All Forum Posts by: Max McNally

Hey fellow investors, I'm looking into getting started in Real Estate in the CA Bay Area, and I really don't know what steps to take. I've looked into house hacking, multifamily BRRR, fix and flips, and I can't seem to get the numbers to work in any of them. I decided to try and get my feet wet by buying an out of state multiplex, which I'm in the middle of right now. It seems to look pretty good, and I like the numbers, but I really want to be able to do deals locally. Is anyone willing to meet up and give me some insight? My current strategy is to get some cash flow from out of state multifamilies, and turn it into a house hack next year. I will gladly buy a beer or two for a seasoned investor that would be willing to take me under their wing. Thanks in advance!

Hey fellow investors, I'm looking into getting started in Real Estate in the CA Bay Area, and I really don't know what steps to take. I've looked into house hacking, multifamily BRRR, fix and flips, and I can't seem to get the numbers to work in any of them. I decided to try and get my feet wet by buying an out of state multiplex, which I'm in the middle of right now. It seems to look pretty good, and I like the numbers, but I really want to be able to do deals locally. Is anyone willing to meet up and give me some insight? My current strategy is to get some cash flow from out of state multifamilies, and turn it into a house hack next year. I will gladly buy a beer or two for a seasoned investor that would be willing to take me under their wing. Thanks in advance!

Great advice, thanks. I'm definitely withholding judgement until I get rent records, utility bills etc. 

I'm looking into buying a multifamily property (6 units in Ohio). I've run the numbers a bunch of different ways, and they seem too good to be true almost, so I was wondering if someone could verify, especially multifamily owners in Lorain County, Ohio.

The property is three duplexes on two lots, asking price is $125k. They seem to be in good shape, but they are older buildings ~1900. The owner says they have newer roofs, newer heating, and are well maintained. They are section 8 approved, and fully rented. The owner claims to be collecting $680 - $720 per unit gross rent. Each unit is 3 beds 1 bath. Annual taxes are $2,945. 

Here's my breakdown, using the low end of the rent range ($680 per unit)

2% rule 

$4080/125k = .032% 

50% rule 

$4080/2 = $2040 

Property management (10%) = $1632 net per month

So $1632 per month cash on a ~ $31250 investment, or 62% per year

I did a separate breakdown using real tax numbers, 10% vacancy, 10% property management, 5% maintenance, and insurance, and I come out to over $2k a month net. 

Does this seem accurate? If it is, it seems like a no brainer to buy, right? I'm just wondering why no one has jumped on this deal yet. It's been for sale for almost a year now. Should I be worried about that? 

Also, since it's more than 4 units, I would need to put 25% down. Would be a good idea to offer to buy them seperately? 4 units now, and then the other two in six months or so? Would a bank allow that? Any thoughts on what I should offer for the properties? Thanks so much for your time!

Max

Thanks for the answers guys!

@Chris Mason - My strategy and goals are to get immediate cash flow. While I think it's very possible to do in California, the upfront costs are so much higher that I would have to save for a couple of more years to get started.  I just don't see any way to make any immediate money in CA without a large (> $100k) investment, where I could get started in a smaller market immediately. Am I looking at this the wrong way? My strategy is to buy multifamily rentable properties that make immediate (or near immediate) cash flow and hold. Any advice is appreciated!

I'm a new REI looking to buy a multifamily property for rental income. I've read the Ultimate Beginners guide, as well as Investing in Real Estate by Gary Eldred and I have a couple questions.

1. What are the pitfalls of investing in out of your area (or state) real estate markets? I live in the Bay Area of California, and I can't make the numbers work on anything near me. I could afford a place like Atlanta or Ohio. Does it make sense to buy there and get a property manager? How do I find agents/financing/contractors? How often would I need to travel? 

2. The 2% rule seems really unrealistic to me. Maybe it comes from living in an expensive area, but I've never seen a property that is worth $100k rent for $2k a month. Does this actually happen ever? 

3. I've been using this spreadsheet to analyze property listings. Does this seem accurate? I've been able to find some craigslist with great returns using this tool, I just want to make sure the model is accurate before I jump into anything. (Let me know if you are able to see the formulas in the link)

I know these questions are probably pretty basic, so thanks in advance for reading and any advice you can give me

Max

Hi everyone, I'm from San Jose, California and I'm starting the process of investing in real estate. I'm looking at buying a multifamily property by the end of this year to get my feet wet, and then move on from there. My goal is passive income through fully managed rental properties to supplement my income. I'm currently looking at either CA (though it's hard to make the numbers work in most parts), or the Eugene/Springfield or Portland area of Oregon. (I used to live there and love it!) Would love any and all advice you've got for a newbie. Thanks!

-Max