Google, Amazon and Apple at the market peak back in 2008 (and held it) you would have made a killing today. I feel that the last crash was a once in a generation event. The next crash will likely happen in car lending and developing country stocks and not housing.

The next time we see a sizeable price drop 1 of 3 things will likely occur:

1) Prices will drop but they will be higher then they currently are.

2) Price will drop and investors (big and small) will flood the market and buy up the excess inventory quickly stabilizing the market.

3) Interest rates will spike caused by either an increase in inflation and/or defaults from over leveraged developed economies. This will lead to prices dropping in the short term and housing will become even  more unaffordable in the mid to long term  since higher interest rates will affect the construction sector the most.

Over all I feel that if you buy smart (or even buy dumb but can afford the carrying cost) you will make a lot of money if you hold the property. Ten to fifteen years from today we will see that todays Real Estate prices are actually under priced and we will all be kicking our selves that we didn't buy enough Real Estate today.

I would invest in Commercial Real Estate (specifically Multifamily) and would invest in the Midwest or South. Once the Portfolio was stable I would take the free CF to either buy more properties or invest in paper assets that are riskier such as distressed debt or become a hard money lender.

Again not a lawyer or CPA. The rule of thumb is to incorporate where you make the money. So if you buy properties in Nevada you should incorporate there. Of course you can always incorporate in a corporate friendly state (Wyoming, Delaware, Nevada) and do business in any other state but it adds to the cost and complexity of maintaining the corporation. For example you can use your Nevada corporation in California but you would have to register with the state and pay corporate taxes. With the new tax changes talk to a CPA about setting up a C Corp. You might save money. Also find a CPA that knows Real Estate.

NPV is a powerful tool and is a great way to compare investments. The problem I have is taking the time to build the model and determining the proper discount rate (this is a big one and it's more complicated then it's made out to be). For wholesaling and Flipping I would never use NPV since I would be in and out quickly. Internal Rate of Return would be the calculation that would be the more appropriate to use (especially for flipping) but even then I would only use it to show off what I could do and not use it to evaluate deals and where to invest. BRRRR you are bootstraping. What is important is just doing it and turing over the profits. For buy and hold NPV would only be useful if you have lots of money to play with and you are looking to optimize your portfolio. If you are starting out your time and money is better spent finding the deals or improving the property.

It might not make sense. I have worked with buyers who have to pay a higher interest rate for a down payment assistance product and they couldn't qualify because of the higher monthly rates. Check to see if they have the credit score and can make the additional payment. Also see if they have some one who can gift them the money or another mortgage insurance product that may be cheaper and/or expire after a number of years/equity build up compared to FHA.

Not a deal breaker unless I plan on doing major work to the home. Would get a quote from a remediation company. might be cheaper then you think.

The right question is not whether it is easy to do your taxes by your self or not. The question should be how do I become even more productive and increase my wealth. The tax code is online and uncle Sam does a great job of providing you with instructions on how to fill out the forms and companies like intuit have tax software you can use. Though you can save some money you are missing out on a CPA experience, knowledge and infrastructure to help you with your taxes. Find the right CPA and every thing else will take care of itself.

What I have realized observing others and my self is that when people don't do what they need to do despite having all the resources they have 1 of 3 things really holding them back:

1) Don't have a big enough why

2) Haven't defined their goal and created an action plan to implement it

3) Have unresolved fears and confidence issues

Though I think having a big enough why will produce the energy to resolve most issues obstructing our path to success I believe working on #2 & #3 will yield the biggest benefits for most people. Every body I know has a big goal and dream. They just haven't gotten around to making their dream a reality because of  #2 & #3.

What I suggest is that you start with #3 (unresolved fears). Sit down and have an honest conversation about your fears. Be sure to list all of your fears no matter how small or petty they appear. Next to each fear write what you would do if it came to fruition. Its amazing the stories we make about our fears. With your fears identified look for simple things you can do to break them down. So if you fear the potential financial burdens of owning Real Estate start by looking at homes, valuing them and coming up with cost estimates. If you fear dealing with tenants moonlight as an assistant Property Manager or temp as a Leasing Consultant. Do this for each fear.

For #2 (undefined goals) I would suggest you create a SMART Goal, create an action plan to get to your goals and brainstorm ways your goals will be sabotaged (from you, people you know, resources you don't have etc.). With each sabotaged goal item come up with creative solutions to over come them.

Some resources I recommend: 

For a great Lifehacker article about ways we sabotage our selves (also check site for other great thoughts):  

https://lifehacker.com/5928698/how-our-brains-stop...

12 Week Year (a book with great content on the creation of action plan but a bit wordy):

https://www.amazon.com/12-Week-Year-Others-Months/...

Make your Shift (Great book about creating goals and breaking them down into manageable pieces):

https://www.amazon.com/Make-SHIFT-Powerful-Moves-W...

I hope you have a successful 2018!