All Forum Posts by: Michael Galloway

Russ McKelvey, is it a total of 4 units including the Victorian? or is there 1 victorian and 3 units?

Issues to keep aware of

(1) zoning, double check to see if there is a grandfather clause. All it takes is one bad tenant and you could have a zoning issue. This could lead to a unit or two being shut down by the city. Ask me how i i know ;) And yes they can make you tear a unit or two down. If they are nice, they will let you keep it as a storage unit. (i have had that done as well)

2) Older buildings have a lot more rehab, and a lot more upkeep.

3) This might be more of a flip for me, than a buy and hold. Depends on rehab and ARV.(numbers dont work for me as a hold- see 50 percent rule of thumb and 2% rule of thumb. If these buy and hold rules are close, i apologize. I looked at the rent roll above and it comes to a total of 2325? is this correct?

4)what is the gas and water situation? Seperate meters? tenant or landlord pays?

5) How are the foundations? How are the roofs?

Arron Sweeney, you have come to the right place. Welcome.

I have to disagree with Ali on her comment "but not in CA. No cash flow."as i buy cash flow positive properties all the time in Contra Costa County, California. Since you are local, let me know if i can help you in any way. (as a mentor)

BE A JUDGE OF VALUE!

This is the root of the issue: The people that cannot discern value, pay ridiculous amounts of money. Those that can... would never pay this price.

These non discerning "investors" are the same people who buy marginal "deals" and over rehab, under budget, and never make a dime. They are charmed by the vices of the greedy men, i mean gurus. (Can't say I blame the gurus though. It's getting a lot harder to find a deal these days, than a dummy.)
Sure they tout the token "investors" that fall into a deal or two. Even blind monkey's find bananas.

These hopeful "investors" spend all their money on a dream. (No discernment.) There should probably be more restrictions/qualifications put on these type of "investors" than trust deed investors by SB 978 (but that's another discussion)

This is exactly the reason these "investors"/people try this type of business and fail. They think you can just buy success or a blue print for success. NO SECRETS can be bought that can replace hard work.

My point is that if you only have $25,000 to your name. It should be illegal for you to put it into a Coach/Mentor's pocket. Focus on putting it into a transaction instead.

Finally, If you spend more time here on BP and less on the GURU hype, most of these "secrets" of real estate investing will reveal themselves for free.

PS there are no secrets, shhhh don't tell just for BP members only;)

Adrian Mata, welcome from california. You are in the right place. Stick to 2 to 4 units to start. Looking forward to hearing about your success.

Jordan Sizelove, i think i can help, pm me with your contact information.

Frank O. Congratulations! Looking forward to hearing about your next success as well.

Miho Hirozawa, Brandon Turner, Karen Margrave are you guys playing "hi and seek" without me? i want to play...
just wanted to say welcome from another part of California.

Ryan, welcome to BP. like the picture.

Welcome to BP Bryan.

Josh Rowley, all the comments above are good. I thought i might throw in my 2 cents as well.

Several years ago my team used to sell properties to several funds in non competing areas here in the SF Bay Area. (until they figured they would just hire there own people) Here is what i see happening...

1) Typical funds need to put a minimum of 10million to work, otherwise it is just too small of a business for them to be in. There deal flow is currently unsustainable on local levels and on many different fronts. (tapes, trustee auctions, mls,etc) In addition they have a burn rate on the money that is borrowed. If there is not enough deals for the money they have to give the money back.
Not enough deals = not enough interest from funds.

2)I'm not hearing new money being raised for this type of investing.

I try to keep my ears wide open on what funds and family home offices are investing in. Here is what i am hearing about sfr flipping/buy and hold funds.. "the sexiness of this investment is wearing off." "too many moving parts" " No new money is flowing in at this time". "When x fund realizes that he is just a property manager, he will know why his return is what it is."

This is a good sign. The beginning of the end of these type of funds.

3) Investing is on so many levels a micro managed business that is hard for large funds to see. (too many moving parts) They are after returns, although it looks good on paper, they will soon find out what the management side really looks like. Its funny how quick returns diminish when your disposition is 10% in realtor fees, closing costs, and fix ups. They can not ascertain this on paper, but they realistically will very soon.

These funds are a one trick pony, (buy and hold at the median house prices typical 3/2s) The typical exit strategy is 5 to 7 years. What happens when these funds are going to exit in several years?.. Stay tuned we are in for a wild ride when Wall Street is ready to let this pony out to pasture.

PS
I will also second what others have stated above. "go where they are not". No fund is doing SUB2, No fund knows your stomping ground like you do, has the relationships like you do or can. In addition, if you can, play at the levels they cant.