All Forum Posts by: Michael Hastings

@William Sansom, do you have any details of the deal to post?

Hi @Account Closed, my first investment property was not a bust, neither was my second.  But my third, fourth and fifth ones were.  I can speak from direct experience on what not to do:

Adding to the list:

1.  Do not over-leverage the property with mortgages, always make sure there is cash-flow to pay all expenses AND make you money.  Not too many logical reasons to buy non-owner occupied property that has a negative cash flow.

2.  Do not depend on a property manager to "manage" your property.  The property is your business and no one will care about it as much as you.  Not the neighbors, not the property manager, not your parents, not your friends, not the tenants, no one.  Take time to actively manage issues and follow up throughly to ensure you are satisfied with all actions of the property manager.

3.  Have an emergency fund, as things will break, people will miss paying rent on time and you will be stuck with a mortgage payment to the bank to protect your credit.  Things happen!

4.  Do not rush into investments.  My property was not passive my any means and did require my attention and time, when getting them off the ground.  If you have a full rehabbed property, then you may find your attention is not as necessary, but taking your time to find the right property which matches your risk tolerance,  is critical.

5.  Join a local investor's club.  Think of it as free therapy.  Plus, you will need the networking to help you when things go wrong.

6.  Don't settle for marginal returns. You can do better in the stock market with 401K and Mutual Funds than some of the returns I see people reporting from their RE investing. Go big or go home on returns, that is the magic of REI (in addition to all the tax benefits and long term growth upside).

Finally, do not overthink the whole process.  It can be complicated, buying property that is, but there are so many specialist to help you along the way and willing to help.  Once you get past # 1, the rest start to get easier as long as you treat your property like a new born baby, nurture them, treat them right and they will bring back loads of joy (and cash, hopefully!).

@Lanis Olanisa, can I ask you what type of advertising you would be buying from Zillow (impressions, pay per click, etc.), and what business would you be advertising?  Also, do they provide any statistics on successful clients they have had in the past who are advertising the same business as you?

Hi @Mansoor Fazel, I think the list of questions you have prepared are those that are to be used if an investor is researching a realtor in a market which is not local to you?  If so, it seems to me that the questions you have provided are fine, but how do you analyze the answers?  For example, what if you ask me "Have you worked with out of town buyers before?" and I answer "no".  Will you not want to work with me, if I have answered affirmatively to all of the other questions?

In the markets not local to me that I have been researching thus far, I have just been calling to the listing agents for the properties that I am interested in, and in that instance most of the questions you posted would not apply, as they are the gatekeeper to the listing at that point.

If there is a need to have a "go to" agent for a marketplace, then I see a reason for many of the interview questions you posted above, but not all of them.  A lot of this business has to do with trust, gut instinct and the ability for someone to perform on your requirements.  When I was buying a lot of property in Bay Area years ago, I used a variety of agents, and frankly could not tell you unconditionally that one was better than the other.  But, the thing was that as the listing agent, they had a direct connection to the seller and had a willingness to help me close the deal.

I would be interested however to hear how you handle the answers to these questions to select a realtor to work with.

Thanks~

@Sunny A., in less than 5 minutes, I logged into realtor.com, searched for multi-family units and pulled a 3-plex in a nice area in San Leandro, right off i-580 and 150th Ave. for 599,000.  The units are a 3 BD, 1 BTH, and two 1BD, 1 BTH.  Yes, the units need work.  Yes, this is not the ideal area, but is more than livable and near some great properties in the SL foothills (as I lived near here in East Oakland many years ago) and with some elbow grease, the correct loan and your flexibility, this will work for house hacking, and I would bet WILL get you close to very little out of pocket monthly if you take one of the 1BD rooms.  Heck, you might even be able to get some money for fix up and work with a contractor to add bedrooms to the 1BD, to get more money for the rents.   Maybe more with a short term rental after it is fixed up?  This is not far from Merritt College, rent the bedrooms to traveling students?  People visiting for Warriors games?  People who don't want to stay at a hotel near the airport?

I am just saying you have to be flexible and creative in hot markets.  As @Robert Marston demonstrated, it IS possible, IF you are flexible.

@Sunny A., I wanted to mention to you as well, you may want to go find a lender in your area, not to just get prequalified, but to also use their knowledge of the area as leverage, as they will know more about what type of financing is possible and could help you formulate the appropriate strategy and area to focus on for the type of investment you are interested in.

@Chris Mason seems to be a good resource for this and his BP post history indicates he has a lot of experience in this area - Reach out to him to see if he can help.

@Sunny A., thanks for asking the question.  I grew up in the Bay Area (Oakland) and worked in the Silicon Valley (Sunnyvale / SJ) for many years, I know there is an uphill battle you are facing with housing and weighing your options.  The facts are that the prices are not inline with the salaries of all in that marketplace, which is why so many people work there, but migrate out to Tracy, Stockton, Patterson, Modesto, Sacramento, etc., for living, where the prices are a bit easier on the wallet.  But, who wants a 2 - 3 hour commute one way?

There are benefits to renting in some markets (NYC/LA) and for some people based on their situation (transitional), although I would not recommend it as a long term solution to building wealth.  I assume you are after that, since you are here in Bigger Pockets, a forum for real estate investors.

That being said, I totally believe it to be possible to house hack in the Bay Area, although it is going to take some investigation and flexibility on your part.  You may have a smaller place.  You may not live in the best area.  You may be a little further from work.  You are going to be living with your tenants, know all of this in advance.  I believe there to be options through using short term rentals (like airBnB) and some long term rental situations (like multi-family) to offset your monthly living expense.  @Ben Leybovich said something in his book on house hacking that was profound to me, which stated "you can afford anything, if it pays for itself".  I really wrapped my head around this statement, and it has changed my whole outlook on affordability and my living arrangements.

Since you are in a market where the prices are higher, I would advise that you should be looking for a living arrangement where you monthly housing cost is either eliminated or reduced significantly through house hacking or multi-family property investments (where you live in a unit and rent the other(s)).

Go online and do some research on home prices, and do some analysis where your can find a living situation in which someone else will be paying the lion share of the mortgage.  Not to make light of your situation, but I can guarantee people are doing this every day in your area.

Good luck, and I hope this helps.

@Paul Little, I live in the Denver Market, so I know the frustration you have, but the fact is that there are a lot of investors here that are cash flowing and gaining equity on their property just fine. And I am not referring to people who invested in property years ago, I am indicating that these people are buying properties today (condos, townhomes, small SFH both on and of market). No joke. My hang up was the amount of money needed to get into these types of property as an investor is going to be higher than some of the turnkey markets like KC, St Louis, Birmingham, Memphis, etc., which seemingly require lower down payments for a lot of their inventory. But, know that it can be done here.

You need an investor-friendly agent, and they ain't easy to find.  I would be happy to share what I have found, drop me a PM if interested.

@Mateusz Prawdzik, great story and you are right about getting start, sometimes you just need to take action and continue to learn as you go.  There are a few take aways from your story which should be very important to @Alexandra Holmes.

1.  You said "only had one person vouch for me and give me some capital to start". This is an important point, as you reinforce that SOME money is needed to get started with REI.

2.  You also said "Can't say i didn't get lucky because I did and I'm grateful for it."  Also an important point, as I think the saying is "luck is nothing more than preparation meeting opportunity".  You were hungry, acted on your ideas, had a person or two help you along the way (maybe more) and got started.

I am new to REI, but certainly not new to hustling and have taken the same path you mentioned above to grow and excel in my career. You story is inspiring and should help anyone reading know that a lot of success in this business (or any business, career or educational endeavor for that matter) has to do with the right amount of perspiration, risk, education and luck!

Thanks again!

@John Thedford, thanks for this write up. I have been spending a lot of time angling to start with buy-and-hold opportunities, but I may be missing the boat here on HML. Can you tell me how you started as a HML? Did you network and find locals who needed money for the latter two strategies you outlined, and then put yourself in a position to allow them to borrow money from you for their endeavours?

Thanks for your time.