All Forum Posts by: Michael Zau

@Phyo Ko I dont know where the property you used your VA loan, but if it was at your previous base, you might be able use your VA loan. Also, in this specific case, it is worth looking into a refinance into a Fannie loan and potentially pay the cost in order to free up your VA loan. That being said, it is very true that the cash flow is traditionally poor in San Diego and negative rents for a sailor in San Diego cannot be financially healthy. So if your plan includes a side job with your spouse, if you have one. Then another job could make up for that. I'm a loan officer in SD and would be happy to have a private message via BP messages,

@Dolly Meas I just read your post and I have a client building right now in La Mesa. I happen to live in North County Inland, and you are very close to me, so if you ever want to hop on a telephone call to go over numbers, that is what I happen to do pretty well.  I think that for a spec investment home in Escondido or nearby you are at about $2.50 a sq ft and that is for a low end custom home for San Diego.  I have a few contractors that you can talk to if you want that specialize in investment spec homes.  if you are ok with a joint venture, they will fund  and build, but you will end up with less profit.  (their time period is 5 months from beginning to end, rather than 2 years), so consider that as a tradeoff for a yield comparison.

You dont really have that much money, nor experience.  I strongly suggest a few months of networking with guys that have done a few deals that you can be a partner, not just an investor.   They may have experience, and some money, just not enough to play bigger and your money could help you intern, learn and partner at the same time with them.  An entrance contract would help you if you have a mentor or coach to help you as well if that is a choice for you. 

You can refinance your current home and see if there is enough equity to pull for a down payment on another home.  You can borrow from your retirement and pay that back over time, you can (ugh) use credit cards if you have enough credit.  The challenge shouldnt be the money, its the willingness to pay for the money. 

Investment Info:

Other fix & flip investment.

Purchase price: $170,000

Referred by realtor. Asked for referrals for about 14 months. Still in Rehab, it does rent for 1800 if we decide to keep it. Financed the whole purchase using private and hard money.

What made you interested in investing in this type of deal?

still a profit deal

How did you find this deal and how did you negotiate it?

with a realtor that I have a personal relationship. seller wanted to sell a very poorly taken care of condo.

How did you finance this deal?

110% financing using private money

How did you add value to the deal?

as a loan officer and advisor, I didnt charge the partnership and fees or points. Also utilizing my background in private money as a broker, helped in getting investors in the deal

Lessons learned? Challenges?

communication by me is challenging since I have the unfortunate ability to be a systematic empath. When it hits the fan, I go running and that is a terrible trait to have. So taking it in the emotional shorts is a great learning lesson.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

real estate agent, mortgage broker and private investors. also using laborer's after their regular hours to get lower cost rehab cost helped get the costs down.

@Dan H. I agree with your assessment, however I disagree with your opinion on the worse areas.  Compared to other lower income and higher crime areas around the nation, San Diego, arguably is actually ok.  There are decent parts of Escondido, Chula Vista, Vista, etc... and if you are investing, then you can eyeball what is a "worse area."  Overall an above average assessment that I would agree as well.  @Josh Gosnell  You will know by asking the right questions to the realtors in the area what are good cashflowing areas for you.  But since San Diego is a high cost location, you should narrow it down to either north or south San Diego, otherwise, its just too much driving.  It's a large county.  I think that you might find better numbers south of the 94 freeway. if you are in the south or along the 78 freeway if you are north.  IMHO, you'll find the triplex househack better served along the 94 or in Escondido. ( be prepared for the drama and noise....) 

@Thomas Pae I am purchasing properties in San Diego right now. and live in North San Diego.  When you get a chance, look up some the the cashflow events that I host, only quarterly now, and you will definitely gain significant value in learning about real estate investments, risk and mortgage debt. 

@RJ Dixon if you have no willingness to go fha because of your opinion, screams fraud to a lot of lenders. That might be a reason to lose your deposit if you didn’t want the fha loan and didn’t even try. However if you just didn’t qualify, that is a different story. Everyone is right about check your contract. For me as a lender, if you used every avenue , you can get an adverse action letter and that world stand up in arbitration, if there is a clause for that in Florida.

When you concentrate on rate, it potentially takes you away from some long term goals in the accumulation phase of real estate.  Right now interest rate is important because you want to maximize cash flow.   However, if you plan on paying off the mortgage and not refinancing, then accepting higher rates with non Fannie\Freddie\Ginnie , ( FFG) Lenders will allow you to use the FFG on larger loans when you really want to maximize the lower rates.  IF you plan on having less than ten properties, then yes interest rate above five percent is really high.  

As a Mortgage broker, i'm in the middle of a refinance of two properties and pulling cash out.  WHEN, I see another deal, I can buy  with down payment, joint venture or whatever. I have choices and flexibility.   I'll be buying in San Diego, when I can because I know that over the next 20 years, the values have a good opportunity to increase.    Regardless of current economic conditions, San Diego, has job growth and location is awesome.