All Forum Posts by: DJ Cespedes

Hey John, 

I'm out in the Bay Area (Oakland). Today I have been doing my research on options for investing in multifamily properties outside of the U.S. (specifically in Latin American countries). The goal is to essentially have a vacation property that is cash flowing or at least paying for itself. I am also focusing on areas that are likely to appreciate over time. 

DJ 

Hey All, 

I am currently still in the process of finding a multifamily unit in the Bay Area as my first investment property. I have been putting in multiple offers, but so far nothing has come up. I am still plugging away and I am optimistic that something will stick. In the meantime, I get the benefit of being able to save more and expand my budget, which opens up more options. 

That said, in addition to purchasing a primary residence here in the Bay Area, I have also been exploring the idea of purchasing an additional investment property outside of the U.S.. Specifically, I have had my eye on countries in Latin America (ex: Nicaragua, Ecuador, Costa Rica, Panama, Mexico), which combine low real estate costs with reasonable rents (which makes for good cap rates) and a low cost of living. I was surprised to see how low you could purchase a property with an ocean view in these countries for. 

Taking it a step further, I thought it would be a good idea to consider multifamily properties where I could rent out the other unit(s) to cover the mortgage (or even better produce positive cash flow) while reserving one unit for my vacation home. 

I know there are several potential obstacles to consider when thinking of such an investment, but I wanted to get the BP community's thoughts on this strategy as well as some insight/advice from those  who are currently investing abroad or considering doing so. 

What countries would you recommend and why? 

Is it possible to get a mortgage in these countries (versus paying the full cost upfront)? 

What barriers have you experienced when investing abroad and how would you recommend navigating these obstacles? 

Thanks! 

DJ 

Hi Min,

I just took a quick look at your post, and while I am unfamiliar with LA and rental costs there, given that it is close proximity to USC, I think the price for rooms seems reasonable, but someone else here can confirm.

Regarding whether it is a good deal, assuming the numbers are accurate, I think it is an excellent deal, especially for a duplex! Your mortgage is essentially covered while you live there. Also, if and when you decide to move on and rent out the other 2bdrm unit, that will be pure cash flow! 

If everything checks out and you can get it with FHA I say go for it! Good luck!

DJ

Thanks everyone! I attended the Tax meetup last week in San Leandro and it was great! I even won a $100 home depot gift card! Going to hold on to that until I purchase my first investment property! 

Any Bay Area meetups coming up in the near future? Would love to meet some of my local peers and talk RE! 

DJ

Thanks @Account Closed.

I spoke with my lender and it appears that they may be able to finance the home with FHA, but said that once under contract, it is possible that other issues may arise during appraisal, inspection, etc., that cant be known at this time. One possibility that he mentioned was that the appraiser may compare it to comps for modular homes rather than that for normal multi family units. If that happens, the home may appraise for much lower than 720k. Also, he mentioned that if I were to get the property, the resale value may be lower as well should I decide to sell it. The same appraisal issue could also arise on the back end if/when I decide to sell.

That said, assuming that I am able to get financing, would you recommend that I move forward on it. Is it a wise investment for the first time investor? It is a nice home and generates decent income (didnt even realize it was modular until I read the disclosures), but maybe a modular home is not the best move for a first time investment property? The price also appears to be pretty high for a modular home. Its right up there with the comps for normal "stick built" duplexes. 

DJ 

Hi BP Fam, 

I live in Oakland, CA and I am currently in the process of placing offers on my first investment property, which will be an owner-occupied multifamily. I am offering with FHA 3.5 percent down.

I am considering making an offer on a duplex in Oakland (Fruitvale Area). It is built after 1989 (no rent control), with an already vacant unit for me to live in. Also, other property is occupied and generating income to cover about 60% of the mortgage on its own. After speaking with the agent, reviewing comps, etc., a competitive offer for this home would be around 720k. 

However, upon reviewing the disclosures this evening, I realized that this is a manufactured home.  

I would love to hear you all's thoughts on the above as it pertains to manufactured homes and whether you find this to be a good investment. Thanks! 

DJ

@Calvin Kwan you mentioned that a way to get around Measure Y is to live in the property for 2 years and then petition to raise the rent through RAP. Does this also apply to Multi-Family Units? And after two years can one petition to raise the rent to market? Just curious how this works and if this is a backdoor way to decontrol 2-3 plexes in light of Measure Y. Thanks! 

Thanks for the tips and advice everyone! Much appreciated! In terms of location in Oakland, any recommendations on what neighborhoods/areas to focus on? It seems like my chances are slim in West Oakland given my budget and cash flow goals, but I have even lost out on bids in Fruitvale and East Oakland. Im trying to "look ahead" and focus on lower priced areas that may not be the most desirable now, but will be as gentrification spreads through Oakland. That said, I want to be careful not to end up buying in a bad pocket that will not appreciate. 

@Amit M. Thanks man! I plan to take a drive/walk around Richmond this week since im finding better deals out there and Richmond is appreciating like crazy, but man that 80 is a killer! If possible, id like to stick to Oakland or even maybe San Leandro. Im sticking to this plan for sure! Would love to discuss how you went about this and how it is worked for you.