All Forum Posts by: Kristina Heimstaedt

I'd second @Isaac Melgoza. It depends if you're looking for a single family residence, multi unit or if you're open to a condo. I know that you really limit your options with that kind of budget unless you are ok with a 1 bedroom condo and even then the options are limited. Southern California is not for the faint of heart. However, we get better appreciation than the majority of the country. Be careful though, because that also means swings the other direction. Every rose has it's thorn.

I recommend the following:

1. Learn your state laws. Look at what you are allowed and not allowed to do. In California, you must give 30 days notice before you increase rent by less than 10%. If you raise it more than 10%, you must give 60 days notice. 

2. I personally increase rents by 2-5% annually. In my area this typically keeps stable tenants without too much turnover. Rents in my area have been going up by 5% on average per year. 

3. Always put everything in writing. Look at the current lease to see when their lease is up, renew the lease and give them appropriate notice. How you choose to contact them and coordinate is completely up to you and how you communicate with them now.

@Nathan Churchill @Daniel P. You might even consider bringing a general with you on the inspection. I had a client do that so that his contractor could give him a better idea of the numbers on the spot. You might need to pay for the contractor's time, but it's going to give you the most accurate numbers you can get. 

I would check with the city. I have personally found that if a property has traded hands a number of times and if it has no problems (layout is fine, rentable area, major systems are fine), sometimes I find that there are zoning or restrictions as a result of the city. 

I might also see if it's the property management company is the problem. Maybe everyone has been using this company and they just don't perform the way they should. 

9 times out of 10 though, you're not going to dump a performing asset especially at a depreciated rate.

This might sound aggressive, but I think it's important to take what you can up front. In California, it is illegal to take first, last and a security deposit. However, you can take a security deposit up to 150% of rent (please double check that for anyone in California). 

We used to just take first month's rent and a security deposit equal to rent. Unfortunately, we had someone not pay their last month of rent and trash the place despite the fact that you aren't supposed to use your security deposit for your last month's rent. 

I think there is a fine line balance between protecting yourself as a landlord and taking advantage of a tenant. Now we take about 125% of rent for the security deposit. 

Every once in awhile we get some flack for it, but I just respond with that "you're the lucky recipient of my hard lessons learned and it is just not something I can negotiate". We had one guy really push back. He stopped pushing once we offered for him to leave. He was very happy to be in his new place just prior to Fourth of July.

Hopefully this helps!!!

Real estate is not like the regular stock and bond market. My dad is a financial advisor and likes real estate, but is always significantly more calculated with each move because real estate isn't nearly as liquid as stocks and bonds. 

I would like to give you some hope that there is opportunity to find comparable rates, but I think it's a bit of a fool's errand. If you look at the Portland market, they have had a significant jump post recession. Blame it on "Portlandia". Blame it on the affordability. Blame it on the "keep Portland weird". Blame it on the fact that it is attractive to millennials. It's a matter of poison, not right or wrong. Atlanta, Denver and Austin have also seen great returns post recession. Is it for the same reasons that Portland has come back? I'm sure historians/anthropologists will dissect this into something tangible in the future. 

I personally like unique assets. I'm in a coastal town and know that the closer I am to the ocean, the more inherent value I have along with a number of other factors. In my particular area this also means that it is typically the spot that comes back the fastest and has the lowest vacancy. Is it the right fit for everyone? Absolutely not. 

Either way, check out Bill McBride's blog because he is the best and if you like numbers, he will become your God/Eric Clapton/Michael Jordan/Warren Buffet/Bill O'Neil... I think you catch my drift. Calculated Risk Blog

Keep an eye on the inspector's report. More often than not I think that is where new investors make mistakes. For instance, I had clients who purchased a house and the husband thought that it would be super easy to do 90% of things. Then he got the contractors in and he found out exactly how much everything was going to cost and was a little surprised. The expenses were more than he expected despite that all of the major systems in the home were in great shape. 

I would presume that if you have an absentee owner, there might be quite a bit of deferred maintenance, not just cosmetic fixes. 

I might also see about getting a better rate on that loan. Paying nearly 5% interest seems quite high. I'm definitely biased on that end though because I work mostly with ARMs.

Keep plugging away!!! Looks good.

I might go back to the seller and negotiate with the seller. You might have an appraisal contingency that would really help with this. 

If I'm the seller and comps seem to justify my price, I'm going to tell you to pound sand and either deal with it or I'll find someone else.

Most of the time, it's in the bank's best interest to give a slightly lower appraisal as it helps to minimize the bank's risk. 

I think the reach question is that it's up to you and what your end goal with this particular property is. It's not an uncommon problem so you're not alone. Part of doing business in real estate.

Depends on what you think you bring to the table. Are you comfortable with a 20k project? The other thing to consider, which I don't think gets talked about enough, weird people rent weird houses. I might aim for the one that is more normal whatever that might be. The other thing to consider is your marketplace. Maybe apartments are better than single family homes. Maybe none of this matters and you're most concerned about cash flow on paper because it will be the property manager's problem. Lots of different ways to look at this. 

Up to you. We try to analyze the numbers for each property. Our best performers get cap ex when they don't have repairs. Maybe it goes in your pocket as a nice little bonus. Maybe you choose to put it in a "no repair" jar and it goes towards a new property or something else. Maybe you set it aside for rainy day policy in the off chance that you might have a more significant problem down the road such as roof, HVAC, etc. 9 times out of 10, there is no wrong answer, it's just how you choose to appropriate the funds.