All Forum Posts by: J. Martin

@Account Closed , they're located in a loft-type space over there in the SOMA in SF where you had identified. You're right about no phone number, but you can shame them on their twitter or FB accounts if you have any problems or can't reach them online. Not an entirely unusual way for an online company to handle tech support. But not stellar either. And they also recently raised $25MM from some reputable private equity firms, so while their contact information may be below typical brick-and-mortar standards, it is a WORLD above what is available to buy bitcoin (ps I just bought some other coins such as lightcoin, feathercoin, peercoin, etc on btc-e, an exchange in bulgaria with an unknown owner. How's that for comparison?!) Coinbase is looking for people with a regulatory background, so I was actually thinking about stopping by and seeing what job opportunities are available..

However, with all of these, you can make the purchase, then transfer the BTC offline so no company has access and no one can hack it. Buyer beware though! On all of it! You are not crazy to be suspicious..

Hi @Sandeep, and welcome to BP! Good job on the timing, and I think you're right that a lot of deals in the South Bay are drying up. Still some in the East Bay, but a different market. I invest in Richmond and still doing well on cash flow. But many others making good money out of state too..

If @Johnson H. is around on the forums and not tired of answering Houston questions, maybe he can help you. And for a second, you sounded like @Account Closed , although I think he pushed his chips "all in" a bit earlier.. Maybe you two put in competing offers on an REO in the South Bay in 2009 and didn't even know it.. When there's blood in the streets..!

Welcome @Brendan O. !

I did an FHA loan on a 4plex for my first deal in the Bay Area, although I had much less capital, and wanted higher cash flow, so I moved out of the Sunset in SF and bought in Richmond (city of) just south of the BART station. Easy commute and much safer than I thought ironically, but boring... I'm most likely going to move to SF or cool part of Oakland now that I'm past my year of owner-occ and no longer desiring to live here. Best thing I ever did. But that might not be your cup of tea.

Even if I had the amount of money you do at that time, I would still buy FHA and save that capital for conventional deals later, and extra reserves/liquidity to let you sleep well at night. You may realize later in your investing career that being able to essentially get hundreds of thousands in equity financing for future deals (by preserving your capital by doing FHA deal on the 1st) at a 30yr fixed rate for under 5/6% is something that you might kill for later..

..especially when you'll be able to get a CD earning more than 6% in 5/10 years until your loan maturity 20 years later, and it's going to cost 15% interest or more if you want to borrower equity capital short-term from a private lender (above 80% LTV) - IF you can get it. Well worth a little cash flow sacrifice in early years, IMHO, especially if you have the liquidity to deal with it.

I like 4plexes, but if you like cash flow, I would look outside SF. If you're only looking in SF, be aware of all the tenant laws first of all. sftu.org is a good place to start if you haven't. Renting rooms is not uncommon in SF (midwest BP members dont' understand), and might keep you closer to market rents under rent control. You can probably get a 4plex for much less per foot than SFH in SF.. Could be as low as $300-500/ft on 4plex vs $450-800/ft on SFH in same neighborhood. . Some 4plexes just under $1MM and better CF than an SFR..

Welcome @Steve Cook , from over in the East Bay! You sound a lot like me when I was 28.. Financial industry job, saved a little scratch, realized I'm better off buying cash flow properties (then probably renting) in the Bay, rather than try to buy at the elevated price points in SF.. Oh wait,I was 28 last year! lol Was on the prowl for years, then finally pulled the trigger when prices bottomed out. Have you considered buying a 4plex with an FHA loan to leverage that capital? (It will probably up your purchase price by multiples, although you won't get good cash flow unless you move to a periphery areas you might not want to live - like Richmond, Pitssburgh/Bay Point, etc). Btw, I organized the last East Bay meetup, and will be posting the next date soon. Monitor the topic below if you're not already.. I had the pleasure of meeting @Melvin at the last one

Many folks around here have gone out of state, although I just don't quite have the chutzpah yet.. Maybe @Johnson H. can give you some tips too, if he doesn't mind the competition..

@Erin A. , love your strategy! I bought a 4plex FHA in Richmond (near BART just like you said! LOL) to really maximize the usage of my capital. Best thing I ever did! Hopefully you're aware of the restrictions regarding multiple FHA loans. You have to pay off/re-fi the previous FHA loan to conventional (or at least non-FHA) to get another FHA loan on a new purchase unless you move more than 50 miles from your last, or a few other exceptions. I've run my broker up and down on a way to do this, but my FHA 30yr fixed is at 3.25% due to fortunate timing, so it would kill me to have to refi out.. Let me know if you figure it out a way!! But I think it is extremely difficult/nearly impossible unless you meet the exception(s). Check out this forum on the topic. In there, I include a link to the HUD/FHA guidelines on the exceptions. Ultimately, the loan agent/broker will have to answer your questions. FHA/HUD does not do it. PS Moving to STOCKTON from Oak?!?

http://www.biggerpockets.com/forums/49/topics/106608-fha-vs-conventional

..and monitor the following topic for the next East Bay meetup. I'll most likely post the next date for a January meetup before the end of this week. I will also post any SF meetups on this forum.. Looking forward to seeing you all there!

http://www.biggerpockets.com/forums/86/topics/106912-east-bay-meetup---dec-10-in-oakland

@Account Closed , that's the kind of idea I was getting at.. Knowing what you can handle and how you can move from there.. Looks like you'll still have room to breathe, lower expenses, probably increase rents.. As long as you know how those changes could impact your bottom line..

..although a 300bp increase over 2-3 years would not be the craziest thing that could happen.. It's been at least 300bp up in every upward rate cycle, and prime was 825bp going into the crisis (+500bp from today).. Not that we're going to get there tomorrow or next. But with about 10 FOMC meetings a year, even 25bp every other meeting would put prime up 250bp over 2 years - when they start increasing.
http://www.forecast-chart.com/interest-prime-interest.html

ps. It's a good problem to have with your ROE/ROI on your singles! lol Maybe you should 1031 to some MF in higher-cashflowing areas like the East Bay!

Hi @Account Closed , regarding the downpayments, when I was looking at both options last year, the straight FHA loan was better than the Homepath for an owner-occupied. 3.5% FHA. Now 5% Homepath for owner-occ. Was 15% non-owner occ for SFH. 20+% for 2-4 units. FHA had a much lower rate (I think 75-100bp at the time..?) than Homepath. And the Homepath rate stayed at that rate for the life of the loan. FHA MI could roll off. But that has changed..

I bought a HomePath property with the FHA loan when all was said and done. Did not do the 203k/Renovation as I heard from everyone it was such a headache, takes so long, so many fees, just go try to find the money somewhere else.. I went through a loan broker, and they were able to call and around and find lenders doing Homepath. But FHA was better deal at the time. I used loan brokers on my last 2 deals, and they've been competitive with direct lenders. They just prep a lot of the work and give the "direct lenders" extra volume that they don't have to pay someone in-house to do all the work for.. Maybe a few extra bucks on top, but well worth it to have someone out pounding the pavement for you. And these programs are always changing, so you're never really going to know until to talk to someone who can fund the loan... Homepath or HUD/FHA will not help you... Get ahold of a lender!

@Michaela G. check the other wallets on the link on my post above. The wallet software for your computer does not need any verification at all, because it's stored on your own computer, not on their server. There are other online wallets that don't need verification in that link I believe.

@Account Closed , you are absolutely correct that there is no FDIC insurance. I consider holding it highly speculative, as stated before, which I am doing. And I plan on sending Michaela some for free (when she gets her wallet!). So no risk for her. You are also right that there are a lot of spotty, or at least non-transparent exchanges out there for purchasing it. I use coinbase.com because it's based in San Francisco where I live (so at least it's in the US and I know where to go yell at someone!) But that's why a lot of people store it offline ("cold storage") where it cannot be taken, hacked, etc. because it is not connected to any network. It can be stored on a flash drive and stashed safely in your favorite spot.. I didn't use BTC-E because it's in Bulgaria, w/ unknown owners.. and there's enough risk in the price itself.. totally with you on all that.

ps. if you get a bitcoin wallet, I'll send you a little bit too for free.. ;)

@Mary B, Was it my property in Richmond? lol

@Michaela G. , I remember hearing your "accidental landlord" story, and I LOVE it! All's well that ends well! I also like your Germany comment! It drove me crazy over there! Missed a boat stop and went further down the river because I was standing in the wrong spot at the 12 second stop.. No we can't stop longer! Then "sir, you can't stand there. you must be 3 ft back when waiting for the next one" On time. In place. As instructed. Structure structure!! (Although many beautiful places, and fun people :) .. at Oktoberfest at least!). I'm stoked for how your buys worked out for you Michaela! Wish I could make money like that out here! But I just don't know GA and probably missed the boat on the timing..

I think one of the biggest differences with some of us buying on the left coast is that we use a lot more leverage because of the higher price point (I'm sure you've seen the local MLS!). So I feel the need to have a more detailed view of how my returns pencil out if things don't go as expected. Not to mention that you could buy a dozen houses out there for a downpayment out here!.. You can only lose what you have in when you are a cash buyer by yourself. But I have my credit and my investor's money on the line.. It's not stressing me out or anything, but I feel the need to be diligent. I wish I were you! lol

Don't be so quick to give up @Michaela G. ! That site can be used to purchase from your bank account also, which is why they ask for financial verification. You can get a wallet that doesn't require a credit card and more info about wallets at this link. Then I'll send you some.

http://bitcoin.org/en/choose-your-wallet

By the way, I am going to make my first bitcoin payment for an actual transaction tomorrow. I went to a hiking group on meetup.com today and met some cool folk (and a BEAUTIFUL hike through the presidio, land's end, baker beach, and sutro.) There's a $2 "fee" for something, that the leader takes through paypal. I asked if she'd accept bitcoin instead (because I can't remember my paypal password and have my bitcoins handy). She said, "I'd love to!" She's getting her wallet tonight and I'm going to send it tomorrow. Just for novelty's sake for her at $2. But still, interesting... And the first time it's actually easier for me than another payment system, even if only for own forgetfulness of my PayPal password..

I probably didn't ask the question as well as I could have..

I'm not asking what exact percent of revenues you think expenses will be in our area, or about the 50% rule. (although I agree with you all). And not about reserves. My question is whether or not you calculate if you'd still be making a good ROE with higher expenses or lower rents than you project over the longer term?

Like @Wade Sikkink said, he calculated his break-even vacancy. @Johnson H. , especially investing in lower-rent areas, do you know how your ROI will play out long-term if your expenses are an extra $2/ft/yr? Or 10% higher? (whatever you use) @Account Closed , do you know how much your rents would have to increase to offset increased rates in your 5/1 ARMS without eating away at profit (or how profit would drop if they don't go up as expected)? Prime has regularly been over 7% every 5-10 years.. even higher the further you go back.. Not trying to pick on anyone specifically. Just getting at this idea of knowing how fluctuations relative to your expectations might impact your longer-term returns.. Whether or not you calculate the impact on your ROE of those less likely, but plausible scenarios..

Again, nothing crazy. But if nominally higher expenses/ft wipe out all profit, or a raise in prime by 250bp wipes out most/all profit, those results may be something that are totally plausible and I might be concerned. If I see that those increases just put a dent in the already very healthy profit, plus considering the upside.. Maybe I don't care and totally willing to accept that. But do you look at it?

@Bill Gulley