All Forum Posts by: John Barnette

Yes basic fees for just owning a rental property. Even non owner occupied SFR. Apartment license fees. Then fees for various city inspections. Life in California.

I have found my c class single family homes have had better performing tenants than my c class apartment building.  The sfr rentals with good fico say 680 and higher have paid on time always. Sfr with solid income yet 580 fico have been late a couple times a year. But only a week or so and pay the late fee. They also lived in prior house for 12 yrs prior to new owner buying and wanting to move in.  Apartment building slower paying tenants more often.

Contrary to what some folks experience has been with financing an acquisition of a small commercial loan for such building, the lender ABSOLUTELY reviews your numbers as a buyer and the building numbers. I closed on an 8 unit appt building in March 2017. 

My background. Have had various rental properties of one sort or another since 1997. On tax returns and self managed. I was in a 1031 exchange and this was an upleg. Already owned 9 other props. Mostly sfr, but also duplex and a condo. Mostly cash flowing on tax returns. 

Day job is real Estate agent and thus considered self employed.  16 yrs.  Decent income but also write off a bunch on tax return.  FICO about 770.

Property acquired in a C location and B/C condition. About a 10.5 GRM on actual rents that were about 10-15% under a very active Bay Area market. Coming in with about 35% down. Plenty of seasoned reserves. $1,150,000 price.

First Bank was Provident . They were quite optimistic to start and best rate. Most terms similar in shopping around. Paid appraisal and came in at value. 

But...they ultimately turned me down. Said global debt to income for me as a borrower was too high. I have no debt except a $400 car lease and 9 mortgages. About 50% ltv global on those too. They sliced and diced the income of the building, and increased the expenses for some huge vacancy factor on below market rents. So basically they underwrote  (word?) Me with reduced income and increased expense and completely ran me through the ringer on my personal side.  

Cost me a commercial appraisal and $700 in processing. Switched to a lender  (First Republic Bank) that I have a deep relationship with and they did it. Higher rate but also went from a 5 to a 7 yr arm.

So expect the full on body cavity search as a possibility.

I have heard from others familiar with this game that when you get to about 20 units, that the buyers are not scrutinized as much.

And stay away from Provident !  

Hi all. Madequate offer on a Fannie May home pathis REO. Richmond, CA which is a reasonable blue collar older suburb of SF/Oakland. A pretty solid market.

Was just reduced from 479k to 429,900. OK lendable condition except no stove and furnace nother working. So makes conventional financing tough.

Wrote 415k cash.

Anyone with recent insight into how willing to negotiate Fannie May is these days?  Asset managers have motivation to lock an offer within a few percent of asking?

They took it back for about 375k in Sept 2016. Not sure why they waited to list till now.

Thanks 

Yes doing very well in East Bay. Yes getting multiple offers nearly always. Especially sfr.  Condos in established neighborhoods.  Only downtown high rise high end is slower.  All kinds of buyers and generally with very solid down payments.

I am in SF and half my portfolio is in East Bay Richmond and San Pablo. I am always looking but true that it is extremely competitive. Sitting on cash, doing a cash out refi on a high equity holding to build even more cash. There will be somewhat of a market correction at some point. There always is.  Don't expect a significant decline though.  And there are a number looking to buy on the dip.  My "day job" is a Realtor. So hear a lot of sentiment regarding current and future planning.

San Francisco investor here. Medium size well cash flowing portfolio in the city and East Bay communities.  My 2 cents especially for someone of your age. Invest where you have growth. Attractive urban locations in southeast, southwest, west coasts. People want to live there. Business and employment growing there, incomes growing, all leads to growing rents and values over time. Don't go to where it is "cheap" because it is cheap for a reason. Cash flow yes, but likely flat to declining populations, value via cash flow and local market demand.  Consider second or 3rd tier California and Arizona. It is a fun business. Not overnight riches but a gradual snowball forming into a big snow boulder over time.

Hi Alice

I work with Keller Williams San Francisco. Also have offices in the Peninsula.  Great company. Very learning based, focus on wealth building, pro investing.  Check out all kinds of info about Keller Williams on YouTube.  Give me a call or email if you want to chat with leadership in my office.  Blocked me here from giving email or phone. Can contact me through Google or zillow

John

Would be important to know why there is so much delinquency in the HOA given that it is in a good market with high incomes. Good economy last several years. Does make financing difficult. Not going to be traditional Fannie/Freddie backed loans. Portfolio may be a good source. First Republic Bank in is SoCal. Will need good/great credit scores and probably 25% plus down. The condo should be discounted quite a bit as well due to the issues.

I personally bought into such a situation back in the black days of 2010 in San Francisco. Lots of HOA problems, back dues owed, short sale, etc. Had to go hard money. But bought a condo with tenants very very cash flow positive for 73% less than it had sold in 2005. Yes it as a tough time back then, but not 73% tough and rents never went down a penny. Actually went up.

Thank You.  Awesome weekend on so many levels. And I had to leave early (about 5:30 or 6p) both nights...so couldn't stay for more networking and real estate bull ********.  Thanks for your tremendous efforts.  I consider myself an "intermediate" level investor with about 10-12 yrs experience with landlording single family, a few small multi's, 14 flips, a few 1031's, awesome cash flowing 10 door Bay Area portfolio...and this was a perfect type event. About half the crowd more advanced and half the crowd more beginner.  Perfect and made it fun, educational, motivating, awe inspiring...and part of a cool community of folks with similar interests.  Next year...maybe discussions on growth strategy. Say from single family investing to trading up to apartment buildings. Cash vs debt...maybe have a lender or two on a panel.  I also know a smart financial advisor in SF who is very real estate oriented...but also alrernative investments, insurance products, etc.  How a wealth portfolio can be balanced and profitably constructed.  Many ideas....

Will be there in 2017 too.