All Forum Posts by: Kevin G.

Quote from @Erik Estrada:

Quote from @Kevin G.:

I am considering house hacking in San Francisco with my wife and two small kids. I've noticed many multi-family options available, with some promising the possibility of living almost rent-free. However, I'm wondering what the catch is.

My main concern is the current vacancy rate in San Francisco, which I know is higher than in previous years. I'm looking to use the lowest available down payment option, preferably 3%, either through a conventional or FHA loan if the conventional option doesn't allow for such a low down payment. Luckily, my credit score is great, so hopefully, I won't need to go the FHA route.

I'm specifically looking at 4-plex properties with at least 3 bedrooms for my family and ideally 2 bedrooms for the other units. I've already seen some of these properties on the market. However, it's concerning to see many sellers dropping their prices and numerous rental properties available in San Francisco.

Considering I'll be putting such a low down payment, my price range is likely around $1.2-1.4 million.

My plan is not to stay long term. We’d only live in it for 1-2 years max, and then ideally be cash flowing by then.

I would appreciate any thoughts or advice on this matter.

 Hey Kevin, 

You may now finance a 2-4 unit with a conventional loan with 5% down. It used to be 20-25% down in the past. 

Do you recommend exploring the FHA route to get 3.5% down? 

I am considering house hacking in San Francisco with my wife and two small kids. I've noticed many multi-family options available, with some promising the possibility of living almost rent-free. However, I'm wondering what the catch is.

My main concern is the current vacancy rate in San Francisco, which I know is higher than in previous years. I'm looking to use the lowest available down payment option, preferably 3%, either through a conventional or FHA loan if the conventional option doesn't allow for such a low down payment. Luckily, my credit score is great, so hopefully, I won't need to go the FHA route.

I'm specifically looking at 4-plex properties with at least 3 bedrooms for my family and ideally 2 bedrooms for the other units. I've already seen some of these properties on the market. However, it's concerning to see many sellers dropping their prices and numerous rental properties available in San Francisco.

Considering I'll be putting such a low down payment, my price range is likely around $1.2-1.4 million.

My plan is not to stay long term. We’d only live in it for 1-2 years max, and then ideally be cash flowing by then.

I would appreciate any thoughts or advice on this matter.

Quote from @Doug Spence:

@Kevin G. Great questions! I live in San Diego and I've been investing out of state since I moved here in 2018, with an investing focus primarily in Oklahoma, Wisconsin, and Florida. I've done two out of state BRRRR's and two out of state flips, and I also purchased three turnkey properties. I've invested in numerous syndications as an LP.

I've sourced deals both on market and off-market, and I think the best way (especially now) is finding that investor-friendly agent that is willing to submit lowball offers on homes that have been on the market for a while. Your agent should also have access to off-market deals, and that should be one question (of many) you ask when vetting your agent. 

For a BRRRR, I take the ARV*.75 then subtract estimated rehab costs. These are tough to find but they are out there! The tough part now is finding something that rents for enough to cover the mortgage with these higher interest rates. That's why it's challenging to BRRRR these days.

If you want to BRRRR successfully, you ideally want to find properties that don't qualify for conventional financing because they need SO much work. That leads you to need a HML or private money (private money is my preference) so you can pay cash.

As for contractors, I like to leverage the property manager's network of contractors. They are already vetted and have a relationship with the PM so you're less likely to get screwed. Plus the PM can verify the work before payment is sent. 

Good luck! Keep us updated on your progress.

Thanks so much for sharing your experience and insights! It's always valuable to hear from someone who has successfully navigated the out-of-state investing landscape, especially in diverse markets like Oklahoma, Wisconsin, and Florida. Your approach to BRRRR and flipping, along with your experience with turnkey properties and syndication's, provides a well-rounded perspective.

I have been able to find a few successful ones on the market in the KCMO area, but bear in mind this is just based on my own calculations and not viewing the properties. So I am guessing on rehab costs by just looking at the pictures. It would be easier if I could get someone to view these properties, but I don't know how competitive distressed properties are in this area. In the market I am in right now, flips are very hard to get, and you'll easily see 10+ offers on some of these homes. I am hoping to face less competition in a Midwest market like KCMO.

In regards to lending, yeah, I am definitely going to use a HML as that's my best option. I have one that can do 10% down.

Thanks for all the great information!

Quote from @Andrew Postell:

@Kevin G. I lived in NY for several years. When I lived there I couldn't afford even the "off market" deals that were in front of me. So, I chose to invest in Jacksonville, Florida. Now, there are studies that show Jacksonville is good for this and for that...but that's not why I invested there. I invested there because I had a network of trusted people that I knew would look out for my properties. When you invest out of state...you may never even see your own property! That's an enormous amount of trust (and money) to leave in the hands of strangers. This is a common discussion - City X has 2% better numbers than City Y....but the reality of it is that one bad vendor, one bad relationship, can wipe out ANY benefit that is potentially there. If you have someone that you already know in a certain city - choose that city!  If you are targeting a city...then interview people right away.  If you can't find people that you feel comfortable with...then keep interviewing...or try another city.  Trust your instincts.  Networking with other local investors is also a good idea for that market...so use those facebook groups to your advantage. 

Hope all of that makes sense.

Thanks for the encouraging words. I was expecting some negative feedback for wanting to invest out of state considering how the overall market is doing as well as our economy.

You make some great points and it makes me feel a lot better knowing my immediate family is there and willing to help if needed.

Hey everyone,

I am a house flipper here in the Bay, so I am not new to real estate, but I am new to investing out of state. I have been looking to get my hands wet in the BRRR method space. The primary market I am looking at is the KCMO area. I am seeing strong growth in this market, but I also have family that live out there as well.

I think I can get some of my family to help me source deals, or at least help somewhat and will have eyes on the properties when I am not there.

It seems to be a low barrier of entry for me coming from the Bay.

Here are some of my questions:

How do you guys normally source these deals and what should I be looking for percentage-wise on the ARV vs purchase price?

What remodel costs am I looking at for the KCMO area in comparison to the Bay Area?

I was going to use a HML lender to source these deals, and then refinance obviously at the 6-month mark. Is this smart or should I be getting these properties with a conventional loan? Just looking at putting less down if I can and using a HML to finance the rehab.

What would be the best way to find a reliable contractor out there?

Any other tips or suggestions you have?

Quote from @Carlos Ptriawan:

Quote from @Russell Brazil:

Because San Francisco is a cyclical real estate market. He shoots up quickly, then recedes a little. Rinse and repeat.

 OP needs to understand every bit of city has its own micro-structure, its own cycle and in-migration dynamics.
The latter part is the choice my one city within the same region experiences huge inclines, and the other has persistent decline.
People is just simply moving.

One very reason why the east bay is the highest appreciation now is because of good quality school district, and tech people from south bay move to east.

You're right. I still have a lot to learn about this market and real estate investing in general. Nonetheless, I appreciate this discussion and I'm happy to learn more about the Bay. I currently invest in this market and I also want to expand into the Silicon Valley market. Additionally, I engage in in-depth discussions on real estate trends and find deals for my subscribers. Therefore, it's crucial for me to continue learning, which is why I participate in these discussions.

Regarding the East Bay, I partially agree with you. The schools in Brentwood/Oakley are great, but I can't say the same for Antioch/Pittsburg. I say this as someone who has lived in the area for over 28 years. However, you make a valid point that tech professionals are moving further east, which is contributing to the recent appreciation.

You're right. I still have a lot to learn about this market and real estate investing in general. Nonetheless, I appreciate this discussion and I'm happy to learn more about the Bay. I currently invest in this market and I also want to expand into the Silicon Valley market. Additionally, I engage in in-depth discussions on real estate trends and find deals for my subscribers. Therefore, it's crucial for me to continue learning, which is why I participate in these discussions.

Regarding the East Bay, I partially agree with you. The schools in Brentwood/Oakley are great, but I can't say the same for Antioch/Pittsburg. I say this as someone who has lived in the area for over 28 years. However, you make a valid point that tech professionals are moving further east, which is contributing to the recent appreciation.

Quote from @Carlos Ptriawan:

Quote from @Kevin G.:

Hello everyone,

I have been actively researching the real estate market in the Bay Area, which I feel isn't talked about much in this sub. I know that due to its extremely high barrier of entry and overall VHCOL (Very High Cost of Living), it's a different beast altogether. But when looking at the trends, I actually see Silicon Valley specifically not slowing down anytime soon, while other parts of the Bay Area are actually suffering.

Let's start with the bad...

San Francisco (SF) is experiencing price drops of around 5.4% Year-to-Date (YTD) and is expected to drop even more next year. Businesses are leaving left and right, with some of the most popular flagship stores closing down. Crime rates in SF are at an all-time high, which can't be ignored. Tech workers with high incomes have options, and if it means leaving the city for a safer community and better quality of life, they are going to choose that, and we are seeing it in the trends. More homes that have recently been remodeled are popping up for sale in SF, indicating that some home buyers have sought to add value to their property and try to bring back the home values they once had in 2020-2021.

Oakland is also facing challenges. Rents are dropping rapidly in the city, largely due to the high level of crime. While Oakland used to be a cheaper option for people who wanted to live closer to SF, that is no longer the case. The crime and overall lack of safety in the city are driving people away, and I don't blame them.

On the other hand...

San Jose and the surrounding area have seen an increase in home values of 10% YTD. This is very interesting when compared to SF experiencing the opposite. I attribute this to the safer area, as well as the rise in tech jobs thanks to the AI boom.

How it pertains to investors...

While the Bay Area market can be scary due to the high barrier of entry and overall crime in certain areas, it would be smart to dive deeper and take a look at the future growth. My prediction is that the increase in AI jobs will bring prices soaring again, including rents. We are just in the infancy stages of AI and have yet to fully explore the potential of this technology.

Navigating the Bay Area market can be quite challenging. Even for those who feel confident in navigating different markets, the high prices and interest rates in this area have proven to be difficult.

Would love to hear your thoughts and theories on why the Bay Area's market behaves so divergently.

 This has been discussed a lot. Actually SF market was the best market in bay area for the first appreciation wave post GFC, the peak was 2017. After that, city like San Ramon/East Bay has exceeded SF performance, while San Jose is #2. Currently San Jose is still #2 in relative performance. East Bay was better.

The best opportunity to purchase in San Jose is actually December 15, 2022. That's where someone selling a super-steal 3 BR in Sunnyvale for only $950K LOL.
NOw it's 1.6 after 8 months LOL. The discount phase is gone.

Interesting perspective. I am from the East Bay and have lived here my whole life. I completely agree and have witnessed the significant appreciation that has taken place in the East Bay. However, I find it difficult to believe that it surpasses San Jose in terms of desirability. When comparing appreciation percentages, the East Bay certainly comes out on top. Personally, I find the area to be less desirable than San Jose, and especially San Ramon. The only truly nice areas in the East Bay are located in Central Contra Costa County, such as Walnut Creek and Pleasant Hill. Brentwood is also ok. Prices, demand, and rents are all high in these areas.

Hello everyone,

I have been actively researching the real estate market in the Bay Area, which I feel isn't talked about much in this sub. I know that due to its extremely high barrier of entry and overall VHCOL (Very High Cost of Living), it's a different beast altogether. But when looking at the trends, I actually see Silicon Valley specifically not slowing down anytime soon, while other parts of the Bay Area are actually suffering.

Let's start with the bad...

San Francisco (SF) is experiencing price drops of around 5.4% Year-to-Date (YTD) and is expected to drop even more next year. Businesses are leaving left and right, with some of the most popular flagship stores closing down. Crime rates in SF are at an all-time high, which can't be ignored. Tech workers with high incomes have options, and if it means leaving the city for a safer community and better quality of life, they are going to choose that, and we are seeing it in the trends. More homes that have recently been remodeled are popping up for sale in SF, indicating that some home buyers have sought to add value to their property and try to bring back the home values they once had in 2020-2021.

Oakland is also facing challenges. Rents are dropping rapidly in the city, largely due to the high level of crime. While Oakland used to be a cheaper option for people who wanted to live closer to SF, that is no longer the case. The crime and overall lack of safety in the city are driving people away, and I don't blame them.

On the other hand...

San Jose and the surrounding area have seen an increase in home values of 10% YTD. This is very interesting when compared to SF experiencing the opposite. I attribute this to the safer area, as well as the rise in tech jobs thanks to the AI boom.

How it pertains to investors...

While the Bay Area market can be scary due to the high barrier of entry and overall crime in certain areas, it would be smart to dive deeper and take a look at the future growth. My prediction is that the increase in AI jobs will bring prices soaring again, including rents. We are just in the infancy stages of AI and have yet to fully explore the potential of this technology.

Navigating the Bay Area market can be quite challenging. Even for those who feel confident in navigating different markets, the high prices and interest rates in this area have proven to be difficult.

Would love to hear your thoughts and theories on why the Bay Area's market behaves so divergently.

I am two weeks into my first house flip. I started the business a couple of months ago and it took us around 50+ offers and lessons learned to finally secure our first house in the Bay Area, CA. The market here is insane for any type of investment.

Let me share the numbers with you:

• Purchase Price: $480,000
• Rehab: $63,000 (Includes 10% cost overrun)
• ARV: $650,000
• Profit: $46,000 (This is good for the Bay Area)
• ROI: 54.8%
• Expected holding time: 2 months

We have already encountered several problems during the first two weeks of this project. Firstly, our contractor decided to charge a higher labor cost once starting the project. The mistake here was not getting the estimate in writing or having a contract. However, we decided to continue with him to avoid wasting time finding another contractor, as most general contractors have poor communication or tend to disappear.

Another issue we've faced is with material choices. Initially, we had a modern design in mind, but our contractor suggested cheaper items, particularly for the flooring. Unfortunately, it didn't turn out as good as we expected. In the future, I will trust my gut and stick to the original design. The cost savings weren't enough to justify having lower quality flooring.

Despite these challenges, everything else is going according to plan. As long as my team can complete this project in three weeks, we will be ready to resell it.

What's next for me?

Flipping a house has been an invaluable experience, and I'm already searching for my next project. Additionally, I'm compiling extensive data on real estate deals across the country for an educational endeavor called Dealsletter. If you're struggling to find good deals or simply want to stay updated, feel free to reach out!

I would love to hear your thoughts on my journey and the lessons I've learned. Any feedback or advice for my next flip would be greatly appreciated!

Cheers, Kevin

Wow! I guess we have really been dropping the ball on not offering on these. We are absolutely brand new to house flipping and it’s all a learning experience. We have been going completely cosmetic but our GCs does work on roofs and it’s also not hard to find roof contractors as well. 

Does anyone find that it’s hard for hard money lenders to cover roofs as apart of the 100% rehab costs ?