All Forum Posts by: J. Martin

Jerry W is right. You can buy at a fraction of the cost to build still, so it's generally not worth it unless the area is in high growth and you can get a lot for a deal or an old building to knock down and build something bigger. But then you're talking about developer territory, which encompasses an entirely different level of knowledge, experience, risk, and capital. Read up to get a handle on the things you need to know, or partner with someone who is successful already - and walk before you run. There are also properties from homepath.com that are available first only to owner-occupants w/ 5-10% down, although they seem to be priced a bit higher than market because of the favorable financing. They take FHA 3.5% down also on 2-4 unit. Good luck!

Regarding proof of funds and pre-approval, it depends on the area. In the SF Bay Area in CA, everyone is expected to submit a pre-approval from a recognized bank with their offer, to be considered. However, the market is hot, so sellers call the shots. Many ask for proof of funds (like a screenshot you described), because many lenders are liberal with their pre-approvals. Also, because appraisals don't always come in as high as purchase prices, sellers like to see that the buyer would have extra funds to close the gap, if necessary - with enough reserves to qualify for the loan. Just black out the account number so they see your name, the balance, and the company. I was sending a proof of funds along with my preapproval without even being asked on my last property so the seller knew that I was both serious (took the time to do it) and had a firm ability to close the deal (the amount in the account was more than enough). Doesn't hurt your odds of getting into contract! (unless you don't have the funds!)

I worked with different agents before finding the right place, and told them all when I was switching to a new one - because they were not offering me what I needed. Don't feel bad. You're the only one truly looking out for #1 - you. Just be honest and thank them for their time. It's part of the business. And post something nice on their LinkedIn account and refer a friend if you really appreciate their work for you.

Well said William T, and good luck in your niche.

I rent to some latino families in Richmond, CA. One 3br unit is a multi-generational latino family w/ 4 working adults that moved to get more space and pay less than they were in San Francisco. A family lowering their expenses and working hard to save up money is someone I'm happy to rent to. I got a normal deposit and told them up front I need some form of legal ID for all adults that were going to live in the unit, but they didn't necessarily need to be issued by the US. Pays on the 1st, unit good condition, no problems or unnecessary calls, and so far, so good. Look at the circumstances, and not the race or citizen status IMHO. Like William T is probably seeing, there may also be a niche to make some money since some owners are apparently unwilling to rent to them.

And no, I'm not aware of anything that makes it illegal to rent to non-US citizens.

Hi @Andy Kaufman ,

Have you started the club in Berkeley?

I live in Richmond and invest in the East Bay, and am interested in meeting up with some more investors in the East Bay. Any info/date/times appreciated.

Thanks!

Hi Sarah,

I haven't been especially active on bigger pockets, but I am an active real estate investor in the Bay Area and thought I'd get in touch before doing a surprise drop-in on the meet-up on 11/18! I own 5 units in the East Bay and am interested in talking and networking with some other Bay Area RE investors to share some thoughts, experiences, and maybe get some more deals going.. I've worked with @Johnson H. before in our 9-5 jobs and happened to see him in this thread, so hopefully he'll vouch for me, even though we've only had limited discussions about our respective real estate ventures so far..

So just wanted to check to make sure your meet-up welcomes those who are just getting into the BP game, and already in the rental game.. Hello to everyone else, and hope to meet many of you soon!

Best,

J Martin

0% down is great!

if you can't do it with VA, know that you can put 3.5% down FHA on a 2-4 unit and most likely get more cash flow. They'll count 75% of in-place or market rents for underwriting too, which gives you a much higher purchase price than you would qualify with yourself. Then do a 0% down VA for a principal residence/future rental SFR later.

Low-down payment financing backed by the govt is one of the greatest gifts to real estate and ROI, IMHO.

And yes, have them sign a lease if you do this deal and they stay. Better yet, have punitive monetary penalties written into the lease if they don't move out in time. Something like $500 for going past the date, and $100 or 150/day would give them a large incentive to move out, even if they're in a bind. If you're really concerned, you can have an escrow company hold something like $2-5K of the seller's proceeds, to be released upon move-out at agreed-upon date, and delivered in XX condition. Everything's negotiable. You can always tell them, "If you plan on holding up your end of the deal, none of these terms even matter."

It depends how competitive the market is out there - to know what they can get away with. There are people in San Francisco & NYC who purchase condos and let the elderly owner live in it for free until they die just to be able to buy it off-market (sellers market). In other areas/situations, buyers just extend escrow until the owners move out, because they refuse to take the risk (buyer's market). But a lease is not unreasonable under any circumstance.

IF YOU ARE A HANDS-ON MANAGER.

I buy and rent in the lower-income city of Richmond, CA in the Bay Area, 35min train commute to San Francisco. I think there are opportunities to make good money on these types of properties IF you're willing to be a very hands-on manager. I bought my first 4plex and moved in to one unit, spending lots of time screening and hand-selecting good tenants. I have the nicest place on the block after I installed new motion lights, fence, garden, etc. I pick up any trash outside. Tell the neighbors not to park their cars on the lot. Call police if people are slumming around in the neighborhood. And fix anything that breaks in the units. Vacancy is 2% in Richmond and rents are increasing dramatically all over the Bay. Wroking class folks come here when they get priced out of more desirable areas or want more space for their dollar. The cash flow is good, got large security deposits, and haven't had any issues (although just for a year now).

Time will tell, but I think this approach can work well. If you want to live out of town and leave an average property manager in charge of the building, you may have a higher probability of the situation spiraling downwards.. But if you can manage it or have someone you can trust manage it, I think it's a good way to get cash flow from day 1 (at least on my properties), and enough extra to cover the risks you might face in these neighborhoods. ...if you keep your eye on them and don't let the tenants or the scene slide out of control..