All Forum Posts by: Marshall Leipprandt

@Sunir Manandhar I do think it will continue to grow year over year. I believe that real estate values will continue to creep higher over the years and become increasingly less affordable for younger generations. I believe that the incentives set up for owning real estate help to create an attractive environment for investors and currently with inflation so high, real estate is a tangible asset that can provide unique advantages over other investment vehicles.

@Michael A. Are you out of state or do you live in the area? I think finding appreciation in Springfield will be tough unless it's forced through value-adds. I like Dayton or Columbus more because they have more going for them across the board, but doubt you can find a quality multi up to your standards at $150K in those areas. I would look to house-hack if you are local -or- use this time to build up your financial readiness and see how the next 3-6 months shake out in some of those Midwest markets. No shame in being patient. 

@Michael Mancuso Hey Michael, kudos to you for pulling a 4.0 so far. That shows that you're hardworking and motivated, keep up the great work man.

I was in a pretty similar spot to you about 6 years ago when I graduated from college. Very motivated, but I hadn't actually gotten into BP until a few months after I graduated. I deferred the corporate route after 6 years as an Air Force Officer and am now a full-time real estate investor and Realtor in Destin, FL and Los Angeles, CA.

All of your options sound solid, but just curious if you are excited to go the more corporate route or if you have more of an entrepreneur/business mindset and want to build something?

@Sunir Manandhar

1) I mostly mean by landlords although I am not educated on SF's city policies so I can't speak to that. I would think they in theory would encourage this but know that the wealthy generally own the RE in SF and would likely lobby against the "forcing" of landlords to comply to policies increasing density in their properties.

2) For what @Bruce Woodruff mentions above. A lot of risk with not much reward. Sure, a landlord/owner can maximize their gross revenue potential with a rent by the room strategy but it requires a commensurate amount of work and administrative hassle. More wear and tear, higher turnover, higher likelihood of problem tenants, etc. Most landlords who bought 10+ years ago are happy with the cash flow they already have and don't see the upside in revenue as worth their time. Not the case for all, but certainly for many especially in the wealthy parts of SF.

3) Investors are definitely doing this. Maybe by house-hacking or even partnering on a deal like I mentioned. David Greene talks a lot about this strategy in SF and the surrounding areas. It takes a lot more work, but the deals can be found if investors know what to look for and have the ability to manage the asset properly post acquisition. On their own, investors cannot buy enough to fulfill demand. And as I said, I just don't think this is a scalable venture in the socioeconomic environment that is SF. The juice isn't worth the squeeze for the real players with the capital sitting around. Hedge funds, REITs, VCs, and even syndicators look for other more manageable strategies to deploy their capital if investing in real estate. 

4) If I knew, I would run for the mayor of LA. The problem is that nobody can best agree on how to solve it in the private sector or through the government. Socialists and anti-capitalists will say rich real estate investors are making too much $ if they are offered incentives to deliver a solution. Conversely, capitalists or libertarians will say that the government will be ineffective at redirecting tax payer dollars efficiently in solving these problems that require non-governmental industry experience and knowledge. Nobody will ever agree. This is generally why the government does incentivize real estate owners and investors because they are often solving problems that the government itself knows it would be inadequate at tackling.

@Sunir Manandhar There is opportunity but I don't see it as a startup with potential to scale for the exact reason you reference: subletting. You may find a handful of owners who may allow it, but overall, you'll have a difficult time getting approval to sublet (especially in SF!). Although it makes sense economically (fitting more people into existing structures), not many owners in their right minds would absorb the risks. 

The opportunity here is really for those (single person or group of investors) who can afford to buy the asset up front and lease each room separately in the home. However, even in SF, it will be a challenge to find a deal that makes sense with current interest rates...unless of course the investor is putting a large amount down.

@Sydney Rae Congrats on your upcoming separation. I was actually in a very similar situation a little over a year ago. I was under contract on a property and had just 8 months left until my DOS. My lender wanted me to sign something saying I would be in the Air Force another 12 months receiving a W2 income and I decided not to sign and backed out of the deal within my financing contingency. I am glad I did it this way and didn't do anything suspicious or jeopardizing of my integrity, it really would not have been worth it in the long run.

What would I have differently? I would have determined what the lender needed to see in form of a W2 income and looked for employers who were flexible on hiring in the 4-6 month time horizon. There may be some employers out there willing to give you a letter of intent for employment which also stipulate income terms and conditions.

Another thing to consider is to simply not do Skillbridge, but that would really depend on your personal preference. If you really want to purchase a property before separating, the Skillbridge will actually limit you because the Skillbridge will eat up your terminal leave days which in theory is time in which you could start a new W2 job, hence increasing the chance of you getting an LOI from an employer on an advanced time schedule. Just some ideas. Best of luck!

@Monica Boyles Out of curiosity, what is your logic behind saying that buying in CA doesn't make sense? Are you talking in regards to finding a cash-flowing property or a property with high appreciation potential? What are your goals and what's your current cost of living? Do you plan to stay in your current career for many years? How long do you plan to stay in CA?

I think a lot of people discount buying in CA when in reality, it could make sense if you found a duplex or something similar in a solid area and owner-occupied while renting out the other unit. You will not cash-flow on a duplex if you owner-occupy it, but if your current cost of living is lets say $4K/mo and your all-in cost of ownership of a duplex in SF after a 5-10% down payment is $8K and you can rent one side of the duplex for $4K, then your cost of living has not gone up yet you are now able to access the appreciation of the asset, gain equity in the property via principal pay-down, and gain the tax advantages of owning real estate. This is obviously a simplified example, but that is the general logic I use to make this analysis.

If you are fully sold on out-of-state markets, I agree with @Jonathan Taylor from above. A lot of affordable out-of-state markets are the "siren song" calling to CA investors. Certainly a lot to think through when looking at new markets, but I would start with an area that you are either familiar with, enjoy visiting, or have family/friends. Having at least some connection to the area helps you leverage that knowledge and the network in that area to find a trustworthy team. Plus its always great to have someone you know and can actually trust to drive by on occasion and report back to you.

@Michael Songer Welcome to BP Michael! I've read both of those BP books, but not Never Split The Difference yet. I'll have to check that one out!

House Hacking is the best way to start. That's something you'll probably hear just about everyone say on here. What is your specific house hacking strategy? SFH rent by the room, multifamily, something else? House Hacking is getting harder to do here in SoCal (at least on the numbers side), but there are still deals that can make sense and with the market continuing to shift, there will likely be more opportunities on the horizon for investors.

@Stefani Nachatilo Awesome, thanks for sharing this deal! It's great to see someone still holding after so long. You're practicing what BP preaches and this is an example of the importance of holding for the long-term. Great reminder for myself as I continue to grow my portfolio with a long-term mindset.

@Terry Ouimet It's true, being a part-time Realtor is not as easy as it sounds. Also, keep in mind that you'd need to stay up to speed on all proper documents and forms in your state as well as maintaining a status with your local Association of Realtors, pay for MLS access, pay for lock-box access, attach to a brokerage and onboard with them, along with several other items. So, if you'd like to know if it would be worth your time, I would suggest you work backwards to get to that answer.

If you are wanting to purchase another 1-3 properties, calculate how much you would save on commissions if you had your license, but also factor in the flexibility of having that license and being able to save on the selling end if you ever choose to offload your portfolio. Next, get an estimation of what your annual costs would be for your AOR, MLS, lock-box, and any other expenses/dues associated with a Realtor status. Run the numbers and see if the potential upside would be worth your time. It could just be easier and more effective to hire a really good Realtor!

In terms of getting your license, it depends how much time you have available to take the courses and how familiar you are with real estate across the board. You could totally do it in less than 6 months if you really worked at it, but 1 year could be more realistic given the career scenario you've described.

I got my RE license while working full-time and now I am a full-time Realtor and investor. I am very glad I got my license while I was still working so I didn't have that dead time once I left my day job. Even if you worked at it everyday, there are somethings you can't control in the license process like mandatory timeframes, scheduling for testing, etc.