All Forum Posts by: Michael T.

Yes, @Brian Ploszay is correct that in the Southern California market there is such a housing shortage that rents continue to rise especially in the areas where there is not rent control.  

Similar to the rest of the country there will be a slow down and appreciation may not be as high compared to previous years, however, it will still be stronger than the mid-west.

The mid-west cash flows the West and East Coast appreciate.  It all depends on what your strategies and goals are to achieve wealth.

Ultimately, having properties in both the mid-west and West Coast can and is a positive for investors. I've completed refinances and HELOC's on my properties in the Los Angeles market so I could buy cash flowing assets.

At this point I'm looking for additional properties in Los Angeles that I can appreciate 10-20% in two years and repeat the process.

@Brian Kalb this same response is in regards to this post and your other post.

There has definitely been a lot of good advise here and I agree with both @Joe Villeneuve and

@Frank Wong however, it definitely depends on what your ultimate goals are.

I've done both, I've sold a few properties and reinvested the gains in lower price point properties and I've sold a few properties and invested the gains in appreciating properties.

Recently, I refinanced my multi-unit here in Los Angeles and bought a few properties in the $75K range in the mid-west and they cash flow very well! In my opinion if you find the right market and the right property manager the investments should not take more than one (1) hour per week.

You can also sell your condo here in the Santa Clarita market, find a multi-unit property, let your renters pay for part of your mortgage and then buy a few reasonably priced properties that cash flow in the mid-west.

If I was in your position there are two for sure options;

1. Refinance the condo and then buy two or three cash flowing properties in the mid-west. or

2. Sell the condo, buy a income producing multi-unit in Santa Clarita and then buy one or two cash flowing properties in the mid-west.

If you can't refinance then do the HELOC and buy one cash flowing property in the mid-west.

Juan,

I'll send you a message, however, I do have a list of contractors that I've worked with that are good.  

Obviously, here in the Los Angeles are it's difficult to find contractors that are fair, get the job done on time and are priced appropriately but hopefully my recommendations will help.

Tavish, 

Similar to other replies it will range on the market, however, 6-10% is very normal and I'm definitely willing to pay 10% if they property manager does a good job.

Unfortunately, sometimes you don't learn how good of a job the property manager is doing until they've actually started managing the property.

Obviously, there are numerous connections through BP that will help you find the right property manager for your specific market.

@Brian Kalb

There has definitely been a lot of good advise here and I agree with both @Joe Villeneuve and 

@Frank Wong however, it definitely depends on what your ultimate goals are.

I've done both, I've sold a few properties and reinvested the gains in lower price point properties and I've sold a few properties and invested the gains in appreciating properties.

Recently, I refinanced my multi-unit here in Los Angeles and bought a few properties in the $75K range in the mid-west and they cash flow very well!  In my opinion if you find the right market and the right property manager the investments should not take more than one (1) hour per week.

You can also sell your condo here in the Santa Clarita market, find a multi-unit property, let your renters pay for part of your mortgage and then buy a few reasonably priced properties that cash flow in the mid-west.

If I was in your position there are two for sure options; 

1.  Refinance the condo and then buy two or three cash flowing properties in the mid-west.  or 

2. Sell the condo, buy a income producing multi-unit in Santa Clarita and then buy one or two cash flowing properties in the mid-west.

If you can't refinance then do the HELOC and buy one cash flowing property in the mid-west.

John, 

A majority of the deals in Southern California will be negative cash flow initially, however, if you willing to be patient the appreciation will kick in quickly and you can either re-finance the property or sell it for profit.

As @Russell Brazil mentioned why miss out on the pay down and appreciation opportunities?  

At this time in my life I'm required to live in Los Angeles so there is no reason why I shouldn't take advantage of the pay down and appreciation opportunities that present themselves.

In San Diego I would imagine that you can find a multi-unit that provides appreciation of 12% in the first year, 14-16% in the second year and 18-20% in the third year. 

@Paul Choi mentions multi family of 10+ properties but you don't have to target that type of multi family if you're just wanting to get into something to "house hack".  

Target something where one, two or three of your renters pay a majority of your mortgage and then rely on the appreciation over the next few years to purchase bigger and better opportunities.

Michael, similar to others it depends on what your looking at whether it is SFR's, multi-units or if you're targeting cash flow or appreciation.

In Los Angeles there isn't as much opportunity for cash flow so I typically look for 12-15% appreciation by year one, 22-25% by year two and 27-30% by year three.

For cash flow I invest in the mid-west and my IRR is anywhere between 10% to 18%.

There are numerous individuals such as @Jason D. that do a great job with using their cash on cash returns to get infinite gains due to the BRRRR strategy.

I've done the BRRRR strategy numerous times and it's a great way to have your money work very hard for you.

Keith, congratulations!  

Yes, there are definitely some good opportunities to invest in the Louisville, KY and Southern Indiana market.  

Similar to you I'm here in California and it's not easy to achieve positive cash flow here so it's either cash flow OOS or appreciation here in Southern California.

As @Jordan Moorhead mentioned he has a good property manager and I've have a great agent named Cameo Bennett that I found through here

@Cameo Bennett 

Jesse,

As others have mentioned it definitely varies by market and if the market doesn't justify the value add then the appraisers won't appraise at too much of a higher value.

As an example in the Los Angeles area if you add a $100K ADU typically an appraiser will only add an additional $50K-$75K to the value of the property. If there are multiple properties in your market that have ADU's and they have comps and the re-sell value is strong they will appraise it at the higher of the $75K range.

The best option is to add another separate unit and then the appraiser is able to justify the higher value due to comps.  

I do agree with @Brian Larson that the appraisers have not adjusted to the new laws but it will still probably be a few years until we see the true appraisal value of an ADU in the California markets.

Juan,

There are a few websites that I use but typically each city has there own specific data. A few of the websites that I use are; 

https://factfinder.census.gov/faces/nav/jsf/pages/...

www.bls.gov

www.city-data.com

There are numerous posts here on BP that provide lists of cities that are considered some of the top cities for rental real estate investing.

In fact there was recently one post that was started by Tom Ott

https://www.biggerpockets.com/forums/48/topics/657...