All Forum Posts by: Luke Mccandless

@Jonathan McKay I live in the bay and am also from Spokane ! Per your question, I am a big fan of Portland, and lived and owned property there.  As more people start to see the Bay Area as just unlivable due to cost of living, Seattle and Portland are fantastic alternatives, they are going to be strong markets imo for a long time. I 100% agree with @Account Closed though not as "volatile" which may not be a bad thing. 

I was born and raised in Spokane and lived in the Seattle area for many years for college etc. The Seattle market is red hot right now, investing there will be about appreciation. Spokane, on the other hand, does not have a high appreciation rate but the CAP rate is easily 7-10%. So it depends on your overall strategy which one you want, Spokane is also less competitive so it could be easier to get better deals. I also lived in Portland for 6 years and owned property there. Portland is a great place to live and work, another appreciation play like Seattle although I prefer Washington's tax environment. Have you considered Bellingham? It's a college / retirement town with a strong rental market.

@J. Martin Wish I could make the meet up on thursday I will be out of town. Depending on the condition of the units I would say your first estimate of 650k (a lot changed in 18 months!) would not be too far off. And that seller's credit sounds like a nice extra.  Would be happy to discuss it in more detail!  

@Wes Brand I have been looking / making offers in Oakland for ~ 7 months now, and I can tell you it's going to be rough! Find a realtor that has off market deals and is a veteran. If yours does not, they may not be too plugged into the market. And work with people here on BP. I am trying to use FHA for a 2-3 unit or I have conventional on an SFR ( rent the rooms if it has enough to make it a good deal ). Approved up to about the same as you ( more on multi since you can use the income from the property to qualify). It seems the last bid the owner wants is FHA, all the bids I have made have lost to all cash or zero contingency deals. So I am looking for the ones that sit 4 - 7 weeks on the market. Maybe something is wrong with it but can it be fixed?!? Is it a bad neighborhood but you look up the permits and there is a new development going in in the empty lot next door? Good luck!

@J. Martin Lots of great info in your reply thank you. I share your thoughts. I am just thinking as long as I can get the rents to give me cash flow I can afford to buy at this point in the cycle, specifically with the duplex or triplex owner-occ rent control exemptions, as you said. Also, if I wait until the down cycle ebbs that will be what 2020 ish? I would really like to put my money to work before then. Fantastic resource: FRED by the way. 

@Ricardo Meza thanks for your interest! No good news on that deal I am afraid. I have since made 3 other offers all of which have been either outbid or not responded to at all! Here is an example of a recent one :  Duplex in a not so great part of Oakland https://www.redfin.com/CA/Oakland/1735-19th-Ave-94606/home/1242949 asking price of $488,000 I offered $550,000 my broker said they accepted an offer of  ~$600,000 no contingencies. Realistically if you want to win the bid in the bay right now you have to be willing to waive appraisal contingencies and inspection contingencies. To help this most sellers get an inspection from a third party and share it with the disclosures since they almost expect offers to waive the inspection contingency. Also, earnest money is typically at least 3%. I am still looking but just realizing how aggressive you have to be to win is important. 

In general if you can avoid using one you should. It can be better to go FHA than to not invest in real estate though if that is your only option! They have high closing costs and monthly mortgage insurance premiums. They are generally for people with low credit scores and low downpayment

Read more: https://wallethub.com/edu/fha-requirements/646/#Requirements_Table

I am currently shopping and my downpayment money is in a high yield savings account earning 1% apy. Not glamorous but it is FDIC insured.

Here is a great resource for high yield savings accounts : https://www.nerdwallet.com/rates/savings-account/

@Joe Bertolino 

1: Either way you are betting on appreciation of rents or the property. Argument was just that current rents really do not justify the price ( based on an investment, which I concede is not always the only reason to buy).

2: In Oakland there is rent control as well. If you get tenants in at $1800 even if rents rise it’s not as easy as just increasing rents to market.

Couple examples of close by properties with way better numbers:

https://www.redfin.com/CA/Oakland/1734-E-24th-St-94606/home/50248015 ~6% cap rate at current rents - which I would argue are way below market.

https://www.redfin.com/CA/Richmond/153-S-12th-St-94804/home/1864148 ~6.5% cap rate

@Joseph Weisenbloom thanks I am thinking the same!

@Jeff B.  I can’t see financing this since carry costs are 4% right now ( my most recent quote )

Valid point Mark. It's always a risk reward consideration though. Not to mention, cap rates in neighboring counties are north of 7%. It seems like the main play for this investor is to hope for appreciation. Just seems like a sign of where we are in the market cycle right now to me.