All Forum Posts by: Kristina Heimstaedt

@Dan Schwartz I appreciate the sentiments and I agree that there are reasons and money for almost anything. I think that I might be biased in working in Southern California. More often than not, my clients are looking at properties 700k minimum and when you're talking about a difference of a point or two on a loan for 500k, I look and think that that's my car payment. 

I think I also answered this with the impression that there wouldn't be money leftover for the next deal. I'm of the opinion that when you use lower interest, it allows you to set aside your funds for more deals with the hope that you can make that happen as opposed to tying up all your funds in a single deal. 

Bottom line, @Alejandro Rivera has excellent options no matter which direction he chooses to go.

I'm going to counter @Dan Schwartz and say go for the cheaper money. 

1. If the seller is cash flowing or you don't need to cooperate with their 1031 exchange, get the cheaper money.

2. The whole point of refinancing after you've repaired the property is to pull all your cash back out of the property to use for a future property. Get the appraiser in there post renovations and get a much higher value than when you purchased the property and go repeat the process.

3. I agree that the time frame to get all of this work done shouldn't take long, but having a HELOC instead of more expensive money will take the time pressure off and allow you to focus on improving your product rather than finishing the job to refinance and get cheaper money.

I'd calculate the difference in payments. I'd consider the savings from the HELOC as money that you could invest into the property and get a higher return rate because you put in nicer finishings with the extra cash.

If I were in your shoes I would talk to my lender about getting a HELOC now. I'd make sure I used it now for something and make sure that I was ready to max it out when the market has any sort of correction or hiccup. Personally, my goal is to always go against the grain and plan for having as much cash as possible when everything is on sale.

I take the attitude that when the market is cruising, I don't move, hold and prepare my lines of credit for when I want to really move. If you're happy being there and it works for you, stay. Just be prepared to not miss out in that next deal in 5 years by having a line of credit on your primary residence. 

My main argument for this is that the one thing that you can't change are your property taxes. If you can keep those at the "on sale" price, I'd work my butt off to make that happen. 

Haven't done a flip. However, we get our cabinets pre fabricated from Home Depot and have a carpinter install them.

I like to stay local. However, I've been looking into "secondary housing markets" such as where families might look to go to for a 3 day weekend. Definitely looking at value add flip opportunities. Concept is that we'd be targeting Gen Xers who are stable enough and want to spend more time with their families, but need to stay somewhat close to the hometown so they can stay connected with their normal lives. 

That's a good question. I'm not totally sure. However, in terms of rates, pretty standard in California is 10-12%. I might take the time to potentially interview other companies in the area to confirm that even if you didn't want to continue to use your current manager, that you would legitimately be upgrading your service.

It's always best to buy the ugliest house in the neighborhood. Given that dirt is the expensive part for Orange County, I'd look for a single family house or something as close to the beach or in the best school district you can find. All are good inherent value for the purposes of resale. I'd also make sure I knew rents for rooms wherever you plan to buy and your friend's budget. If he can't help pay more than 1/3rd of the mortgage, that place isn't worth it. 

Feel free to reach out if you have any other questions or concerns!!!

It's tough for me to get past the level of investment you made after the buyer found a discoloration rather than testing for mold. I think that is the real lesson to walk away with here. I have had tenants argue that they thought there was mold in a property. However, the real story was that they didn't want to stay and that there actually was no mold. I understand that maybe your buyers did want to go through the purchase, but decided that this was not a pill they were willing to swallow. Or maybe they just didn't want to go through with the purchase and tried to use this as their excuse to back out. 

Why not keep the property listed on the market and try your best to put a tenant in there in the meantime? I think this is a situation where you could have your cake and eat it too.

First and foremost, learn your laws. 9 times out of 10, you can quickly google something and find some answers. Beyond that, I think if you remember to hold your line in appropriate situations, but also understand that you are in customer service, you should be just fine. I'm going to tell you what I tell everyone:

1. law

2. your common practice

3. the bro deal you're willing to offer as a result of these particular circumstances

Demonstrating your knowledge in such a way sets a precedence of authority. When you then move through and say, "legally here is what the state says we can do, x is my common practice, but I know that you're going through something so I'm going to help you out by doing a, b, c". It's a nice way to demonstrate authority, hold your line, and come out of it looking like the good guy so you have a good working relationship. For you it's an investment. For your tenants, it's a home. Ultimately, it's the business of people. I think if everyone remembers that, you always come out on top. 

My biggest recommendations are spelling things out as follows:

1. Legally-know what you can and cannot do. I always mention this first so that tenants know what each of our rights are given the situation

2. Your common practice-you don't have this yet. However, you will develop systems in terms of how you respond/handle situations

3. Bro deal-I take this opportunity to show tenants that I'm reasonable and that I hear their concerns and want to be flexible and make the situation work.

Handling situations as such demonstrates that you are knowledgeable, but understanding that you are not just in the business of real estate and making money. More importantly when it comes to tenant relations, you are in the business of people. Showing a human side (the bro deal), exemplifies that you understand that and care. I often get repeat business and decrease my vacancy rate because my tenants know that I'm on their team for making their living situation a pleasant experience. You're in the business to make money, but it's all customer service. 

Please don't hesitate to reach out if you ever hit any hiccups along the way.