All Forum Posts by: Leslie Bandy

Sounds like fun to me!  

Rent control does not cover units three or fewer-unit buildings where the landlord resides in the building and has occupied one of the units as his/her principal residence for at least a year.  Vacant buildings are great though tend to come at a premium (though there are a few on the market right now that I really like).  Buildings with tenants paying below-market rents are often a bit more affordable.  Beyond whether the building has tenants, there are great tax benefits to buying a multi-family property.  Even if a property is cash-flow neutral, depreciation and interest should put some money in your pocket.

Below $200K within 2 hrs is tough.  There are a few properties to be had in the higher $200s to mid-$300s in the Russian River area where you could cover your mortgage through vacation rentals.  Lake Berryessa has good prices but a ban on short term rentals (as does all of Napa County minus a few licenses available in the city of Napa).  Clear Lake might hit your numbers - and there are some nice prices up there! - but I don't know enough about the rental market to vouch for it.  Heading east, most of the popular Gold Rush/Sierra towns are a bit over 2 hours.  There is the occasional fixer home/cabin under $200K but also a pretty rare beast.

As I stated, it was a state association that my contractor belonged to, though not necessarily governmental (as the realtor associations, e.g. Bay Eat, CAR, NAR, I belong to are not government agencies). There were financing charges, though they were quite reasonable. More than a HELOC, less than a credit card.

@Manolo D. I don't know the specifics but one of my contractors offered this to me. He said he was able to join a state association's financing program so it sounds like something that may be open to all affiliated CA licensed contractors.

I've got a client with a similar issue.  You might be able to find a contractor that will do the work on a payment plan where you'll have to be just a small percentage of the total before putting the home on the market.  The contractor can put a mechanic's lien on the house (or not) to be paid off at closing.

Some decent cash flow areas in that price range are Pittsburgh, Bay Point, Vallejo, Richmond. East Oakland still has some properties that work as well. Occasionally I see a MFR that even hits the 1% rule. Cash flow does tend to be higher out of state, but equity tends to be better here.

Hi Laquel,

I agree with others that you may find holding onto the property is a better deal in the long run than selling.  Rents are very high and apartments are always in  short supply in Berkeley.  However, if you decide to sell you can generally get very high amounts for fixers.  I work with many investors that would pay good money, but honestly, the best money is going to be gotten on the open market.  If you'd like me to run numbers of various strategies, I'm happy to do so.

Best,

Leslie Bandy

Did the flipper provide you with the comps he's using?  Based on what I'm seeing, I'd comp it out at about $1.06 M, perhaps even less based on its proximity to the freeway.  The lot is about a third of the size as two of the comps which sold at $1.155 and $1.21 M.  Also, $60K is quite low for a rehab of this size.  It is feasible if the work is almost purely cosmetic but doesn't leave a big gap for unforeseen issues.  An experienced flipper will likely be able to price work out relatively well so hopefully he's on it.

I certainly run on the conservative end of things but those numbers are far too slim for my liking.  If you can review past projects and see that his numbers are similar and have worked, perhaps it's worth it.

Hi Karin,

Welcome!  There are tons of ways to make (and lose) money in real estate.  I would only recommend flipping if you've got a great contractor who you trust and has great prices.  Without that, I would absolutely NOT flip in this market.  The margins are not big enough to pay retail for your rehab.  In addition, if you don't know how to run the numbers to recognize a good deal, don't do it without some help.   For buy and holds, I would absolutely recommend working with an agent has is also an investor.  

There are some great reasons to go out of state - and I've done that as well - but good deals in great parts of California can still be found.