All Forum Posts by: Jesse Kailahi

@Andrew Johnson Sorry, noob question.. do you have to be in contract to obtain a T12 or Proforma for a 2-4 multi, and if so, how do you even approach the analysis without one? Does running the numbers through a spreadsheet or BP calculator amount to an unofficial Proforma?

@Kenneth Reimer Thanks Kenny! 50% of market is pushing it a little.. Perhaps with a full rehab and above average/designer remodeling. But I've lived in 5 different apartments/homes in the area (mere blocks away) over the past 10 years, and from personal experience, having friends in the neighborhood (literally 2 blocks away), and researching current rents... 70% of market seems like a very conservative estimate for what these units are producing. But from looking at the price tag, it really seems like the seller is trying to get a buyer to pay for the potential in rent increase, not the current rents. List: 670k, 2/1: 3, 1/1: 1, rents: 750, 750, 700, unknown. Craigslist rents for 2/1: 1295-1695, friends paying $1100-1400 for 2/1 several blocks away.

@Wes Blackwell  "The Mighty Slumlord's Broadsword of Poverty (+50% to tenant rent, -50 karma per attack, +5% city homeless population)" LMAO

@Gene Vityugov I understand the shock, but honestly the intention would be to bring the rents up to market and rehab the units that go vacant during that process. The current rents (according to the MLS data that I have) are HALF of market! I guess I would have to see the renter's agreements and decide whether to carry the mortgage for the duration of the existing leases.

Also, it would be an owner occupied, so that's one unit that can get a facelift and it may even cash flow with only a single unit rented at market if I decide to move after the minimum duration.

Will the appraiser pull 3/1 comps or 3/2 comps, or varies? Completely disregard the second bathroom or take it into consideration? There appears to be some difference in pricing between 3/2 and 3/1 in our area.. not much, but enough to make me worry about an appraisal coming in 10-20k below list (average home prices in my area are 260-400k for 3/1's and 3/2's).

Thanks!

I've been looking at multi-families, and few ever get close to cash flowing with my specific circumstances, but there are some properties that could work... but only if the rents were increased. So I was wondering how you would go about increasing rent for units that are far below the average rent for the area. 

Sacramento has no rent control, so theoretically you could bump the rent up to any amount as long as the tenant was month-to-month and gave 60 days notice.

If the tenant was on a lease, then you would have to essentially give 60 days notice, 60 days before the lease was to end.

So, if the rents are far below market, but the property is priced appropriately for the area based on comps, are you able to take any action as an investor to make it work? 

Are you able to sign new lease agreements upon purchasing the property? 

Are you able to receive the current lease agreements from the seller to get a feel for when the lease is ending? 

Any anything wrong with increasing rents by 50% or more (beyond the moral dilemma with increasing rents for LONG term, established tenants, like a 90 year-old g-ma)? 

Thanks! 

@Michael Evans Thank you for the advice! You mentioned that I should be able to earn 10% ROI on cash. I'd love to hear your thoughts on what types of investment vehicles (aside from stocks) you would put money. Private money lending sounds interesting too.. I'll have to look into how to do this and the risks involved.

@Isis Franco This is sound advice, and I have been looking for about a month in the Sacramento market for this kind of opportunity (just through MLS listings), but I'm hardly seeing any properties that are cash flowing properly with FHA or conventional unless I slash 20% or so off the list price, whether I live in a unit or not. Still my focus at the moment, but it seems like alot of the deals are in the forclosure/auction market, which I don't have the cash to touch and not enough experience with hard money lenders to pursue.

@Dave Foster  All advice is welcome! And yeah, we both have been pretty averse to taking on any kind of debt other than zero balance credit cards. And the idea of owning a primary outright is tantalizing, and I can see how this would really allow us to take off whenever, to wherever!. But if we tried to do that right now, in Sacramento, we would have almost no cash leftover and safety would probably be a concern for the types of neighborhoods we could live in, lol.

@Gordon Cuffe  Thanks Gordon, and sound advice. We are currently looking in the roseville area for multi-family fixers/turnkeys (though few of these make cashflow sense) and single-family fixers. 

@Account Closed  Favorite strategy so far, and something others have echoed... Just running numbers and looking for the right deal at the moment, but coming up short in most scenarios!

Why 5-10% on the primary? Just to have extra money for improvements? 5-10 means I'm paying PMI, right? Or is the idea to refi after the improvements with greater LTV?

And thanks for your input :)

Hi! I'm 30 years old, married with no kids, and live in Sacramento California. I have a stable 9-5 and she is a new nurse. We gross about 100-110k/yr and we have roughly 40-60k in retirement accounts and other assets. We do not have debt outside our mortgage. Our goal is to build wealth through real estate buy and hold (rental properties), and maybe handle a couple flips each year so that I can have the choice to quit my day job (I actually like my job), so that we can travel the world, and so we can also be better prepared to have a baby and spend as much time with the kid as we like. We have no REI experience, but we're handy and have brains, so...

My wife and I bought our home as first-timers in 2013 and are listing next week for a couple reasons: a) we originally bought for 131k and are selling for around 310-320k and we feel it's the right time 

b) we would like to live closer to my work, which is about 45 minutes to 1.5 hours away currently, depending on traffic and time of day

c) we want to sell our home high (we've done some remodels) and start over with another fixer-type property and just get into real estate investing with more cash to begin with in the coffers 

We are projected to net $170,000 from the sale.  Here are median home prices in Sacramento (and actually we would be looking at moving north into the Roseville area so I'm closer to work). The market seems to be pretty hot with few multi-family staying on market for very long (like maybe a week or less until a listing goes to pending). There still seem to be some fixer SFH opportunities at lower prices in rougher areas though. I have yet to analyze a property.

We will no longer own property after this, so my question to you is... what would you do with the money? We need to live somewhere (renting is fine for us if we must for a little) and we want to start investing in real estate.

Thanks for your input! 

@Chris Mason Ahh, interesting, I'll keep that in mind!

Thanks for the replies! I feel a lot better about getting started in real estate investing!

I've been listening to a lot of BP podcasts and attended a webinar. A piece of the "process" is analyzing properties and putting down offers on multiple potential deals, constantly, until an offer is accepted. Hypothetically, let's say you have secured a few properties, you're in your second year of real estate investing, and you are still going through traditional financing and using conventional loans.. Does this mean that you would have to become pre-approved and/or enter into contract on properties every 60 days since pre-approvals only last something like 90 days? Your credit score will take a beating if you are putting offers down throughout the year, won't it? Do hard money lenders check credit? Do you, should you, prevent your credit score from tanking?