All Forum Posts by: Ryan H

In my search for a single family residence, I came across a multi-plex listing. The original plan was to buy a primary residence in my wife's name while keeping our San Francisco condo in my name until next spring when we are ready to move. Sell the SF condo and take the proceeds and roll them into some SFR rental properties, probably in Austin.

However, the idea of a fourplex of SFRs in Sonoma County is appealing as well. Here are the stats:

Net Operating Income $41,722

There are (3) houses that are 3BR/2BA and (1) that is 3BR/1BA.

The price per house is about half of the current market rates for other SFRs in the area. The units need some work/updating and that is the first unknown as I haven't toured them yet.

I recall other BPs saying they won't touch a multiplex deal with anything less than a 6% cap rate. I get that but given the market I am looking to move to is pretty small, this seems workable.

We are having trouble breaking into the Sonoma market and have been outbid by $100K+ over asking cash offers several times. I am considering this as an alternate way to get into a SFR in the area and acquiring rental property at the same time. Kind of like the old duplex idea of live in one side rent the other to cover your costs but a wee bit bigger.

Thoughts?

Warnings?

Supportive advice/encouragement?

I bought in San Francisco after renting there for 6 years. I thought the bubble had burst already in 2007 so I jumped in after I had enough saved up. Even though I was underwater for years and unable to refi, the area has come roaring back and now my comps are over 20% higher than my purchase price. I am looking to sell in the coming months and then reinvesting out of state, probably Austin where I have family.

Currently, my wife and I are looking to buy our next primary in Sonoma but are being outbid left and right. There are even multiple offers to get into a back up position. Nuts.

It depends on a few other bits on info like the number of bedrooms, other storage space(s), distance of carport from the main house, and size of garage for the area (1,2,or 3 car) but assuming you are discounting a 2 car garage, I would take off around $20K - $30K based on the cost of what a new garage costs plus a little bit more being that the lot has easement issues that won't allow for a garage in the future.

The key words in your post are "I bought." How much did you value the ARV to make the deal work to start with?

I am seeing the same thing in the Bay Area. I bid on a place that stopped after demo of the interior... needed tons of work. Neighborhood comped out in the $300s at most. This place listed for $150K, I offered $170K cash and was laughed off the phone.

Ended up closing for $250K cash.

All I can figure was the person who bought it, knew were the treasure was buried. Maybe it was under the house rather than in all the walls and ceiling where the other guy punched all the holes trying to find it!

Based on what I have learned through the BP podcasts and the Googles, my wife and I sent out our first round of "driving for dollars" yellow letter campaign this week. We are actually looking for a SFR for us and not as concerned about making a profit from it right away. We drove neighborhoods we liked in the Sonoma area and wrote down addresses. I typed up a "handwritten letter" and printed it out on yellow pad paper. Instead of mailing them, my wife posted them directly to the front door.

We only flyered about 20 homes in a first attempt, very targeted selection. Just 90 minutes later I received my first call! By the time I dug my phone out of my bag, it went to VM in Google Voice. A minute later I had a transcript of the message in my email. Our selection was spot on... empty nesters, thinking about downsizing, tired of the up keep, thinking about selling as-is. While they are not looking at selling now, they may consider it in the future and would tell their friends about our situation and see if anyone they know is looking to sell as-is.

Not a deal, but it's a start.

Anybody else have any crazy yellow letter response times?

Hey Brandon,

I have been looking forward to a possible BP meet up in SF since I heard about the recent Denver one. Thursday is date night with my wife so that's a no go but if it it changes to Friday then I'm in.

Enjoy SF and try to make it to 21st Amendment Brewpub or Magnolia in the upper Haight while you are in town. Or dawn a sweater and take MUNI out to Ocean Beach for some true SF weather shock.

Hey there @Meggie G,

It sounds like we have some similar goals. I too own in the Bay Area and have a condo in Dallas, Tx. I am looking to pick up another rental in the north bay this year. You may want to try some "driving for dollars" style marketing to get some sellers for flips in the area.

If you find yourself in the need for architectural help on your future flips, please feel free to contact me.

Have a stellar week,
Ryan

Welcome @Abhay K.,

Congrats on taking the plunge and getting a plan together. If you find a property that has permitting issues or needs a little architectural enhancement, I would be happy to help you out.

One of the problems with older radiant floor systems are the fittings. A project my coworker is project managing recently had a major leak. The heating system was turned off during construction and over a couple of weeks the system cooled down, the fittings loosened in the slab and the water drained out and pressurized the slab. Over the weekend the crew returned to find the entire floor soaked and all the flooring tiles had popped up, carpets squishing, etc. in other words... These old systems can be a disaster.

As a Bay Area architect, I would say it is best to abandon the existing system and switch to a new heating system. You could also trench out the existing radiant pipes and install new continuous loop radiant piping. As for cost, the cheapest is to install a new system that's not in the slab. Without the construction type or square footage and volume of the space it is difficult to provide a useful estimate.

Hope this helps without scaring the beegeezus out of you.

I am looking to purchase what will become a primary residence in Sonoma, Ca. Ideally, I would like to buy pre-MLS or from a wholeseller. As an Architect/Project Manager, I am comfortable with some rehab work. If anybody has any leads on SFRs, ideally at least a 2BR/1BA on a large lot, please drop me a line.