All Forum Posts by: Josh Bakhshi

I got notice from one of my property managers that they want to close shop.  That would put me in a hard situation.  I have a few properties there and no other property management companies to take over my properties.  I got into discussions with the manager and he asked if I would partner with him.  My experiences with managers are only as a customer.  Does anyone have suggestions on what I should look for to decide to be partners or not?

Naomi,

I think that is a great plan.  Btw, it's heloc.  Anyway, you have to treat this like a business.  You need to do your homework on the areas.  You have to check out the Property Managers in the areas you are looking at.  Know your numbers.  It can be done, but you need to go into this with your eyes open.

If you keep the property, the rental income isn't that great and will probably lose money some years. So is the goal to keep it for appreciation? And if you already say that the PM companies are not good, how can you trust them with this major investment? Lastly, if you keep it and the cost for your new property goes up b/c of higher VA rates, I think answer these questions will help you make your decision more clear.

What are your plans for the capital gains?

Congrats on starting your adventure.  I am also from the Bay Area but now live in Atl.  Most of the places you mentioned are not really cheap.  Nothing like SF, but they have been going up for some time.  Now you know that all the Tech companies have closed their offices from the start.  I'm of the belief that more and more tech employees are going to keep working from home so location isn't very important.  

The other thing that you brought up is not being able to visit the property during these times.  My question is why would that matter?  I assume you are going to hire a PM to take care of everything anyway.  You should ask for multiple quotes for anything over $2500 to make sure you are not getting cheated, ask for pictures and try to get a third party (friend/family) to visit the property to make sure everything is on the up and up.  But visiting the property shouldn't make a difference.

Lastly, I would like to know what your goals are.  Are you looking for appreciation in 3-5 years when you can flip it into something bigger?  Are you looking for just 1-2 rentals to add to rental incomes?  Are you looking to buy 15 houses in the same area within 3 years?

Have a goal in mind on what you want done in the next 3, 6, 12 and 24 months and work back words to achieve them

You will do fine.  Understand that this is a business.  Everyone that shares their success stories also had plenty of issues to overcome.  If this was supposed to be easy then it shouldn't be profitable.  

I get an average of 3 calls a week for different properties.  I tell them that I would be happy to answer their questions about the property if they don't waste my time.  Only once did someone during the conversation give me a number and we went back and forth a couple times.  We didn't end up making a deal and wished each other well.

ALL the other times after I answered all their questions about the property, they ask me how much do I want for it?  I reminded them that they call me so it is up to them to give me a price they are willing to pay.  My advise to people is if you are calling others to buy the house, then you say a number first.  

Your way is the logical way and anyone w/ two brain cells would see that.  But from my conversations with some bankers, they lack even those two cells.  1- Rental Income needs to show up on two years of tax returns.  Then they take 75% of that amount and give you credit for the income.  Even though they should add back depreciation, you're still screwed.  

In your case, they would take 75% of your gross rental income of 9K for a total of $6750.  But deduct total mortgage payments of $7500.  So you would be negative $750.  Congrats. 

Jobs, schools and demographics.  If appreciation is your main play, then you should look at properties that are well below market value and add value after the purchase.  Treat the property like a flip, even if you are planning to hold it for some time

I'm not a lawyer so take this with a grain of salt. All my properties are in an LLC. We also have insurance policies on all properties. Two times we got sued and the insurance company took care of everything b/c that is what they are there for and why we pay them. I did find out that both times, they did not go after any members or managers. So having the LLC does bring some protection. I also don't like tenants or others know who the owner is/are.

As for forming it, we are in GA so we just file directly w/ the GA Secretary of State.  Super easy.  I don't know how it is in CA but worth looking at