All Forum Posts by: John Barnette

zillow is also notorious for having listings "available" that are either in contract, sold, or other.  Some of their data outside of even zestimate is inaccurate

Realtor here

@johnny lujan

Yes I would seriously look into the business if you feel that it may be something attractive to you. If you are self reliant, like problem solving, like people, like sales, comfortable being without a promised income.  It can be hard starting out when young. I started at 29.  

I personally do feel that being a licensed Realtor on a big team is perhaps the best way to get into the business. Will be lots of grunt work and long hours in the beginning and lots of work. But invaluable real life experience, activities to do and learn, and income.  Plus you likely will be able to kick start your advertising if you work well with some big agents.  I had success with post cards using language. "We just listed" or "we just sold". Instead of "I just....."   I paid for the cards, postage, and leads were shared with the mentor agent whose sales I "borrowed" for my marketing purposes.  Got career jump started that way.

I meant seller in above post. Not buyer.  

agreed. Realtor and investor here. The mere fact of having a real estate license raises the bar on acceptable ethical conduct that is to be expected.  It is looked at very suspiciously of any agent (whether wearing the Realtor hat or not with a specific buyer) to be locking sellers into a legal contract at a value that is honestly below retail and the trading the contract to another investor for cash to your pocket.  Especially in California where anything will sell quickly if priced right.  As a Realtor we have a code of ethics and fiduciary duty towards a person of the general public who engages us for professional market expertise regarding the value of their property.

Now the fiduciary duties, and obligation to the client or potential client go away when they have representation by another agent. 

My two cents

If I were starting all over again as a fresh new Realtor I would seriously consider joining a significant producing team as an assistant/ buyer's agent kind of a role.  Two primary benefits are learning a massive amount of how the business actually works and people part of the business (the most difficult generally) and secondly you will be earning some money as you go along. A small part of many transactions.  Instead of a large part of only a few transactions (in first year or so).  Only can learn so much by books, real estate courses, training seminars, etc

And a personal business coach I once had always emphasized outflow will ultimately lead to inflow.  Focus on outflow of money, time, effort, contacts, etc.  eventually experience and money will inflow back to you.  

The business is a roller coaster for sure. Lots of ups and downs, zigs and zags.  Hold on tight for quite a rush!

very cool. Don't know much about Florida investing except crazy appreciation potential on beach front.  Looking into things there potentially.  Though not sure how long term I wanna be with sea level rise.  Stories of salt water bubbling up in Miami area sewers well inland.  Land is very porous lime stone and ocean water traveling underground.  So according to article in National Geographic about global sea levels.

Was searching through old posts and couldn't seem to land on what I have been thinking about.  Sure it is out there. Maybe time for discussion again..

Basic strategies for equity appreciation and 1031 trade up.  I have a small but profitable portfolio of 6 individual rental properties (think little houses in monopoly) in SF and suburb of SF.  In a very very high appreciation area in general.  Luckily through time of ownership, past 1031's, and some terrific opportunities in the last several years, I am at about an approximate 60% equity position on the portfolio as a whole.  I have not calculated the cash on cash of the portfolio, but estimating at around 7%.  Some rock stars and some not. But still cash flowing.  Most are on 30 yr, 4.5% notes at the highest.  Reason for houses and condos in SF is that they are not as controlled by our rent control ordinance. Can actually charge what I want and market will allow.  Any duplex on up built prior to 1979 - which is a majority- have rent control and the tenants own you.

What are thoughts on "strategic" debt/equity positions? Right now I am setting aside some of the cash flow for savings and future maintenance. Several were purchases of beaten up short sales that I had to improve prior to renting...so in pretty decent condition.  Also using $2000 a month to pay down my lowest mortgage of them all.  Thought is to pay it to zero and then put a line of credit against it for emergency/killler deal funding cash.  Still owe about $148k though.  Some pocketing for fun.  Some may even question hurry to pay down a 4.5% 30 year note.  I sometimes debate that too.. Can I realistically use that cash for more profitable results than 4.5% ?  

Is there a theory on planning a 1031 trade up with a certain amount of equity and thus lower debt, running out of depreciation to hide cash flow from IRS, and increase gross value of portfolio in a California appreciation market?  Basically my return on equity is dropping with such market appreciation.  Kind of a numbers guy and like looking at these things in a big picture.  

I am still working a JOB as a Realtor and do pretty well in that regard as well..but seem to be a better investor at times...and like it better usually as well.  And fairly young going on 45.  Other stock and cash investments on reserve too.  No dependents.  So can take on some risk but don't want to over do it....saw too many people and many fellow real estate agents loose their shirt and pants and shoes, etc in the great recession.  

My default strategy now has been to use the positive cash flow to 1. pay down my lowest debt note, 2. save for small deals in Bay Area.  Namely have invested in two places in Richmond.  A working class (ish) suburb further away from Silicon Valley than SF.  Still Bay area, but lower cost, still some distress, some dumps for sure, close to Bay Area train system.  A more cash flow oriented area than appreciation oriented.  A Bay Area class D, but probably class C for many. One rental there has an assistant vice principal and her kids as tenant and they are perfect.  Just picked up another place for $215k with about $10k needed for repair, paint, garden, floors, etc.  Rent around $1900-2000.  3. money set aside for unknown purposes earning practically nothing in the bank.  The hard part is that it is nearly impossible to make the real estate rental cash flow and job cash flow to keep up with the market appreciation.  

sorry for long post, but I am sure some of you get at what I am considering...especially Ali Boone!  Miss leverage!

Thanks, John

Or perhaps another strategy completely: I have 6 investment mortgages and 1 for my own roof so 7 total.  Talking strategy with lenders and other pros in the business... Plan on doing some 1031 exchanges and bundle equity and mortgages from a few of my smaller properties (in financial terms) and use the funds to leverage into a larger property.  However I am in the SF Bay Area and my portfolio is all stuff on the lower end of price scale by our crazy standards. So room to sell, combine, and grow into bigger dollar stuff. Will need the higher equity position to make cash flow anyway.  Tax deferred (until I am 6 feet under) saving and appreciation of the cheaper stuff is far more realistic than traditional saving of job cash flow needed for future acquisitions.  

principle residence only with no rental income or depreciation claimed on tax returns - the 250/500 rule applies with 24 month holding.  Impossible to do a 1031 with principle residence.  Property held for investment of any type and handled as such on tax returns - a 1031 exchange candidate.

Gain more than 250/500 on your own house - be prepared to write a check for federal and California state on gains above this limit. Long term capital gains federal and regular income state.

As my grandfather said, it is hard to loose money paying taxes.

They are not fun though

Use hard money if you have to. I have used several times in my career as an investor. Always short term and always used when buying short sale or REO property at a great price in San Francisco Bay Area. Why you would have to?? Property is not in lending condition. No kitchen, no heat, copper pipes stolen, etc. Will not qualify for traditional financing. Or honestly back a few years ago when traditional lenders were very shy I had to use for even a "lendable" house due to my being self employed, tax returns showing not enough income to really justify the purchase, and having too many other mortgaged properties. Even with high credit score I was deemed too risky. But had assets I could prove and leverage for hard money guys.

In all cases I am absolutely happy I did pay for the expensive money to get the deal. Usually I flipped the places and did anywhere from acceptable but ultimately a bit disappointed (around $16,000 profit on a problem child fixer flip) to overwhelmingly excited on a $80,000 profit on a zero fix flip with 30 day holding time frame. Oh and the best on a flip that I decided to keep after fixing and doing conventional refi. It is cash flowing over 15% COC as a rental and has more than doubled in gross value in less than two years....in San Francisco. Have not even figured the true COC return from appreciation on that but it will be very very nice.

SO ultimately yes hard money is worth it if the deal is worth it.