All Forum Posts by: Nick Barreto

(semi)Devil's advocate:

You're probably speaking specifically on behalf of the "booming" SF market but check out the appreciation in Sacramento areas... Some have gone up as far as 10%. I think the reason is these tech companies are realizing the efficiency of remote work, therefore allowing the San Francisco RE market to deflate some pressure and let people live an hour away. 

That being said, I think it's important to remember that native California residents have proud roots here, but with the high Cost of Living in SF/ Bay Area. Sacramento has maintained a sturdy middle class -- there are areas not so appealing and areas that are booming -- but keeping it affordable has made it one of the best areas to invest due to appreciation and economic stabilization. 

Do your research and dig up the deals... they're there. But the competitive SF/Bay Area Market is headed for bikini bottom IMO

So, here we go... I have saved up enough and I want to put it into my first investment property. After discussing with my girlfriend, we discussed a more local approach would be a safer move than trying our luck out of state as a “newbie” as I had originally planned. Let me just say, I’ve learned several different approaches for scaling Real Estate and I believe the saying is true; there is no perfect way to do it. So this gives me some room to get creative with my initial plans and gain some hands-on experience.

*Guidance, criticism, questions curiosities? Please feel to comment here or PM me*

How about I share the initial plans I had to get my toes wet with REI and then we can dip into the new strategy I'm currently working on. Starting early last year, I researched a community near Dallas/Fort Worth, TX. I had some family connections in that area so I was introduced to an agent, a contractor, and an old-timer handyman who claimed he knew the area better than anyone in town. Because I was not ready to pull the trigger at the time, I realized my inquiries were not nearly as important as the leads coming across their desks each day. For this reason, I shortened my conversations and followed up every month or so, so I wouldn't be a bother. I simply requested some specific property criteria and asked to be notified if something came up for a newbie like me. Because of my ‘Analysis Paralysis', I was not seen as a priority… Word of advice - know what you want out of the relationship and don’t be flakey with communication. If you need more time to analyze the property, simply express your concerns. Respect their time as you’d want them to respect yours!

Anyway, the properties we’re going to be BRRRRs and my property criteria were as listed:

General Property Criteria -- Dallas/Fort Worth, TX [Delayed]

1. Single Family Residence (SFR) → 3+ Bed, 2+ Bath
2. Listing Price- $60k-$175K (Distressed, mostly cosmetic)
3. Location - Decent Schools, High Walk Rating, Retail within 30miles.
4. Repairs - 10% Forced Appreciation in 1st year, 20% of the sales price is rehab budget
5. Expenses - Aim for <50% of Income
6. Cash Flow - $300+/Month

Enter: COVID-19. The pandemic struck a nerve in the global economy and when that happens, the housing market flinches too. “Uncertainty” became a motto of coping and with little hope of an end in sight, I too hesitated. This is when my girlfriend and I decided that in order to reduce travel expenses and time away, I’d look into another approach to get my toes wet. It may not be my preferred approach, but again, there’s no perfect way to do this, guys. So I made some changes...

On to my new strategy for the meantime and to establish some experience) -- *Local Fix and Flips. Ideally, seller-financed but next in line would be a low down payment and low-interest loan and quick rehab. The locations I am scoping out are areas bordering the “heavily competitive” Bay Area markets, which has been proven rather difficult; (Suggestions welcome). The goal is to put no more than $50k down with a ~$20k rehab with an ending $30k in profit. SOW would ideally take 1 ½ months and listed on the market for no longer than 1 ½ months = 3-month turnaround. My monthly expenses (and holding costs) calculation will take into account the property taxes, insurance, and mortgage payments, inspections, permits, utilities, possible delays, etc..

*Local = California, Bay Area outskirts & Beyond!

New Property Criteria -- Location [TBD]

1. Single Family Residence → 3+Bed/ 2+ Bath, Built in the 2000s, in Sellers Market
2. Listing Price → $300k - $500k (Distressed, Mostly Cosmetic, an eyesore for the community)
3. Location → Great School District, Good Neighborhood, Retail ~20miles (Seller’s Market)
4. Repairs → Forced appreciation for at least $30k Profit on the flip. Short SOW,
5. Expenses → Aim for quick close because of Taxes, Insurance, Utilities, Mortgage, Etc.

I got in touch will an old pal I knew back when I worked as a residential lender. He’s a young, hungry agent with years of experience and if all goes well will be the first addition to my Dream Team. We caught up and laughed while reminiscing and then we transitioned into some questions about his experience, goals, and a few nifty deals he's been able to surface over the years. He’s a good guy and we’ve had plenty of good times with, so I felt comfortable putting a bit of pressure on him. I let him know that this will ideally be an ongoing venture for me and that I plan to stick with the agent that understands the potential we could create as a team. I think it’s powerful to surround yourself with those that have similar interests in mind and I wanted that to be established. After working out a deal that would make us both happy, we virtually “shook hands” and agreed to circle back a week or two out. 

Agent’s homework:

• - Research some potential Farm Area, and up and coming neighborhoods,
• - Forward some properties that fit the given criteria,
• - Regather some previous knowledge from Investor clients,
• - Possible Financing options
• - Sharpen knowledge of Foreclosure procedures.

My Homework:

• - Research potential Farm Areas and analyze a few properties as examples.
• - Go over finances and organize documentation for the loan approval process.
• - Establish Property Criteria for local Fix & Flips
• - Ask the contractor (old mentor) for advice for my next steps when walking a property.

Summary --

With enough cash for the down payment, expenses, and rehab to spend on a flip, I am formulating a Property Criteria for a Farm Area in California that my agent and I will discuss after we each do some of our own research. My agent and I share a mutual interest; money! For his time and effort, I promised to help in any way I could, whether that be referrals or marketing. I shared my plans to scale and when I asked for his commitment to a long term business relationship to accomplish this he obviously couldn’t refuse.

What worked? --

Build rapport, establish mutual goals, delegate responsibility, offer continuous work for long term scale. Not only extract value from your agent but also present your value in return. It would be difficult to turn down a well-thought-out proposal that makes both parties wealthy, right?

I look forward to hearing your thoughts!

Nick B

Thank you, everybody! Already making moves with a past colleague. Stay Tuned!!

@Joshua Durrin I remember attending a few similar events years ago, always a good time and always good people (and good snacks). I will have to look back into those, they must be virtual meetings now, huh?

Glad this resurfaced! I'm in the same boat. I spent the last year researching OOS properties for buy and hold. Given the state of the world I've called an audible and want to look into some fix & flips within the area with some sort of financing (preferably seller). I grew up in Walnut Creek and have seen the prices rocket so I just want a piece of the pie if it's there...

What I'd like to know is if the growth in the Concord area will continue to scale. The reason I worry that it will plateau is that with everyone in the SF/Tech industry now working remotely, companies are realizing the insignificance of having people physically show up to an office. (Of course, there's pros and cons, but overall, most can perform just as well if not better from the comfort of their homes).

I mention this because I have a buddy who is waiting on the final decision from his company (A BIG TIME COMPANY) on whether he can work from home for the rest of his career or not... This would mean he could move anywhere he'd like and keep his position at the company. Keep in mind this is SF where pay is high and cost to live is even higher. If this happens wouldn't the price of SF homes decline, and homes in surrounding areas to follow?

BiggerPockets Community,

This will be my first of many blog posts on BiggerPockets and felt it only necessary to begin with an introduction of myself and how I got here. Over the years, I’ve spent countless hours reading BP material from both professional and newbie investors. After etching out a path for how I want to approach my goals, I finally decided it’s time to put myself out into the world of networking in order to build the necessary relationships to further my knowledge.

As I write this post, I hope it reaches those who are stuck in "Analysis Paralysis" because I feel your eagerness. But also, the seasoned vets with invaluable guidance. Luckily, with my extensive (almost obsessive) education of REI, I now have the confidence to pull the trigger.

I digress, My Name is Nick and I am a 27 year-old Bay Area resident and native. Throughout college I found myself looking for lucrative ways to make money. I promised myself at a young age that I would not live my entire life working for someone, so with this mindset, I fell in love with Real Estate. The more I learned the more I loved it…

After college, I started as a Loan Officer, financing everyday homebuyers. While I was there, I met an investor that offered to mentor me with a more hands-on approach to REI. Being out of an office sounded great, so I took it. For a year I learned the ins and outs of his business, and honestly, by the end of my stint, I probably could have run it for him. I offered to take on more responsibility for a stake in his properties which he did not accept (His loss). So, with expenses piling up I needed to find a job that would put me in a better financial position and in a timely manner.

I found and still work with a startup called OpenSpace that provides a 360º photo documentation solution for large commercial projects around the world. Selling software these days is easy and in a relatively untouched industry like construction, I saw a huge opportunity and again I took it. After only a year, I have doubled my initial liquid cash.

Step 1 was to educate extensively, Step 2 is saving enough cash, and Step 3 is taking the bull by the horns.

My personal goals include an “early retirement” as Brandon Turner would call it, building a family that I can spend time with as much as I’d like, creating an empire of real estate across the state of California and beyond, and fulfill my creative ambitions with a film studio in Southern California.

Here on out, I will be much more active on the BiggerPockets forums and I urge those who relate to my extensive analysis paralysis stage, to reach out and follow along and use my stories as proof/learning experiences for your own goals.

Look forward to connecting with each of you!