All Forum Posts by: Michael Lam

@Travis Glenn

Don't let the Vinyl scare you, just be cautious that is all. If the ROI is excellent give a closer look. But don't let the ROI cloud your fundamentals.

Hi @Travis Glenn

What you have heard is true.  Not every case, but having vinyl allows you to hide such unwanted visuals.  Couple points I want to make out.

1.  I did a flip on a house that used metal siding.  Similar styles you'd see for Vinyl.  I had to do some repairs and I could not find the exact same siding.  No one sold it in my area.  So it was a huge pain in the ***, so I ended up putting stucco on an entire side.  Luckily buyers didn't care too much and I was able to sell it.  

2.  When I did open up the siding, I did see damage that was not and could not have been pre-inspected without damaging the siding.  (nothing huge but you can image it could have been anything)

3.  You will need to use other data/info to help gather insights to this vinyl situation.  What I would ask is how new is the Vinyl, and compare that to how old is the home.  

4.  I would ask before Vinyl what did they do?  was it wood panels, another set of vinyl..etc

5.  Look for any stains coming out of the vinyl, that is random, like somewhere in the middle of the exterior wall.  If vinyl not installed properly you could get water streaming behind the vinyl or leaks of it.

6.  If you have termite on your exterior wall but have not made its way up to roof or to interior areas,  a vinyl job would do a good job hiding this problem. 

7.  Tip:  Go around the house, take some small stick (heavy) and start tapping around vinyl.  Listen carefully to hear, change in sound like hallows as this could mean a gap present.  Or listen to hear "crumbling" (pronounced sound...not small ones) , as this could mean what the vinyl is attach to is deteriorating or at very least needs to be secured.  Inspectors will most of time only inspect what they can "visually" see.  Your doing more investigative inspecting.

8.  Tip:  Pay close attention to the color/pattern of Vinyl across entire home.  Look for any unusual patterns that don't match.  It'll help indicate some repair was done.  If you see this, seller is not being honest if not disclosed in their seller disclosure document.

Good luck and  hope I didn't scare you.  It may be a very good deal from what you have indicated, but do be cautious (as with any home you purchase)

Hi @Austin Glidewell

The point when to sell is relative on your opportunity at hand.  Each time I've sold its for something different in some ways but at the end it was to free capital and pursue other opportunities.

1.  I would dump a home if its not cash flow but equity has risen and home is not in a desirable location.  (there is a grey line for no-cash flow but in desirable location and equity is rising)

2.  I would sell a home, if the market was favorable to me transferring that capital to another property (1031 exchange)

3.  I would sell if the home is in a market that is at its highest in several years and home is not in a desirable location.

My theme is, I'll hold on to my good cash-flow rentals in area that are desirable to sell.  I will be more inclined to dump homes in not so desirable location (even if they are cash flow).  I'll take money off the table if its reaching a peak.  For example, Sacramento, CA is reaching this peak in my opinion.  I have a few rentals there that I'm considering to dump.

Hi @Marci Stein

What is your LTV on this property and is it your Primary or Secondary or Investment (non-owner occupied)? That'll put it in perspective.

Hi @Nick Yon

I'm also local to Bay Area, so welcome!

1. Are you looking to buy your first home (primary) ..then do investment

2. Or do you want to buy investment first.

3. It sounds as though your looking to "buy and hold" strategy while being cash flow? With the high prices here in SV, it can be challenging to be cash flow, but is possible with combination of leveraging the right amount of capital, and right deal. How far are you willing to look?

Hi @Ally Kumar

I've worked with other investors who own properties with septic tanks.  I too have inquired about this concern and for the most part its not a big deal.  You spend every two years or so to clear it.   One of my colleague clears it out every 5 years at around ~$300

I do know that its debatable.  On one hand if your on city sewer connection, you don't have to worry about maintenance.  But you do have to keep in mind your at mercy of the city decisions.  That could raise the price of sewer fees.  

For example, if you purchased a home in an older neighborhood that is low in population density, then you can figure or make a good inclination that in the future the area will need to update their plumbings.  If they did, they will have to raise fees/taxes.  This would be more costly to you since less people to spread the cost.

On the other hand, it can equally be expensive if you don't maintain a septic tank.  But with anything, if you don't maintain it'll cost more to repair.  

To me, i'm indifferent on either.  However, I'd be more concerned about the potential of increase in sewer cost, since I'm the kind of landlord that will do routine maintenance and be on it to avoid the larger cost.  But if your in a new neighborhood, you shouldn't need to worry.

If you did an inspection on the septic tank, it'll tell you its lifespan and its condition.  Use that in your decision making.  You may end up getting yourself a great deal on a home with septic (where other investors avoid).

@Sharad M.

I read similar article.  Kinda scary if that is the case.  Minute this hit the wire, their stock destroyed.   They did settled, http://www.marketwatch.com/story/lumber-liquidator...

But it's not clear are they recalling those?  or they are just stating after the fact?

Hi @Ryan Moore

Excellent question

1.  In the area of your 4-plex do other similar rentals have washer/dryer?  If they do then you should have it.  But if majority don't, you can try to get some used ones off Craiglist for real cheap and install them.  

2.  Do they add value?  Any renter loves to wash their own cloths at the comfort of their home, versus going to laundromat.  However the "value" would be based on answering the question above.  If your competition has it and you don't, then it will devalue.  However if no-ones has this option, and the closes laundromat is driving distance than it would add value. 

Hi @llya Presler

1.  That $9000 upfront is the hidden "interest" in your 12-18 months.  

2.  Typical traditional closing cost is 2-5% so the way I read it is your closing cost is ~13% for the 70K loan.

3.  So its not 0% interest rate.  They just moved that upfront.

Hi @Jen Hoang

Interesting dilemma that is more common than not.

1. Even if you partnered with someone, getting a conventional loan with both your name will require a credit check, thus your credit score would come into play and not provide favorable rates.

2.  What you could do is "gift" it to your partner for downpayment,  then you have some side official agreement that that money is to be tied to a specific property of purchase.

3.  Could you purchase home in CASH outright?

4.  Are you doing flips or accumulating?