All Forum Posts by: J. Martin

Hi @Michaela G. ,

I know I'm a bit late here, but I've seen you post around on the forums, and just wanted to say hi. I've always been a bit apprehensive about building a labor-intensive portfolio out of state where I don't have a good hold on it.. So I've been buying here in Richmond. (Still somewhat labor intensive, but really not bad..).

I was curious on your thoughts, as it sounded like you managed them from there first.. But I saw your profile has Hercules.. So did you just find a PM there that was willing to manage at a reasonable price? Or someone else you trust? (I assume you're not flying back and forth!) Congrats on those entry points on the properties! Looks like you have a lot of potential upside!

Also, a bunch of SF and some East Bay BP members are meeting at Rogue Brewery in SF this Monday 11/18 at 6:30PM if you or others would like to come say hi. @Andy Kaufman , if you have any info about Berkeley meetups, that's right down the street! But I haven't seen any regular East Bay meetups on here.. Let me know if you want to start! I'd love to!

I own a partial soft story 4plex in the Bay, but not in Oakland. You may know that Oakland is in the process of inventorying soft-story building for the purposes of implementing a retrofit program along the lines of SF. It looks like 5+ buildings would be targeted 1st, then 2-4, and down to SFR's maybe.. Everyone says it's better to save up for a retrofit than pay for earthquake insurance. But as far as selling or not, there will be less impact on price before new regulations are announced, than after, presumably. I'm not sure what the impacts are for rent control, if you can use the retrofit as a "substantial improvement" and increase rents.. but that could play in to the calculation.

I work in bank regulation, and when I asked what will happen if 20%-50%+ of bay area buildings become uninhabitable due to damage - along with the ramifications for loan payments, housing supply, and money to rebuild, the consensus answer seems to be the same: FEMA will jump in and pay for everything, so why waste your money in the meantime? Does that protect your building from structural damage and potentially injuring someone? No. I know that's not a warm and fuzzy answer, but just the considerations I've heard out there..

Here's a link regarding the Oakland city plan.. Good luck!

http://www2.oaklandnet.com/oakca1/groups/ceda/documents/report/oak040369.pdf

Hi @Account Closed ,

Welcome to BP and as a new investor in the Bay! As an East Bay investor, I will tell you that it's hard to hit the cash flow numbers people discuss about the lower-priced areas in the US on BP!.. but there are still some great opportunities in the Bay. And there is an amazing depth of knowledge and resources here to get you started on your real estate career. You may find that some of the lower-priced areas in the East Bay might give you an easier entry, with lower price points.. I've still been finding good cash flow deals in my area in the East Bay. But poke around and see what suits you.

I'm always interested in meeting up with other investors in the area, and will be meeting a bunch of the SF Bigger Pockets (BP) members at Rogue Brewery in SF this Monday, 11/18 @ 6:30PM. Come out and say hi! You can message me or email from my website if you have any questions, and the forums on BP are a great source of information. Enjoy! And hope to see/hear from you soon!

PS. Like your pic! You look like someone I'd see out on the Playa!.. lol

Like any city, there are good, bad, and OK areas. I agree though, it does take more proactive/diligent management to keep out the problems/headaches.

Good luck on the new business!

Hi @Barbara Brennan . Welcome! Lots of great people and advice on BP. I invest here in the East Bay. Like @Justin Williams said, there's still stuff in California! I like to know the area well and be able to drive to it if I want to see what's going on. Many here have been very successful out of state also though. As many have said before, having a good/trustworthy team in place is critical, whether you are in or out of state!

Much success in your investing/wholesaling!

When you say you have $40k equity in your rental property, are you talking about $40K in "tappable" equity below 75% LTV for a bank-loaned non-owner-occupied 2nd lien? Or does the $40K take you to the value property value? That would make it MUCH harder to tap. There are other private sources out there, but they usually want a better LTV than the bank..

From what I understand, VA loans are for owner-occupants only.

I was also unclear when you said "buy and hold at least until summer for a bigger profit". Do you intend to flip the house (and count on the new buyers to be better in upkeep)? Or take permanent ownership of it so you can have 2 nice-looking properties with good tenants next to each other?

I approached the owner of the 4plex adjacent to mine about buying it, and she said she wasn't interested. She doesn't sell her properties. I let her know that I would expect to pay above market since she's not trying to sell it, or swap her for a higher-yielding property, but said she still wasn't interested. There is a lot of value to me in controlling that property, for various reasons, such as your issue with the upkeep. Adds value all the way around.

If you would really like to have the property over the long run, I highly recommend you do within reason whatever it takes to purchase it, if it's a reasonable deal. Who knows when it will come around again? If it's a flip, then just look at it like a flip. In that case, it doesn't seem to matter as much that it's next to your rental, except that you may have better knowledge of the neighborhood than your average purchaser. And maybe you can fix it up nicer..

Either way, good luck!!

Considerations in determining the eligibility of a borrower for one of these exceptions are the length of time the previous property was owned by the borrower and the circumstances that compel the borrower to purchase another residence with an FHA-insured mortgage. In all other cases, the purchasing borrower either must pay off the FHA-insured mortgage on the previous residence or terminate ownership of that property before acquiring another FHA-insured mortgage.

Handbook 4155.1: 4.B.2.c-d
http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh

@Ariam K. There is no explicit restriction regarding the size of the new purchase. However, the HUD language explicitly states that FHA will not insure a mortgage (aka, you will not get one) "if FHA concludes that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties." Maybe this statement has something to do with rumors regarding not being able to purchase another 4-unit property, because it may have a higher chance of being view by FHA as an attempt to obtain investment properties, rather than just an affordable place to live. Talk to a mortgage broker who has done a second FHA loan before and find out what the practice is versus the HUD language in your area. You can also refi the existing FHA into conventional, if possible, and it does not appear that you would be subject to the restrictions listed above by @Aaron Ram . Here is the language:

http://portalapps.hud.gov/FHAFAQ/controllerServlet?method=showPopup&faqId=1-6KT-879

Good luck, and let me know if you're able to close on another one!

You can purchase up to a 4-unit (rather than UNDER 4 units) with an FHA loan, but it has to be one property/parcel. (Technically, you can even buy a 5+ unit and convert it to a 1-4 unit with an FHA 203k loan!)

The FHA language explicitly states that the program is NOT intended for investors to accumulate properties. And generally, having more than 1 FHA is not allowed.

However, they make exceptions

1) if necessary due to a growing family,

2) moving more than is reasonably commutable (generally considered 50 miles) 3) and certain exceptions regarding joint ownership/co borrowers.

From what I hear though, you may need to be renting at the time of entering the second transaction to convince them you are actually going to move. But that last part is just a rumor.. Also, the language in FHA refers to having more than one insured mortgage at a time, not originations. So, you may be able to buy FHA, refi that to conventional within 2 years if possible, then get a new FHA. But that involves a lot more expenses..

Here's what HUD says:

http://portalapps.hud.gov/FHAFAQ/controllerServlet?method=showPopup&faqId=1-6KT-879

There are some options for low-downpayment and PMI on conventional loans, but not always readily available.. I'm with you though! I can see why that is a very attractive option! Good luck!

Also, regarding your questions on your numbers and the rules.. It is absolutely impossible or nearly impossible to hit the 1% rule (monthly rents to purchase price) in 80-90% of Bay Area properties. Cash flow itself is hard to find without a BIG downpayment, but that squeezes down ROE also.. That's why you see so many CA investors out in Phoenix/Houston/Atlanta/etc buying up SFRs.

Are your units 2br? Do your research and don't be afraid to ask for market rents. They've been going up a lot lately, so it's worth your time to do your diligent homework. Go on Craigslist. Go personally look at open houses for rentals in the area, and see how it sizes up to yours.. An extra $50/unit is $2,400 in your pocket for the year, which will be a good chunk of your likely net income. Of course, this may require finding new tenants looking in that price range..

Enjoy the journey!