All Forum Posts by: Dan H.

best state to invest for buy n hold REI is California. Mathematical fact. I find it strange when people who live in So Cal choose to invest out of state for the lower entry point or better cash flow.

If I was young with minimal assets in San Diego I would look to house hack a duplex in working class area of San Diego ideally with an FHA low down loan. I see some duplexes in my area of interest in the mid $400s that will likely sell in the low $400s. I realize this is a lot compared to Indiana but let's assume financed with fha loan at 5% down. So ~$25k entry cost including closing costs. Each of the last 5 years in San Diego you would have at least doubled your money invested in the first year. Add in principle pay down and any cash flow from tenant paying ideally a substantial portion of the mortgage. I have one duplex I purchased in Escondido that if I house hacked it I could have lived free of rent in a detached 4/2 with a yard.

Let's argue appreciation is not guaranteed and is like placing a wager.  I could make the point that cash flowing places are not guaranteed as the properties can depreciate or rent can depreciate.  My wife's family is from n Dakota and there are fairly nice homes abandoned there.  The rents likely do not cover the cap expenses.  But I will make a different case.  Prices do cycle and you must be able to withstand a period of depreciation but historically So Cal coastal prices have performed better than appreciation for any longer term duration.  It is not too many wagers that can be made were up to at least the time of the wager you would have never lost the wager. Odds are pretty good, if you do not see something drastically different about the conditions, that you would win the wager. 

So consider what you know about the local RE and research appreciation history (property and rent appreciation- last few years rents have gone up almost 10% a year which equates to ~$100/month per year on small cheap rental units (more for larger units)).  Think about advantages provided by prop 13.  Then make a fully educated decision.

Good luck  

@Ken Teng the problem with your view versus @kevin Fox view is that the historical numbers show Kevin to be correct. Use any duration you desire and compare the return of SAN Diego financed buy n hold versus any location in us that meets 1% rule and it is not even close. If I financed virtually any SAN Diego property 4 years ago I made far over 100% profit, likely over 200% profit and possibly over 300% property. I have a property I purchase in 2012 with $60k down that has made well over $200k in appreciation and over $50k in cash flow after subtracting $600/month for cap expense and 10% for maintenance/vacancy. Look up SAN Diego appreciation for any duration you desire and then tell me any location in us that met 1% rule that had better ROI for financed buy n hold property than SAN Diego. You will not find any 1% area anywhere in us that has had better ROI than San Diego financed buy n hold (not opinion, verifiable fact: I challenge you to find any place in us for any duration more than 3 years and less than 50 years that has better ROI for financed buy n hold).

Good luck. 

my family has a vacation rental (duplex) 1 block from beach in SAN Diego. It had a vacation rental on the beach in gulf shores Alabama.  

For the SAN Diego unit it barely does better than it would as a long term rental due to pm fees and vacancy.  A block from ocean is pretty close but the ocean front rent faster even though they cost more.  So there is a big difference in vacation desirability between close to the beach and beach front. 

The gulf shores units (duplex) we sold for a combination of reasons including 2 hurricanes, outrageous insurance costs, property tax increase that was going up faster than the rents. It was an awesome property literally on the beach, walk out the front door on to the sand. But it was a pain and no longer profitable.  The insurance doubled almost every year that we owned the unit but rents barely moved. When hurricane repairs were needed the out of state owners were the lowest priority. 

So a good vacation rental will be costly, high quality, great location unit that hopefully is safe from natural disasters. 

Good luck

I would move to Groton into a month to month rental.  You can look for a good investment property and if you find one that the numbers work as a long term buy n hold including management fees then purchase it and do your house hack until time to depart (6 to 12 months).  If you do not find it then you are only renting 6-12 months.

It would be a fairly rare case were it would be worth buying and then selling in as short term as 6 to 12 months.  There is the cost of loans (possible points, inspections, mortgage broker fee, etc), the cost of selling (mostly realtor fee).  You would likely need ~8% appreciation to break even.  I will leave room for an exception if you find a property were you believe you can get significant force appreciation (convert a 2 BR to 3 BR, make a duplex into a triplex, appreciation for a rehab, etc.).  This would basically be a flip that you would be living in while performing the work to flip.

Good luck

I am not a big fan of most of those guru seminars.  They do a decent job motivating which helps them sell subsequent seminars.  I think the information that the provide is easily available on the internet.  You could probably ask any question on this site and get someone that knows what they are talking about to answer (but you may have to filter out those that do not know what they are talking about).

There is a monthly Meet up at a current REI project put on by some San Diego BP members (@Justin R., @Parker Cox, @Kevin Fox, @Tim G.).  This is not a seminar but more an open house with a exchange of information.  Especially if you stay to the end of the meet up there is a lot of chance to talk with the investor and get your questions answered with a smaller group than are present earlier in the Meet up when there may be 30 or 40 people there.

The Meetups have ranged from flips of SFH, to flip of a SFR that will be sold as a SFR but the buyer will be renting it as a duplex (included tricks of the trade to work around the SFR zoning), to a quad that is a buy n hold where each unit can use some rehab, to a purchase of empty lot and building 3 new SFRs. In summary they have ranged a lot of the REI scenarios and I learned something at almost all of them even the building of 3 new units which is above my comfort zone (I learned it is ~$100K to break dirt on a new SFR which places a bottom value on any SFR).

There has been no selling. I have found them to be motivating, a chance to network, and learn something.

I recommend you come to at least one. It will be worth the time just for the chance to network with other San Diego RE investors.

I have not seen the posting for the next one yet. I have one of my search words be "San Diego". It usually (but not always) catches the BP Meet up open house post.

Good luck

Historically it would be difficult to go wrong with financed buy n hold San Diego RE. Be sure you can weather any short term depreciation as the only people to have lost money on San Diego financed buy n hold RE are those that sold the property when it depreciated. 

Good luck

As @Matt R. Indicated San Diego is a great place to invest as is Orange County. For financed buy n hold So Cal has better ROI than virtually anywhere else for virtually any duration between 1 year and at least 50 years. Granted the ROI is based on property and rent appreciation and not initial cash flow. I purchase a property 3 years ago that was cash neutral at purchase using my cap expense numbers (most people think are high) that now cash flows $800/month. People think appreciation is not guaranteed but in San Diego in the long term it has always gone up. 1, 3, 5, 10, 20, 30, 40, 50 years makes no difference the properties have appreciated (this is not to imply that there are not some short periods of depreciation - long term it appreciates). Note property appreciation and rent appreciation typically go up together. In past 3 years monthly rents have increased almost $100/year.

Add in prop 13 protection. 

There are few better places to invest for financed buy n hold than San Diego. None of those better cash flow locations have anywhere near the ROI of financed buy n hold San Diego REI. It's a verifiable fact. You could leave rent appreciation out of the equation and it would be true. Look up San Diego's RE appreciation and determine what sort of positive cash flow would be necessary to match it if you were putting down 20% or 25% for the properties. In either 2013 or 2014 (I do not remember which year but one of those years San Diego RE appreciated over 20%) you would have had 100% ROI for the year just on property appreciation (not including the rental appreciation).

Good luck with your better cash flowing locations. 

I enjoy my real estate pursuits more than my 9 to 5 job and have had enough success in the real estate to quit my 9-5 job yet I have not.  For me it is probably that I like the safety net but I will add the job satisfaction with my job has varied from extremely satisfying to not at all satisfying and currently is someone in the middle (closer to not satisfying).   So I may be holding out hope that my next position is extremely satisfying.

If you never found the job satisfying why not simply switch jobs to something other real estate, something close to your current job?  Real estate investing can be difficult, is best done with some capital and safety nets especially when starting.  So my suggestion is you find a 9-5 job that provides more satisfaction than your current job even pays less.  Then while having the safety net of the 9-5 job pursue your Real estate ambitions.  If you are successful in a few years you can quit the 9-5 job.  If you are not successful at least you have a safety net that does not suck the life out of you.

Good luck

San Diego RE auctions are very competitive. I have never purchased at one as the price typically seems too high for the risk. Being patient, I can usually find something that is a better value: either a good value MLS or possibly off market property.

I go to a few BP open houses in San Diego and know a few investors. It seems like MLS is the top source of San Diego RE investors whether flip or buy n hold. Just have to be patient for the property with profit potential and act fast when one is available. Also we are approaching what is typically the best time of year for purchasing. In fact we are looking at multiple properties currently when we have had 0 good values in our market niche since spring time.

Good luck

My tax man (EA,  Esquire - not a CPA) only discloses his hourly rate which is very high but he is very good (he is the named partner of the firm).  He does not charge for small items like quick answers to questions.  He also typically gives us a break for using quite a few of his hours in one session.  For most items I do not know what the charge will be prior to getting the bill but I always expect the bill to be significant.

example bill may be: 5 hours * (his hourly rate) = $x - $150 discount = $y.

He makes a very good living but he is very good.  Even though his hourly rate is very high (makes the hourly rate my company charges for y time that I think is very high look not so high) I am not looking elsewhere.

In your case you seem to not be happy with the deductions being found, are getting no rate disclosure (at least I know the hourly rate and know it is high), and do not think much of the work being performed.  I think this answers your question.

I do want to point out that sometimes you get what you pay for or not all bargains are bargains.  I highly suspect that my tax man's rate is in the upper 5% but I also think his skill is likely in the upper 5%.  I think he typically saves me than he costs.