All Forum Posts by: Enrique Huerta

https://www.trulia.com/real_estate/Hemet-Californi...

For market data at a glance, I like Trulia. 

I echo @Jo-Ann Lapin's opinion. It depends on hold period and business plan.

Hi @David Flores ,

You'll get a variety of opinions regarding whether it is a "good time to buy." So, you plan on buying a 4-plex to live in and rent out the other units? Or simply as an investment property where you will NOT live there?

Good time to buy depends on your plan. How long will you own the property? What kind of financing are you using? 

Hemet is an area with a lower median HHI, but it has seen growth over the last few decades. Pricing is also lower overall due to location, lack of higher paying jobs, etc. I personally was interested in a 200-unit deal that traded there a few years ago. It's a working-class area and I would encourage you to visit the city, drive around to see the neighborhoods and do a deep dive into the demographics so you get an idea of how the city is. A lot of people wouldn't invest there, I personally would if it was the right deal. From the last deal I saw, many people worked locally at factories, retail stores, etc. and some higher paid tenants were commuting to the Temecula/Murrieta area and even down to San Diego.

The market is anticipated to decline somewhat over the next 2-3 years, but no one knows for sure. Timing depends on your business plan, financing, and long-term goals.

Elaborate on those and hopefully I can provide more color to the answer.

@Stephen Brown ,

Typically, the PSA will spell out the most critical dates and then it is up to you to put them on your calendar or use an internal tracking system.

Typically Timeline from my experience:

Signed PSA = Open Escrow

Initial Deposit = Due within 3-5 Business Days after Escrow Opens (subject to negotiation)

Seller to delivery DD Items = Due within 5 Business Days after Escrow Opens

Preliminary Title Report = Due within 5 Business Days after Escrow Opens and then you can negotiate how many days you have to object to any findings.

Due Diligence = Due within 30 Days; Can be negotiable

2nd Deposit Due = Upon removing DD Contingency

Appraisal = 45 Days after Escrow opens

Loan = 60 Days after Escrow Opens

Close Escrow = 60 Days

Extensions = To be exercised 15-30 days in advance of initial closing date (to be negotiated)

I recommend you create a calendar, or use Folio as a Gmail add-in to keep track of your timelines.

The main issue is that each deal has it's own timeline and you must be flexible in negotiations. I've seen deals where the DD is 14 Days or less and closing occurs 45 days thereafter or less.

@Diana Villalon

That's a tight deal. I'll answer some of your transactional questions as others have already provided feedback on the deal's merit, or lack thereof, as an investment.

So, i know the numbers don't really make a lot of sense, it's CA... :( but I"m wondering if it's worth putting in an offer to get my feet wet. I am low balling this one, as they are asking for almost 60k more than what I plan on offering.

Only you can determine if it's worth putting in an offer. I have clients that have purchased properties like this that barely break even or are negative CF. They do this for tax purposes, or because they don't care about cash flow. They believe in the long-term appreciation of CA and will buy, hold, and sell in the future for a profit (although it is never guaranteed).

Since this is an MLS deal, is it industry standard to negotiate the #'s with the seller to show him the numbers if it's on the MLS? Does anyone know? or would the agent just put in the offer and it comes back rejected? What do I do next?

In general, it doesn't matter whether it is MLS or non-MLS. You can provide the seller with comparable sales in the neighborhood. Don't share your particular financial calculations, but just the neighborhood comps (as single-family homes are valued based on comparable sales). A recent example is a property was listed for $675,000. The most recent comps in the last 90 days were going for $595,000. The seller was priced at comps from 6 months ago (which no longer apply in our current shifting market in the OC) so I negotiated the offer until $595,000 was accepted.

Pick a number. Provide the data that backs up your number, and stay strong on your "ceiling." Don't overpay just to get a deal unless you can justify the reasons for overpaying. AKA you know something that other's don't.

If the agent just puts in an offer and it gets rejected, you can negotiate further and "do the dance." If the seller doesn't respond, there's no interest. If there's no interest, they're not a real seller assuming your offer is fair according to comparable sales.

@Edmund Campbell , others have already mentioned these approaches but they work best: Cultivating relationships with brokers via Loopnet, Google searches, CoStar searches, etc. Looking at the MLS, FSBOs, etc. And Cold-calling, emailing, mailing owners directly.

There's no secret sauce. It takes calls, conversations, meetings, and analysis with providing feedback to cultivate the relationship.

If you find a solid deal in Cincinnati, we would be interested in partnering.

 Depends on the location. If you need 20-30% down, then that's all you need to save up + CapX and Closing Costs.

Share your criteria in a general fashion. If you said 10% cap, why did you say that?

Do your homework and research market cap rates in a region. In reality, you want to be general as others have mentioned and say I'm looking for 50-100 Units, up to $5M, with value-add potential. Something like that.

With that, you'll get deals sent to you and you can underwrite them to start getting a feel for potential values, etc.

@Linda Weygant , previewing property is one of the best ways to become familiar with the market place as it pertains to inventory, location, nuances of neighborhoods, floor plans, etc.

I'd say maybe 1/50 is actually intent on previewing for their buyer, with the majority wanting to solicit a listing once they meet you in person.

When I brokered real estate, I previewed 5 homes a day. And I didn't keep track of 123 Main St. vs. 125 Main St per se, but when I met a buyer or went to a listing appointment, I had the knowledge to say. "Oh, I just saw 123 Main St. and it's exactly what you're looking for (to Buyer)," or "125 Main St. is similar to your home, so we need to price at that level (to the seller)."

It is my strong opinion that GREAT agents preview property. This assumes the property is on MLS. The chances of an agent looking to preview a FSBO just for inventory knowlege is slim. There's so much out there to see so they're likely looking to solicit a listing. I could be wrong, but up to you as to what you want to do with your time and tenant.

If the agent had a real buyer, he'd describe the buyer, qualifications, and motivation as to why he wants to see your specific.

It was only a handful of times when I had a real buyer for a FSBO. I called the seller, clearly stated I didn't want the listing, but that I had buyer ABC, approved for $XYZ, they've seen everything on market and I'd like to preview the home on their behalf. OR, bring the buyer to the showing if I was familiar with the tract.

@Account Closed , Unless you have your own track record that you can point to, I don't see another way around it in order to raise capital. One way is to secure commitments from family and friends who are taking a risk on you and your business savvy. If, however, these are not family/friends and more "distant" relationships then they'll will likely want to see more of your history in this business.

Why are you looking for a way around it? Do you want to make more money? Is it ego, in that you want the recognition? It shouldn't be about pride, or proving that you can do such and such. The most important thing is working as a team for a common target. Everyone will have their place in a team and be better at one thing over another. This isn't to say that you cannot do the things you want to do, such as secure new investor relationships, but the outcome is what matters, not the process. And if you really want to do that for the right reasons, then make sure you learn how to. There's plenty of books, trainings, and even other people who have experience raising capital that can help point you in the right direction. It's a learnable skill like anything else and I respect anyone that can do it well!

Best of luck!

@Anthony Ballard ,

As @Bjorn Ahlblad said, it's anytime. Whenever you are ready. 

You obviously are ready now since the idea crossed your mind. So follow Bjorn's advice and get educated. David Lindhal, Joe Fairless, Frank Galinelli, Michael Blank, and many others have written about the ins and outs of multifamily. Use your market knowledge and network to evolve. 

The only thing you have to change is your focus from duplexes to now looking at sourcing and analyzing the smaller apartment properties. PM me or reply here if you have more specific questions and I am happy to help point you in the right direction.