All Forum Posts by: Harris L.

Just curious if there are any regulations that wouldn't allow an reo to be turned into a seller financed deal by the same bank if you were to buy the property from them?

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Originally posted by @Amit M.:

Originally posted by @Account Closed:

http://recenter.tamu.edu/pdf/1794.pdf

@Amit M.

Read the link above. Fortunately smoking grass will likely be legalized soon in your neck of the woods :-)

This does not support your assertion that Dallas has averaged 5% appreciation over the last 20 years. Report stops at 2004. Fail.

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Max- it absolutely maxes sense to look at 2-4 (value added is best) in the Bay Area as an investment. Plus given your job and down payment, you can either absorb a small negative or put a bit more done to compensate. You'd probably have a hard time getting something at a decent price in SF proper (unless you get lucky), but Daly city, Oakland, etc . Would be good markets to plant seeds in. Depending on market cycle and overall economy, their values may fluctuate a bit more, but 5-10 years from now you'll very likely be cash flowing nicely and have a nice appreciation gain. Then you borrow against that gain (and/or the gain in your primary) and buy again. That's what I did. Worked like a charm :)

i like your suggestion here...

by the way to everyone else... thanks for your thoughts i learned a lot from both sides... i have been thinking about these two options myself... but i will continue to keep reading for a few more weeks before my next move...

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Originally posted by @Jay Hinrichs:

Originally posted by @Alex Vidal:

Originally posted by @Account Closed:

@Max Maloney

I generate 12%+ Cash on Cash and 20%+ Internal Rates of Return on every out-of-state investment. Investing locally means you will likely loose money for several years, before you're able to raise rents sufficiently to cash flow.

My belief is that investing for appreciation is speculation. You cannot predict appreciation.

Jon - You do realize that IRR calculations/forecasts are heavily weighted to the exit price? Therefore you're blatantly contradicting yourself saying that you get 20%+ IRRs, but you think investing appreciation is speculation and you can't predict appreciation.

I find it very hard to believe that you can find a stabilized out of state property (like one Max would hypothetically be investing in) that can generate a 20%+ IRR. The only way you're going to get to a 20%+ IRR, is through value add short term investing or unrealistic assumptions. Any one can throw out claims like you have above, but I'd be very interested to see your financial models and assumptions to see how realistic they really are.

Additionally, you need to realize that no matter how high prices currently are in the Bay Area, they have only just now reached pre-recession levels. There's plenty of room for the Bay Area to continue this upward trend because of land scarcity, much more difficult lending practices than 2005, job growth, income growth, and pent-up demand from the Millennial generation. Many out of state markets have had a huge run up in recent years and have now greatly surpassed their pre-recession levels and that throws up a big red flag for me.

Additionally, there are plenty of properties locally that can cash flow day 1. I purchased an A+ located $1M SFR this year, that generates a 9% cash-on-cash return in the East Bay. Real estate is an industry built upon inefficiency, all it takes is a little digging and work to find a truly good deal.

Over the past 20 years (which includes 10 years of the worst market in recent history), SF home prices have increased 3.5x and SJ homes have increased 4x. Rather than simply saying appreciation is speculation, I challenge you to show me any market in the US that has experienced appreciation anywhere close to that. Additionally, although there's no rental data going back that far in history, I also guarantee that rents have experienced similar (or quite possibly more) exponential growth.

Are you telling me that you'd rather buy something turnkey in the Midwest that will most likely increase in price 2x over the next 30 years and maybe see rents increase 2x, rather than property in the Bay Area that will not only make you a multi-millionaire in 30 years or sooner when the loan's fully paid off, but will also be spitting off more rental cash flow than you know what to do with? Also what do you think is going to happen when turnkey investors eventually start exiting the popular out of state markets en masse?

The majority of out of state investing is shortsighted and built upon unrealistic assumptions and inflated numbers. Invest in solid property that pencils out, in a market with strong fundamentals, lock a loan in for 30 years and you'll kill it in the long run.

Excellent Post... what he said !!! I made 2 million in tax free dollars just owning home sin the bay area over the last 25 years. show me anyone in any other quote un quote cash flow market that did THA T LOL

excellent post.. i agree with this too.. i purchased 3 properties just few years ago here in the bay area... 2 in 2011 and 1 in 2012 all cash and my the equity for all 3 just doubled... probably near $1m equity. partially i think my mistake was i didnt leverage the bank.. i probably would have been able to purchase a lot more properties.. but im very a conservative investor and a complete newbie + im self employed and my income dropped significantly.

anyways... all properties bring in positve cashflow, rents have increased and ready for harvest.. if i need down payments that is...

also, ive been researching heavily the past few weeks... and i think there are some few good deals in the east bay right now...(according to my own opinion of whats good though) if you have the money to down...

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Before coming to BP I bought 3 condos with HOAs.. and I'm realizing now why many people don't like properties with HOA...

I have a question related to this.. one of HOAs have been increasing...started off at $278-4 years ago.. and it's now at $325. about $12 per year average. Not horrible but would like to plan ahead and explore my best options. There's always a chance that this will increase faster... and I'm not sure if I should wait before I do something about it...because if I wait the hoa fees might be too high too hard to sell...

I've been thinking about what to do next... I devised up a few options.. please let me know what you think and if you have other ideas...

Here's Details of the condo with increasing HOA fees.

1. Two comparable condo in the area sold for $310k and $302k in the past 2 months..

2. I got it for about $118k.

3. I'm at about 9.+% cap rate - around $900 / month positive cashflow.

4. rent was $1395 in 2012 and then now at $1460 - planning an increase this january by probably 5-10%, lower if 1 year lease is signed.

5. comparable rent in the area for condos of the same size is at about $1800-$2000, so I know I have some room to increase.

Options

1. Don't sell since the cap rate is still good and my main purpose is to get good cashflow, just increase the rent consistently to at least stay with the market increase.

2. do a 1031 swap with a SFR or duplex in a slightly different area...after some research.. I can possibly put in additional capital of $15k-100k there abouts to increase my monthly positive cashflow to $1500-$1800 or so per month.

Considerations for option 2:

a. tax will be higher

b. hoa will be gone

c. estimated monthly expenses will be almost identical give or take 10%

d. there's the commission for the sale and for the buy.

Other options/ideas?

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I realized after reading a few more posts that my question doesn't belong here.. I'll go ahead and repost my question in the right forum/section.

thanks.

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Hi guys,

I'm a new member of BP.. have been investing for the past 4 years..but just recently discovered BP... my goal is to get to $10k per month cashflow... so my wife can completely quit her job if she chooses to...I'm currently about 30% there.

anyways.. here's my intro as well as a long question...sorry for the long post.. here goes...

I'm a programmer by trade but did ok in the past 10 years with online marketing...ie managing adwords for small businesses... anyways and I'm currently using what I've made in those 10 years as capital for real estate investments.

I do have a question.. I have 3 condos so all have HOAs and one of them have been increasing...started off at $278-4 years ago.. and it's now at $325. about $12 per year average. Not horrible but would like to plan ahead. There's always a chance that this will increase faster... and I'm not sure if I should wait before I doing something about it...because if I wait the hoa fees might be too high too hard to sell...

I've been thinking about what to do next... I devised up a few options.. please let me know what you think and if you have other ideas...

Here's Details of the condo with increasing HOA fees.

1. Two comparable condo in the area sold at $310k and $302k just in the past 2 months..

2. I got it for about $118k.

3. I'm at about 9.+% cap rate - around $900 / month positive cashflow.

4. rent was $1395 in 2012 and then now at $1460 - planning an increase this january by 10% if still month to month and 5% if 1 year lease signed.

5. comparable rent in the area for condos of the same size is at about $1800-$2000.

Options

1. Don't sell since the cap rate is still good and my main purpose is to get good cashflow, just increase the rent consistently to at least stay with the market increase.

2. do a 1031 swap with a SFR or duplex in a slightly different area...after some research.. I can possibly put in additional capital $100k there abouts to increase my monthly cashflow by 2x to $1800 or so.

Other options/ideas?

thanks for reading my long post.

best regards,

Harry

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All Forum Posts by: Harris L.

Harris L. has started 14 posts and replied 46 times.

Post: Reo property - refinanced by the bank

Post: Hello from San Francisco! Is the Bay Area right for me?

Post: Hello from San Francisco! Is the Bay Area right for me?

Post: What should I do next with a condo if hoa is increasing? quick analysis & discussion please.

Post: New member from the SF bay area

Post: New member from the SF bay area