All Forum Posts by: Account Closed

I’m not sure what you mean by targeted more. Are you referring to taxes or lawsuits or something else?

I don’t think there is anything to worry about in owning a property free and clear.  The reason most people have loans is just to leverage the cash they have and make their money work a little harder for them. 

Basically if it were me and this property was an excellent deal and has upside potential (which it sounds like it does) I would buy it and finance as much as I could, while making sure it still cash flows. That way you still have cash available for any rehab work or for the next property, especially since interest rates are still so low.  

As your portfolio grows, keeping one good easy-to-finance property free and clear can be a nice safety net. If you are early on in your investing, that will definitely slow you down. You have to weigh your risk tolerance and consider the riskiness of whatever you own. 

Peter,

A lot depends on the property and the price you would have to pay.  If you get a great deal, you would end up with a good amount of equity and are better protected.

If you provide seller financing, your recourse is to foreclose, thus the need for a decent amount of equity.  It is a riskier way to sell, but can often lead to a quicker sale and higher sales price.  Just make sure you are comfortable that even when the economy declines you are still in a comfortable position should you have to take that property back.

Lauren Prichard, CEO

Aborn Powers/Aborn Homes

Jennifer, NNN (also known as Triple Net) is a way to recapture the expenses of a property. Retail tenants typically pay NNN. This means they are billed back for actual expenses for 1. common area costs (trash, water, maintenance, landscaping, etc.), 2. property taxes, and 3. insurance.

Cap rate, also known as Capitalization Rate, is a percentage used to compare the price of a property. It is derived by dividing the NOI (Net Operating Income - income minus expenses) by the sales price. Working backward, you can take your NOI and divide by the market cap rates in your area to come to the sales price.

I hope that helps.

@MichaelWagner is correct. It is always easier and often more profitable to purchase an existing property. 

@BritHale, the cap rate is a very individual decision and varies greatly by market. I prefer nothing lower than 7, but in a tight market the caps often never get that high and it can still make sense to take a lower cap at times. If an area tends to always have low cap rates, it is likely because it is a low risk area for investing - rarely any vacancies and rents stay high. Higher caps mean more risk. Right now the economy is good and rates are low. The key is to try to find the highest cap rate in the area. And if an area has extremely low cap rates (3-4%) just stay away. Prices are probably really inflated. Wait until they come down again 

Jennifer,

Storage is a great plan. If you are talking about building, any retail is going to be far riskier. The future of retail is very questionable, which means all retail owners are fighting for the service businesses and restaurants out there to fill their spaces. So unless you find an area that is under served, storage is safer. 

Another though is multi-tenant industrial. These small industrial units can be used for office/warehouse, automotive, manufacturing, storage or showroom/warehouse, depending on the zoning. 

Lauren Prichard

Aborn Powers/Aborn Homes

CA BRE#01031213

Lisa Arant at Placer Title or Bridget Powers at Old Republic. Both in Roseville and both are excellent.

Message me and I can connect you with a few good options.

Roman, If you PM me, I can hook you up with an agent who will hustle for you and do more than send you lists. It’s helpful to have an agent who specializes in these properties, as they understand the numbers and the neighborhoods. Lauren

I own a company that offers property management and sales for residential and commercial. We are throughout California, but are based in the Sacramento area. Please let me know if I can ever help any of you out or provide some helpful input. I love real estate of all kinds and have been investing myself for years. I enjoy helping others invest and/or connect with others who can help them.

Kevin,

Perhaps you should consider some of the many other types of property.  Commercial property can be an excellent investment as well.  Multi-family is overpriced throughout the state right now, so it might be worth waiting a bit on that or being flexible on your areas.  If you keep searching though, there are some out there.  I have run across a few.

If you are not intending to manage it yourself, that opens up your geography.  I recently found an excellent deal on multi-tenant industrial in San Bernardino.

PM me if you have more specific questions or if I can help in any way.

Lauren Prichard, CEO

Aborn Powers/Aborn Homes

DRE#01031213