All Forum Posts by: Jarod Bona

In my opinion, if you are putting together a portfolio, there is an advantage to having some of each. You certainly want some cash flow, even for properties that may fit the appreciation paradigm better, but there is a benefit in having properties that develop equity more quickly. You can access the equity by selling or borrowing against it. The equity may also make lenders more comfortable lending to you in the future for that specific reason. 

If you are just starting out--absent other countervailing factors unique to one's situation--I would opt for cash flow. Most early investors underestimate costs, so knowing that your property has healthy cash flow will protect you from what you didn't consider. Hopefully you can also build up some cash for your next property. 

My wife is a genius at this and it makes a substantial difference. Craigslist can be a great source of even high-end materials. And, in Minneapolis at least, there are plenty of stores like Bauer Brothers that offer used materials, many of which look great in the old houses in the area. To be honest, I don't know how she always does it, but before shelling out large sums for new materials, she tries to think creatively and typically comes up with something. Sometimes she mixes more expensive material with less expensive material in a way that, in the end, looks great.

Labor is more complicated because you often get what you pay for. We never use the highest cost labor, but we have learned that using the lowest cost labor is equally bad (for different reasons, of course). We save some money by doing some of the work ourselves. My wife, for example, taught herself how to tile bathroom floors during our last flip. I am must less useful when it comes to those types of tasks. 

If you are a lender, you might have some interest in a California Court of Appeal decision that applied the full credit bid rule to stop a lender that foreclosed from recovering on an insurance policy for the borrower's pre-foreclosure damage. I just posted an article on my website describing the case: 

California Appellate Court Applies the Full Credit Bid Rule to Deny Trust-Deed Holder’s Insurance Claim - See more at: http://www.businessjustice.com/california-appellat...

Jarod

When we have used agents in the past for investment properties, it was essential that the agent knew how to analyze the numbers--whether a flip or long-term rental (in our situation). Many agents will try to work with an investor in the same way they work with a typical buyer and that doesn't work. 

Also, be available and able to move quickly. In our experience, a good deal, especially if it is on the MLS, doesn't last long. If a new property comes on the MLS that is a prospect, your buyer may need to see it and make an offer on day 1. At least that is what we would do. Every extra day is more competition.

Jarod

We moved from San Diego back to Minnesota (where we were from) around 2007. It was easier to invest in Minnesota, as we were just starting out and that worked for us. But we missed San Diego and moved back two years ago. Of course, in our situation the home prices were higher when we left than when we returned. 

As much as the lower entry points elsewhere are tempting, having once moved from Southern California, I don't think we could do it again.  We may invest out of state, but I doubt we'd leave here. There is a reason people move to California and when you leave it, you miss it.

Thanks, Bruce. I appreciate your kind offer.

Jarod

If anyone is interested in a primer on the government taking your property, I wrote a little article here: http://www.businessjustice.com/what-is-the-differe...

Thanks, everyone. I appreciate the warm welcome and useful information. It is quite apparent that these forums and this website have layers of benefits. I am looking forward to it. I am sure I will learn a lot from all of you and will try to contribute in a positive way.

Thanks again,

Jarod

My name is Jarod Bona and I am a real-estate investor in the San Diego, California area. I am also an attorney and am in the process of obtaining my real-estate license. 

I recently discovered the Bigger Pockets website and podcasts and look forward to learning and interacting with the great community here. The podcasts are fantastic.

My wife and I so far have focused on flips and rentals and have properties in both Minnesota (our original hometown) and San Diego. 

With regard to law, I am a 2001 Harvard Law graduate and have spent most of my career in giant law firms in California, Minnesota, and Washington, DC. I left one of them about six months ago to start my own practice (http://www.businessjustice.com/). My focus is (most relevant here) real-estate litigation, as well as business litigation, appellate, and antitrust. If you have any interest in antitrust, check out my blog (http://www.theantitrustattorney.com/). Here are my entries involving antitrust and real estate: http://www.theantitrustattorney.com/category/real-...

Starting my own practice is the first step in my plan to move more toward real-estate and investing. I am transitioning my legal practice in the direction of real estate and obtaining my real-estate license with the idea that I can help clients as both an agent (and eventually broker) and attorney in more complex transactions. We believe that this approach has synergies with our own real-estate investing.

It is quite rational for a business to strive toward monopoly, as monopoly rents are extraordinary. Competition has a tendency to destroy profits. I wrote about that here (with some discussion of real-estate investing and competition), http://www.theantitrustattorney.com/2014/09/15/mon...