All Forum Posts by: Kyle Horjus

@Ali Boone Thanks for your message Ali, I know we've had a few discussions in the past! I actually went to one of the group meetings you are talking about back in October last year, but I didn't know this was a regular occurrence. I definitely want to be added to the mailing list.

@Jeff Greenberg Could you add me to the mailing list for the group meet in Santa Monica? The one at the coffee shop in October was super informative!

@Christine Palmer I may still start a small WhatsApp group for accountability partners and dig a little deeper into market analyses. The group meeting was a bit too large of a forum for that purpose although a fantastic resource nonetheless.

Hi Rodrigo,

Did you end up buying a fix and flip? If so, how did it go? Would like to know the details. If you are still doing the research and haven't pulled the trigger, I'm trying to establish a group of people for accountability in the Santa Monica area, see my post: https://www.biggerpockets.com/forums/12/topics/527...

Let me know if interested!

Hello All,

First things first, I am not a real estate investor. It pains me to write that but it's not to say I don't WANT to be a real estate investor I am just stuck. Stuck for so many reasons:

1. I live in Santa Monica, CA. There isn't a market within manageable driving distance that isn't overrun with professional real estate investors and insane market prices.

2. Investing out-of-state is scary. How do I invest out-of-state if I can't be there for an extended period of time to manage the closing period and renovations (a seemingly necessary step to get the most equity from RE investing)? I've never had to rehab/renovate a home, where do I begin to estimate rehab costs? So many factors here...

3. What are all the factors to a thorough market analysis?

4. Should I just focus my efforts instead on finding a more lucrative job?

These are just a few items that discourage me from "sticking with it" on the research and demotivates me from analyzing properties. I do have a friend in Orlando I am looking at maybe partnering with on a buy and hold, but I haven't known him for a LONG time and would have to rely on his perspective - he is also brand new to real estate.

Now that you understand where I am coming from, if you are in a similar position and need accountability to keep thinking about real estate and analyzing markets - most of all need accountability to TAKE ACTION once you have analyzed a deal where the numbers make sense...please join me in creating a group of people near the Santa Monica area to share information and keep each other accountable.

I do not have a plus account to create events, but this is not for the purpose of creating "clout" in the RE industry or promoting a turn key or RE company I'm involved in. This is just a group of people getting together maybe 2x a month to share information and establish goals. I wouldn't be writing this if such a group already existed on the events page in BP, there isn't one - at least not a consistent one and one that doesn't cost $$$ to go to the events.

If interested, please send me a message and I'll create a What'sApp thread, thanks!

-Kyle Horjus

Thanks @Ali Boone I will send you a message to learn more about how you find reputable turn key companies, from the podcasts that I've listened to and the forums I read that is the most difficult part. Plus you still have to run your own numbers on each turn key deal so they've said. Even if I choose to buy my own place first in LA somewhere where I can afford, I will look out of state and/or turn key afterwards because I don't have the cash to make these big swing investments and I like spreading out my investments. I would not have the time or team to do rehabs/managing either so it seems like a good route.

@Matt R. Thank you for providing the stats, puts me more at ease with regards to a financial crash in the future and even if there is a crash in the future you can rarely predict what sector it's going to hit. Perhaps real estate will be safe this next time around, but I don't think anyone would deny there will be a crash of some sort most likely in the next 5 years and the bail outs will doubtfully be so generous next time.

@Dan H. I am not familiar with the limitations on refinances, how often can you refinance a home and does it negatively affect your credit score and thus the rate you can refi at? It really comes down to risk, those huge wealthy investors can take the risk of possible negative cash flows in order to win big on appreciation in the long run but I'm not at that point yet so I have to be careful. Seems like everyone is buying everywhere too I mean look at the rate Blackstone is purchasing homes in Sacramento. I didn't think the Central Valley was much of a hot spot but the city is developing quickly and it has a long way to go much like these other cheaper cities.

@Ali Boone Thanks for the clarification, you do make a good point about the cost of taxes. I think the value in the ability to take tax deductions on interest though is understated. For someone buying a 2 million dollar tri plex maybe not because you can't take tax deductions over 1mil but in my situation I could take the full tax deduction on a 500k mortgage for a 2/2. I am still interested in investing out of state if I do get my own primary residence so might I ask how you do it Ali? Do you do turn keys or fly out and see them yourself? How did you set up your team?

@Dan H. I would really have to blend the two perspectives between you and Ali because yes appreciation in the long run will make your net worth grow, but in the short run you don't get to take that appreciation to the bank each month and rent is not increasing by 20% each year like home prices are (maybe 5%). You still have to cash flow or you will go bankrupt and be forced to sell. I think a point that drives home your post is the fact that you don't have to pay taxes on that appreciation either if it's your primary - not the case in rental properties (even though you can do 1031 exchanges). 

I am working on a buy vs rent calculator in excel that will calculate how long someone should have to live in a purchased house in order for it to be more economical than renting. I am hoping you can take a look at it to make sure I have all my line items in order?

@Simon Ruiz I think it would have at least a small impact for sure, economically if a tram cut a 2 hour commute in half and the average person makes $25 an hour plus say $5 in gas that's $60 round trip. Multiply that out in a year and they are making an additional 15k (neglecting tax). Even using just a conventional loan that person could then buy an additional 75k worth of house after saving for a year. With real estate prices in the Valley going up from the wealth effect I'm sure there would be a leveling off of prices in the city. Those are my thoughts anyways.

@Ali Boone

Thanks for your message!

I try to be realistic and know that I will never afford real estate in Santa Monica in the short to mid term. I am thinking of "cheaper" markets like West LA, Culver City, Mid Wilshire etc, but 2x2's are going for 450k - 550k right now so I'll have to wait till the market goes down to an average of 300k. Real estate crashed about 25-30% in market value in 2008 and some say that was the tip of the iceberg but it's hearsay and as @Simon Ruiz mentioned there's still cranes everywhere so demand is still greater than supply in LA. There's talks of a tram from the valley into LA city too which may even out the market here just a bit, but it may not have a huge impact.

I took a look at the article that you posted on owning a primary residence, it makes some good points but there are a few points that I would make adjustments to. It includes mortgage interest, taxes, insurance, repairs etc in the cost of owning a primary residence...you have to pay those on investment properties too! If tenant rent doesn't cover these then you're in trouble. Plus, unless you are living in your parents basement the alternative is paying rent to someone else who is cash flowing (maybe) on you. It also left out the benefits of owning a primary property like tax deductions on interest etc that you don't get to do with investment properties (pretty sure?). There's also a lot of costs associated with investment properties that don't apply to primary residences like vacancy rate, evictions, property management, faster wear and tear on appliances, etc. 

Just saying it's not that simple, investment aside you have to do a serious analysis on how much you are paying rent versus how much you'd pay monthly on a primary residence minus equity gains and (if house hacking) payments from tenants you live with - which is what I'd do with the other bed/bath in the apartment I'd like to buy. Correct me if I'm wrong, but I think your final point would be to stick with renting if renting in the area where you want to live and investing out of state with the capital you would otherwise use to purchase in that market outweighs the benefits of purchasing in that market. I posted this discussion topic to determine just that!

Do you do turnkey then @Caleb Heimsoth?

Thank you everyone for your responses! I would be curious to hear how any of you out of state investors found a mentor to help invest out of state in the specific region you are looking at. If I could help a mentor look for specific deals in that area it would be all online research so is that enough or would that mentor require that I live in the area I am finding deals so I can view them myself and be physically part of the real estate process? Thanks Ariel Vincent also for confirming what I was afraid of. First buyer incentives could make or break the deal if I purchased in LA so I'm not so sure I want to give that up so easily. I feel as though I'm stuck now just continuing to watch the market closely for a decline. Are there many home auctions dedicated to live-in buyers only? That might be my only edge in this market at the moment. I hear your point about being mobile based on my salary. It's one thing to be frugal, not have car payments, etc but it's a whole other thing to leave your family and friends behind and start all over in a city you may potentially hate just to establish some buy and holds. I would rather spend the cash traveling if needed and expense it against LLC profits than reduce my quality of life. I am also working on getting my real estate license in California.

First of all, wasn't that catchy? Ok so here's my situation and I'm hoping to get a myriad of opinions knowing full well there might not be one right answer.

I'm 26, single

I live in Los Angeles

Make 55k a year before tax

I have around 20k in invest-able cash   (recently taken out of stock market, please don't crucify me!)

Saving $400 a month

I do not own any real estate

I would love to stop renting, but leaving LA is not an option and real estate prices are obscene here. Even house hacking would not satisfy the 1% rule. I want to invest out-of-state, but would doing so make me ineligible for first-time-home-buyer incentives? These are only available to owner occupied purchases in LA and I don't want to lose this huge advantage if I choose to buy in LA in the future (once/if the market crashes).

If I do not lose those incentives, I would lean towards buying out-of-state and getting a reputable management company to manage the property on my behalf. I would be curious to see if anyone would recommend just biting the bullet in LA and getting an FHA loan + FTHB incentives despite the red hot RE market. If so I would like to get a 2/2 apartment and rent out the other room or Airbnb the thing (maybe both!). Question is...will the amount I'm saving on rent (once I own my apt) be enough to compensate me for the reduced RE prices from an impending RE crash in LA? Should I just bunker down and wait till a crash before making my first move? This is my dilemma that is currently preventing me from action.

All opinions are welcome! Thanks in advance!