All Forum Posts by: J. Martin

@Sam Magi

In Richmond, yes. Lower prices for the same rents. In Walnut Creek, would be very difficult to find. Prices are higher per dollar of rent (Higher GRMs, lower cap rates) The area is much more prime, and has really taken off in the last few years (and decade for that matter). These types of areas almost always provide less CF than areas which are less prime. Concord is more 'prime' than Richmond. Better schools.

So is it the Monument Blvd property? If so, I like the split duplexes.. Or maybe you're doing something off-market..

Depending on area of Richmond, about $115-150/ft+ for a fourplex compared to $220-300/ft+ over there. Concord prices are about double, but rents are only a fraction of that higher.. But you can probably manage less actively out there.. And I think Concord is a good long-term bet, and likely more consistent appreciation than a tertiary Bay Area city like Richmond. Might be hard to make much cash flow depending on your leverage though. I think your payment will make it close, but you'll have some cash rolling in on a gross basis. Property manager (if you have one), periodic vacancies, any common area utilities, trash, misc fixes, reserves, etc. will suck up a lot of the rest. But lots of good upside in rents and appreciation. Congrats on your deal, and hope to hear you closed soon!

@Kumar R. and @Pakav Kim .

I'd like to suggest some alternatives rather than directly addressing the turnkey company issue. Have you considered investing directly alongside the cash of an experienced buy and hold investor in a cash flow property with equity and cash flow split pro-rata? - so your interests are aligned and they are working to boost the value of their own equity also? - rather than buying someone's flip at a premium when they have no real interest in the property except for collecting fees? Just a thought on an alternative to the "turn-key-but-on-your-own-if-things-go-south" route.. (No offense to any turnkey sellers out there! I'm just talking about investing with someone that has the same skin in the same game as you do - rather than a pure 'sevice provider'.)

Regarding the location, I ran up against many of the out-of-state issues mentioned here when I first started looking, until I realized I could find cash flow in the East Bay. There is cash flow if you come up to the North part of the East Bay, such as Richmond, Pittsburgh/Bay Point, and a few others. I can share some specific numbers with you if you message me, on deals I've purchased in the last 4 and 10 months, respectively, for informational purposes. Both providing good cash flow, principal paydown, and good appreciation prospects, with a reasonable commute to Oakland (20min) and SF (35min) in a tight market with lots of spillover into the secondary/tertiary markets. And no rent control!

Look at a 10+yr historical chart of prices in the area, and you'll see how far they have gone down and how much more potential they could move up over the long term.. (although, who knows!? - that's why I like the cash flow and principal paydown to support the purchase of the investments.) I like to be near BART and freeways, when possible. Commutes can get crazy real quick. **Just information. Not a solicitation.**

Rough down in the South Bay! It is ON FIRE down there along with tech!!! I see a lot of multifamily deals (although I invest in 1-4), and WOW! Cap rates (yields) getting pushed to 3-4%..!

Always happy to help with any questions, and especially networking with fellow local investors! Send me a message. Welcome to BP and good luck!

Wow! That is a new one!

I can't imagine how that would feel if you woke up the first night in your house and saw all the crazy neon graffiti (who knows what it could say..) on the wall.. Glad you avoided that!

@Kyle Zaylor , I live and invest in Richmond and would be interested in meeting up with other local investors. There is a meetup in SF at Rogue Brewer on 11/18 @ 6:30PM. I think quite a few p;eople are coming from around the Bay also. I've also talked to a couple other interested people in Berkeley. Maybe we can get n "influencer" on BP to get the word out and schedule a meetup. I'm pretty busy and traveling during Nov/Dec, but I think the start of the year would be perfect..

Tag my name if you get something together! Thanks Kyle

A 34% cap rate is OUT OF THIS WORLD! Look over your calculations again, do a thorough inspection of the building/foundation, or something! Talk to local CRE brokers or get a local multi-family report from CBRE or "market research". Or loopnet.com if you can find something. Look at market GRM and cap rates for multifamily. Have an experienced broker/investor/someone go over your numbers. I've seen estimates from 35-45% of gross rents in expenses for MF as a rough estimate, depending on circumstances. On the high side in low-rent areas. May differ in your area.

If you can find buildings that truly return all of the purchase price in 3 years of profit (non-compounded!), you will be a millionaire in no time from the inflow of capital to your doorstep!

I think it's a good idea to switch the management company either way, regardless of whether or not they knew. What are the odds that you would have selected the current company if you were to perform a diligent search and find a great manager? Regarding offenders, in SF Bay Area, there are strong tenant protections. Make sure you understand the local tenant laws thoroughly before you take any action. And maybe bring it up to the broker/seller when you're negotiating the final details and try to get some concession.. good luck if you end up going through all due diligence and end up getting it! But understand what the risks and numbers are before you jump in...

For $150/ft in rehab, I would think it would have to have very high-end finishes.. travertine, custom amazing cabinets, some viking appliances etc.

But I've also heard people that do their own work say "there was $200K in rehab performed". Meaning that, as others said, if you paid full-blown sucker retail to expensive contractors, that's what it could have theoretically cost. For them, it was a lot of time invested, and some risk with the flip, that they wanted to be compensated for. Their out of pocket was much less. But no matter what money, sweat, or tears went into it, it's worth what it's worth to the highest bidder, whether the seller makes $20K or $200K. I like you're approach on the estimates though.. Maybe just low margins for him on this one..? Or $100k of the "rehab" is to compensate him and his rehab crew for their time in and his risk..

2 more things forgot to tell you:

1) turn on notification for phrases like "San Francisco", "East Bay" etc so you can get notified about posts in our area.

2) low low termite report for that square footage!! was that yours or their report?!? lol maybe they repaired everything before inspection was done. I've seen dozens and dozens of buildings and reports. the real issue is usually not termites, but wood rot.. near downspouts, corners of buildings, joints & trim, roof transitions/trim, window trim, inside bathrooms and around tubs.. It sounds like someone kept this in very good condition (or make sure you have all your inspections done well!) don't be afraid to spend time on a ladder poking everything that has increased moisture deterioration risk. Good luck and godspeed!

@Sam Magi Re: is 5% cash on cash good for Concord?

All depends on how you calculate it! If you end up netting a solid 5% after-tax annual cash flow return year-in and year-out, with some principal paydown, and upside in price.. while maintaining your building well and growing reserves you may need.. That would be stellar for Concord! If 5% are gross rents to purchase price (aka 20X GRM), watch out!!! Somewhere in between.. I think you'll be OK as long as you get good tenants. btw, what is the GRM at purchase and after your proposed rent increases, if you don't mind sharing? ROE & cap rates are always a bit variable, but GRM is straight forward, even if lacking in sophistication. (Purchase price + Any Repairs) / Annual rents

I think there's a lot of upside over there in rents and price. Close to Walnut Creek (although a bit of a commute to SF!). I have some co-workers with good income buying personal residences in the area. Good luck on your close and on your investment! Let me know if you have any questions. I agree, it's nice to talk to people in the area (although there is an amazing depth of knowledge on here from all over the country!)

Hi @Sam Magi ! And welcome to BP.

I live in my owner-occupied 4plex in Richmond, not too far from your locale. After you get everything rented out (to good tenants!! so key!! and do your research first!!), you should find the landlording fairly easy. Are you going to live on-site? Concord's nice. Can you get any cash flow out there?

My best advice to someone new is to get a good team of people you can trust, especially a trustworthy, reliable handyman. It will make your life SO much easier and you can learn alot in the process. Especially important if you're buying more. I'd hook you up with mine, but I don't think he's going to want to drive out to Concord too often..! Another piece of advice since you're in contract on your first fourplex. It's not unusual to see $50K+ on Section1 of the termite report for an older building (although Concord tends to be newer than Oakland or other areas). Keep that in mind when you're looking at prices, and don't let it scare you off. The water's warm! Jump in! Lots of good advice on this site. Read the beginner's guide, and good luck on your investing!

FYI, there's a meetup of BP member in SF at Rogue Brewery on 11/18 @ 6:30PM. Come out and say hi!

I almost forgot, there's a BP SF meetup at Rogue Brewery in SF on 11/18 @ 6:30PM. Come out and chat with the local BP crew! (which I am just getting to know).