All Forum Posts by: Nathaniel Donnelly

Joe,

My SFRs I plan to have forever.  Already have one producing about 80% cash flow after only a year.  Are MFRs usually considered more temporary? (short or long-term)  Completely ignorant about it.

Thanks Andrew.  That all definitely makes sense.  I guess I'm looking more for information on where to find deals, how much I need to get in, etcetera.

I am a fairly new (1 year) investor with 2 SFR investments in San Diego in addition to my primary. I am ready to pull the trigger on a fourth property which was going to be another SFR, but after discussing with my agent last night, he told me to at least look into getting a 4-plex.

Multi-family properties have always intimidated me I guess, as I have no knowledge about them, if I can afford one, or even how to find them here in San Diego.

Any advice is welcome.  Thanks!

Simon,

I'd be happy to find a vacant lot here in San Diego for $100k, let alone a SFR that would rent for $1500/mo.

Realistically, I'm looking at properties between $250k-$350k that would rent for that much.  My 2/1 within SD city limits is only 684 sqft.

It's a fine balance here, and as long as I can find a property that can increase my cash flow, even minimally, and is not a wreck, I'll seriously consider it.

@Mike H.,

This is just simply inspiring. Not because I see dollar signs (which I do, of course), but that you just validated my gut feeling plan and vision.

You also hit the nail on the head regarding my reasons for refinancing my primary and paying off the rental..it is because of debt to income at this point.

Other advantages I believe I have here in San Diego is that there will always be a high number of potential renters due to the Navy and Marine Corps bases nearby, and to say I'm networked into that community would be an understatement. The other is that yes, our home prices are still lower than they have been traditionally, so I had the exact same idea as you mentioned - snag up as many as possible while I still can.

Thanks again for this explanation. I hope I can ping you again sometime for some advice.

Hello all!

I'm seeking advice on my next steps to help grow my RE empire here in San Diego. My girlfriend and I bought our dream home on Mt. Helix last October, and we each have a rental property.

Unfortunately, my girlfriend bought her home in a nice part of Chula Vista at near the top of the market and has just recently gotten right-side-up after many years underwater. Her mortgage is $2500/mo. and we are renting her place out to a dream tenant (Navy officer and his wife) that we rarely hear from, but they keep the place emaculate and the check is in the mail early every month! Their rent is $2800/mo. As you can see, that doesn't leave us much wiggle room, and it doesn't cash flow, but at least equity is being built.

My little place in the neighborhood of City Heights close to downtown San Diego has been our cash cow. I bought it at the bottom of the market and the mortgage is only $790 and it is renting to another great military tenant and his wife at $1500/mo. They have even helped restore the 1926 home because they have a similar home, built in 1928, back in Indiana. I pay for materials and knock a bit off the rent when they do help out. I bought that house in 2011 for $159k and I'm sure it would appraise for at least $240k now.

We bought the new primary in October with a 5/1 ARM that we pay $600/mo. PMI on. Relax...we did so with the plan of refinancing it in 6 months, which we are in the middle of right now. That refi will pay off the City Heights home and get my VA loan back for the primary - a 30-year fixed w/o the PMI, saving us $800/mo. total.

So that's our situation. My question is this: with my goal of building a REI empire using a buy-and-hold strategy, should I take money out of the City heights home to purchase another?

It seems pretty difficult here in San Diego to find a home that will fit within BP formulas for cash flow, as a $250k 2-bedroom may only get you $1500/mo. rent.

Can people in very high-priced markets like San Diego settle for less cash flow and still be wise investors?

Please advise.

Hello again everyone! So a lot has happened since I first posted. My girlfriend and I have purchased our dream home up on Mt. Helix here in San Diego, and have been renting out our properties since.

Unfortunately, my girlfriend bought her home at near the top of the market and has just recently gotten right-side-up after many years underwater. Her mortgage is $2500/mo. and we are renting her place out to a dream tenant (Navy officer and his wife) that we rarely hear from, but they keep the place emaculate and the check is in the mail early every month! Their rent is $2800/mo. As you can see, that doesn't leave us much wiggle room, and it doesn't cash flow, but at least equity is being built.

My little place in the neighborhood of City Heights close to downtown San Diego has been our cash cow. I bought it at the bottom of the market and the mortgage is only $790 and it is renting to another great military tenant and his wife at $1500/mo. They have even helped restore the 1926 home because they have a similar home, built in 1928, back in Indiana.

We bought the new primary in October with a 5/1 ARM that we pay $600/mo. PMI on. Relax, haha, we did so with the plan of refinancing it in 6 months, which we are in the middle of right now. That refi will pay off the City Heights home and get my VA loan back for the primary - a 30-year fixed w/o the PMI.

So that's our situation. My question is this: with my goal of building a REI empire using a buy-and-hold strategy, should I take money out of the City heights home to purchase another?

It seems pretty difficult here in San Diego to find a home that will fit within BP formulas for cash flow, as a $250k 2-bedroom may only get you $1500/mo. rent.

Can people in very high-priced markets like San Diego settle for less cash flow and still be wise investors?

Please advise.

Thanks Simon! Very useful.

All,

I really appreciate the advice from all of you. And yes, I actually do factor in maintenance costs when I analyze my rental cash flows, and I should've mentioned as much.

I know there's a formula that BP recommends to account for maintenence and vacancy allowances when doing a property analysis.

John, as far as CAPEX goes, will a new roof count as a CAPEX? How about new appliances? I'm not sure where the line is, but I understand it's for "large" expenditures. I'm actually throwing a new roof on my rental in City Heights next month.

Swanny,

I will definitely be calling you! I appreciate the advice, and it looks like you've been wildly successful, and you've been in the game only about as long as I have.

Let me complete this refi and figure out exactly where I stand financially and I'll give you a call.

Much appreciated!