All Forum Posts by: Michael C Williams

Hi Santino. Considering that iBuyer companies will typically purchase homes at 7% below market value, I think a good starting point is 10%. Below that they will likely not even respond to you. Zillow and Redfin estimates are not good indicators for market value so I would never use those in my price analysis. Comp analysis through Cloud CMA, sq ft regression analysis with manual adjustments is the only method I'm aware of that is at all accurate.

@Account Closed. That is certainly an opinion circulating at the moment. The Fed Gov Chris Waller addressed those charges a few days ago and (not surprisingly) citing the Feds complete autonomy as still intact and free from political influence. But words are words and short of incriminating emails/phone calls, we'll never truly know. See his comments below...

https://www.cnbc.com/2021/03/2...

https://www.ft.com/content/3d7...

All communication from the Fed points to rate stagnation through at least 2023. Hot markets will likely appreciate another 10% min over the next two years if inventory doesn't increase so you can draw out your financial assumptions and calculate best, worst and likely case scenario's. A good think to keep in mind is that for every 1% rate increase purchase power decreases 10-11% so buyers will be squeezed when that happens. 

Democrats including Nancy Pelosi, Chuck Schumer, and Tom Suozzi are putting pressure on the current administration to repeal the controversial SALT (State and Local Tax) cap passed in the 2017 Tax Cuts and Jobs Act. Tom Suozzi has announced he will not cooperate in any tax reform without SALT reform (repeal). The repeal will primarily affect residents in California, New York, Texas, New Jersey, Maryland, Illinois, and Florida and move may give a boost to interest in high value properties.

https://www.bloomberg.com/news...

https://thehill.com/policy/fin...

https://www.cnbc.com/2021/03/2...

Hey @Brandon Lubich. What does the local rental market look like right now? Would it be easy for them to relocate to a similar property at a similar rental cost?  Typically buyouts are the easiest and cheapest option, especially if time is of the essence. My typical buyout structure is starting at 2x rent and going up to 4x before exploring other options. This comes will a 30 day relocation period. And be sure to use a written agreement and only hand the check over after you've inspected the property and received keys. Best of luck!

Hey JR. If you're already accessing off-market deal flow in California you have a huge advantage in the RE game. As you know (or will soon find out) CA investing is not always about cashflow so its hard to give an opinion on a particular property just based on those figures. 

A great many war of words have been fought on BP about cash flow vs mixed strategy investment. In Sacramento, 6% cap is usually a good starting point after factoring in 4-7% yearly appreciation for the next 5 years (my estimate based on being an agent here for 13 years/investor for 9). Mix in any value add opportunities and you've got yourself a great property baring any major issues. 

One thing you'll want to triple check with your agent are the comps, it's substantially more difficult to comp multi unit vs SFR properties. My thesis is you make your money on the purchase, not the sale meaning if you buy at the right price, its hard for a deal to go south. 

Best of luck with your investment!

@Gav Chen. AJ is correct about the loan process for residential rentals in California. Adding that even if you find a lender that allows you to hold title in your LLC, you'll likely be signing a personal guarantee that eliminates the liability protections of the LLC in the instance of foreclosure.

For tenant/general home liability, an umbrella policy will be your best line of defense. Even with an LLC set up, you could lose the home in a major lawsuit.

For contractor disputes, your best protection is your due diligence and the contract you sign. There are a lot of lessons to be learned working with contractors. A few golden rules to follow, always work with licensed and insured contractors and put everything into the contract, no matter how minute the detail is. There are plenty of examples online of what language to include in a contract. It wouldn't help to have lawyer referrals ready to go incase you run into issues. Lastly, payment schedules are extremely important in making sure the work gets accomplished to your standards. 

Best of luck with your current and future investments.  

Hi Dan. I am not a lender but monthly interest owed is interest owed regardless if the borrower is paying or not. Lenders are not offering mortgages to borrowers with loans in forbearance. 

Hey Dennis. I can only speak to San Francisco but many of the home here have converted garages/downstairs areas that qualify as in-law units and can be rented without issue. These unit are still desirable, especially if they have access to the backyard space and can help cover around 1/3 of the mortgage in most instances. Feel free to message me if you are looking for some specific housing data for particular neighborhoods. 

Hi Danny. When I used to buy homes at the foreclosure auction we would employee a retired title officer that would perform the research. I am not sure which databases they were accessing but using someone in the industry and paying them to run a lien search for your list of properties may be the most economical and risk mitigating option.