All Forum Posts by: Joshua Durrin

@Nick C.

Amen to that Nick. Most wholesaler blast junk. I’d love to work with wholesalers anywhere. Cash isn’t always the king either. You just need a buyer that can close... hard money shouldn’t be discounted, private money, even conventional financing. None of that should be discounted.

I've written up contracts as myself "or assigned" as the buyer. Ive also explored the option to write in an LLC as the buyer and then sell the LLC to the next buyer (not done this yet though). I've also heard of double closings occurring. There are no special contracts for these, just write down your intentions and execute to the terms. The key to any of these for me was to work with my title and escrow company. Those people are the keys to making these types of transactions succeed. They control the timing and have direct access to all parties involved. They also do these kinds of things much more often than me. And some don't do them at all... so don't get stuck in that situation. Network with local title and escrow companies and they'll advise you on how to make it work in your area.

Your success, however, is dependent on the deal you bring to your investor pool. Bring a DEAL and you’ll be successful. Bring crap and you’ll be left holding the bag.

@Tolu Martin

Tolu, welcome to the club so to speak. In all honesty I’ve been following these forums and studying for years. I’m also a real estate broker in the Bay Area since 2008. But it was only this year (or 2019 rather) that I was finally able to enter the game. And frankly, my “first” deal isn’t performing well. I closed on 3 deals this year though and have now three doors in addition to my primary residence that are growing.

So, I haven’t posted about my first deal yet because it’s still technically a work in progress. The other two I closed are in the forums and you can check them out if you look up my profile. My “first” deal has the biggest potential and sweetest structure, but it was really about buying a business that unfortunately still isn’t set up yet. Things were supposed to fall in line all together, but my partner wasn’t able to pull his end of the business together just yet so we’re carrying the property for now while he continues to get it going. The “business” is related to senior housing, hence it is related to real estate investing.

The other two, however, are performing quite well. And I look forward to the day that my “first” deal gets going. (I say “first” because it was the first one that put money into as an investor, the first investment contract I signed. But it also is still a work in progress.)

Looking back, I’d advise myself to do my due diligence and don’t skip steps. Make the calls, every call, to fact check the deal. Had I done this, I might not have purchased that “first” deal at the time. But then again, it was my catalyst to actually becoming a real estate investor. Get everything in writing as well. Have patience and comb diligently through the market to make sure your money is performing at its best. And don’t be afraid... fear was what kept me out of the game for so long. “Analysis paralysis” delayed my entry.

That’s why in 2019 I had to jump in. I looked at my wife and said, “I’m so tired of sitting on the sidelines in this game, I’ve got to get in it. THIS is the year I have got to get in it and I MUST prioritize real estate investing this year.” Well, three properties later... I guess you could say I achieved my goal and am over the hurdle.

Now I’ve got the bug though. I get so much joy out of turning a place into a home for a new family. It’s also been so fun to learn the processes and figure out the puzzles (I’m also an engineer). Buying an asset that pays me back is equally as thrilling though. And there is no ceiling when you invest wisely and get paid for it. You just need to figure how to keep climbing (hence the puzzles).

I need to build my network, especially amongst contractors, to take on a local flip. I'm also looking at larger units trying to find an entry point in the commercial MFR space, either by myself or in a syndication.

Best of luck to you. Reach out if you ever have questions. Happy to help.

@John Lazzarini

Here’s something to ponder. I helped a client get into the game recently here in the Bay Area. The prices appeared overwhelming at the start. They could afford, on their own, about $4k a month and were looking at SFRs in the $800k range or so. But they also wanted to get into the investment game.

Rental income helps to offset and increase your affordability. When we started to look at neighborhood rent potential with a 2-, 3-, 4-plex their budget increased significantly due to the extra rental income. Each additional $800/mn in rent gave them approximately an additional $100k in purchasing power. Given they were ok with living in one unit, they also qualified for FHA and Conventional financing so they didn't have to come out of pocket with the whole 20% down.

In the end, they settled on a $1M duplex. The rentable unit brings in $2600 / mn for them, effectively giving them $300k additional buying power on top of their $800k that they were targeting. So, they essentially got into a primary residence “under budget” ($1M - $300k = $700k... <$800k) AND became investment property owners with a stream of income on an investment property in one of the toughest and most desirable markets in the world.

If you're buying out of your area, you won't be able to swing the low downpayment FHA financing. You'll likely need to come out of pocket with a larger down anyhow.

Food for thought.

@Wei Jiang

You know, the refi option isn’t a bad idea either. My argument above is really around low performing equity. One way or the other, you’ve got equity sitting there not performing well. I’d look at doing something to get it working for you at a rate better than 1.1%.

@Tonghong Chen

I've been combing through the deals on Roofstock recently as well. I was looking for something with an affordable entry point that cash flowed. They have some decent rent guarantees and such that are interesting, but my issue with all of the deals I came across was that the COC return was just too low. I put an offer on a couple of properties though and then after the second one, the agent I was connected with became non-responsive. So I networked here on BP and found a local agent outside of roofstock and have been working with him for the area I'm looking at. The agent I found on BP connected me with his network too to get my property restored and rented quickly.

I’m still not opposed to roofstock as I think there is potential there. But my experience so far has been that “deals” are more difficult to find on there than they advertise. I like their platform though. Just wish their “deals” were better qualified for investors.

Keep us posted on what you find. Very curious to see an independent review of a success story (hopefully) from that service (there are a few reviews in the forums that have caught the attention of employees with roofstock).

@Wei Jiang

Hi Wei, I’d sell it if I were in your position. But here’s why... your return on equity is low. You have a ton of equity sitting available to be able to put into more assets that can turn a profit and grow. The Cashflow is definitely nice, but given it’s going against $578k in nearly tax free equity, that’s not a very good return. It’s like Dave Ramsey says, “would you spend $578k to get $6500 per year back?” That’s a 1.1% return on equity. You could take that equity and reinvest it and likely make significantly more than that I suspect.

(Full disclosure, I am an agent in the area too, but I’m not intending to be biased in one direction. The numbers just make sense to sell in my opinion.)

Best of luck.

@Mary Griffin

Hi Mary,

It’s not easy but it is possible. My wife and I just did it in Alameda. Our entry was a bit hard as we had to put in more than 10% on million dollar duplex. It also took some ninja negotiations with the listing agent. We were stoked to get it under contract though as we too were looking at it as a place for us to live as well. Given the appreciation in our market too, at the 6 month mark I did a refi on the property and dropped our monthly payment by $1300 / mn. That’s a rent payment in itself in some markets. We had our second unit rented within 5 days of closing too. All in all, it was a lot of work and creative thinking. But being in the biz was also helpful for sure.

There is opportunity out there for sure, but it is a fascinating and challenging market to be in, as well as super rewarding.

@Jackson Reid

Welcome Jackson. Those are some great books to get your juices flowing. Some additional steps you might take are to build your network. Check out the numerous local REI meetups on meetup.com. Just do a quick search and find a few that align with your interests. One of my favorite routes is the "SF & Oakland Real Estate Networking group with J Martin". The Real Estate Investing Meet and Learn with Vanessa Zamy is picking up some momentum too.

Best of luck. Keep us posted on your progress.

@Gorden Lopes, total acquisition cost is $170k, yes.  Yeah, the floors were $10k themselvers.  Literally put new flooring in every room of the house though.  Amounts to about $5 / sq ft.  I didn't think the $5 / sq ft was too expensive.  Most of the cost was in the materials.  The painting was a phenomenal price and I just couldn't pass that up when offered.  

@Trevor Fleck, I use an independent advisor who runs The Phoenix Plan. He setup the account for me and I manage the investments myself. I do have a checking account associated with the 401k as well as a debit card, so it's quite easy to manage expenses that way. I don't ever transfer money in/out. That's how you get yourself in trouble with these accounts. So it's very important to set it up properly right from the start. My non-recourse lender was North American Savings Bank. The loan is actually quite expensive and leaves me tempted to pay off the property altogether, but then my COC drops significantly and my goal overall is to my cash invested to work in the best way possible.

As for my PM, no she didn't charge me anything outside of the placement fee to coordinate the facelift.  Her monthly fee seems a little on the high side comparably.  But given the work she did for me allowing me to be entirely remote in all of this, I'm happy to compensate them for that by paying the higher monthly rate.  The numbers still work for me.  She also got an extra $100 / mn in rent for me, so essentially covered her costs with that.  And without her, this would not have happened as well as it did.  So again, she's earned her fees for sure.  

@Holly Brown, anytime.  Let me know what questions you might have and I'm happy to field what I can.  

@Albert L.

Hi Albert,

I agree with both the guys above. I’m a local agent and investor myself (independent broker actually) and they’ve offered some great feedback. However, two points.

1. The ADU would only be legal if you lived on the property. Once you move, it's no longer a legit separate unit. Something to consider s as t least

2. Buying a multi family right from the start may not be as hard as you think. You’re able to use a portion of the income the additional units to qualify for a larger loan. If the units are rented, the lenders use those rents in their calcs. They have the option to use rents from a market survey as well. Consider that each $800 increment you collect in rent is another $100k in purchasing power. Maybe that helps you get into a multi family that thought you wouldn’t qualify for before?

Happy to chat and network anytime if you have questions. Best of luck.