All Forum Posts by: Osazee Edebiri

I know CA is considered a very landlord 'unfriendly' state to invest, however, that's very low on my list of considerations. This is not only for the reasons outlined by @Darius Ogloza above which I agree with 100%, but also because I've dealt with OOS tenants on units paying 1,000 for a small house. With the issues I had to deal with, being landlord state wasn't enough for me. Perhaps this can be blamed on my PM, but the difference in quality of tenants I get OOS vs what I get locally is quite staggering. After dealing with it for years, I decided enough was enough. I rarely hear a peep from my LA tenants and managing them is very easy. Also, a good portion of them are on Section 8, which does a nice job of motivating them to stay in line.

I think the MUCH bigger issue with investing in semi-decent CA areas is the cost of entry and difficulty to avoid negative monthly cash-flow. Unless you're well capitalized enough to overcome this, I think OOS is still the way to do, despite my experiences with OOS.

@Jason Holtzinger

A couple thoughts from a "neighbor" to your immediate south who has invested both locally and out of area:

1. "Landlord friendly state" is a misnomer.  State laws set unlawful detainer laws but policy is dictated at the very local level.  In handling an eviction, I would trust a judge in Sonoma County way more than some Democratic machine appointed hack in, say, Cleveland to get a fair result.  

2. $200/month seems like a very low bar.  Your capital expenditures over 5-10 years will almost certainly wipe out all of your income, especially in environments that experience harsh winters.  You will spend more on gasoline in a month at current prices.  I wonder whether you have thought through your goals.  Sonoma and northern Marin are expensive but the long-term benefits that flow could fund - a typical Terra Linda fixer should yield $60,000-$70,000 in gross rents - a retirement if you play your cards right and show some patience.

 Osazee,

Thank you for the feedback. I confirmed the rent prices with the property manager of the community. The community actually owns a large portion of the properties so they are pretty familiar with the going rates. Additionally, I live down the street in a one bedroom in-law unit and I pay $1900. The manufactured home is a two bedroom so it seems on par with rent prices in my area. I just have to confirm if there are any rent fees for the actual land that its on inside the community. This would definitely be a cashflow play for me as I'm new into real estate and done have much capital. I don't anticipate it appreciating but hopefully it can provide steady cashflow for a while. Also i would save about $50,000 in one year by living in it myself so that would be pretty cool to then pour that money into buying another property.

Hi BP community, Please keep reading through this intro to get to the guts of my question.

I have decide that I am going to purchase my first multi family property. I purchased my first home in 2012 and held for 8 years in the north bay and came out very well ahead after purchasing my next home in the country. Now I am after cash flow specifically and am looking for a minimum of $200 per month after expenses for my first rental property. I am not as concerned with appreciation as my goal is to buy and rent and hold and repeat. I currently run a construction company and through our business we are comfortable and are able to do pretty much everything we want....at the cost of 80 hour plus weeks for me. My goal is to eventually have enough rental income to not be so reliant on my construction business for all our income.

Now we are on the hunt! The problem is finding a deal in the North Bay of CA that cashflows is insanely difficult. Finding a deal that cash flows without buying for cash seems near impossible do to the large loans needed to purchase the crazy priced properties. after some research of other markets,we could buy a property for cash in Detroit metro or Columbus outright and cash flow on month one.

I really want to invest locally since I know the state very well but just cant seem to make the numbers work.

Should I stay in the hunt or move on to a different state that is landlord friendly and has properties that can actually be purchased with a reasonable loan or for cash?

Thanks!

Hello BP community,

My name is Ryan and im 29 years old. I am a first time home buyer looking to make my first purchase. I live in California Bay Area so obviously prices are very high which makes it tough since i don't have a ton of capital Saved up. i plan to use an FH loan with a 3-5% discount when i purchase my first home which requires me to live in the property for at least a year. I recently came across a nice, beachfront doublewide selling for 95k. The estimated mortgage payment + utilities/taxes and all other expenses would cost roughly $1,100 a month. I spoke with the prop manager who said the units easily rent for $2,500 a month which would net me $1,400 in passive income every month once i move out and rent it. On the surface this seems like a great opportunity once i get past the negative stereotypes that come with living in a doublewide “trailer”. I wanted to hear the BP community’s thoughts on this deal.. am i crazy??! If anyone has any unexpected problems that come with buying a property like this i would love the feedback. Thank you! 

@Nash Mittelman, Oakland is actually one of the city's with it's own pre-approved plan sets that @Paul Dario Jr mentioned but its is a 25'x25' box so won't work on every site.

The other alternate is doing a prefab, there's quite a few companies doing that now since the 2020 legislation passed. They have their own typical sets of plans that can be tweaked by their own architects/engineers. I will actually be doing just that for my own primary residence. I can draft it but I want to save the construction costs and just do prefab. I will, however, be telling them where to put it on the site. The design challenge with prefabs is making sure you position it right on the site so that it is of maximum benefi to the main house and the ADU.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

2 story duplex near West Oakland Bart station
Eduardian home

Hello Fin-savvy friends!  I'll keep this concise because it's complicated (I don't understand it... questions below). 

Circumstance: Wife and I live in 1 of 3 units within an Oakland CA triplex purchased in 2010.  We wish to eventually buy acres in some other state, but don't understand the complexities of 121 sales portions vs. 1031 sales portions as it pertains to:

?  How much $% cash we'd get tax-free out of a sale.

?  How much $% we'd need to 1031 exchange into the new property.

?  Minimum $ value the new property must be.

?  Whether or not we must rent out a portion of the new property in order to utilize a 1031 exchange for tax-saving.

My circumstances are the most complex I've seen, and I've never sold a property before let alone an owner-occupied MF property.

- Original 2010 purchase price: $291,000.

- Approximate sale price: $ 1 million

- Approximately 60% of triplex is rented out (by square footage, as noted on our annual tax statements. 40% owner-occupied).

- Current mortgage debt: $500k (we pulled cash out of a refi a few years ago to purchase/rehab another rental in Boise Idaho).

Can we do this if we're buying raw land with intent to build?

Must we rent out a building on the new land in order to satisfy 1031 exchange rules, or can we just buy the property for ourselves?

If we must rent out a building on the land, must that portion of the property directly equal the value of the 1031 exchanged portion of my sale proceeds?

If we must rent out a building on the new land which has a value at least equal to 60% of the sold proceeds, how many years until we're allowed to evict them and fully occupy 100% of the new property?

Since we still owe $500k on our mortgage, do we need to add that mortgage to the value of the newly purchased property?  In other words, do we need to buy a 1-million dollar property at minimum, or only 60% of the proceeds of the sale (1031 proceeds portion)?

BONUS QUESTION:  Can we sell two properties (triplex in CA + one rental in Idaho) at the same time, and 1031 exchange proceeds from both, to buy into said acreage dream property. 

I know this is complex, so we'd REALLY appreciate anyone who can help parse this out, in part, or in whole!

Christopher & Anais  <3

@Cathy Li I understand, but it just doesn't seem like the juice is worth the squeeze based on what you're doing.  For the rest of eternity, you'd be splitting cash flow up - if any - based on some complicated formula.

Controversial advice: just save up enough to buy your next property yourself - you obviously have a killer job =-)

Can you look at sub markets a few hours away to get a slightly lower price point - maybe in Riverside County?

I feel like most things you can get a reasonable handle on with enough work but rehab costs are the one variable its hard to account for without adding serious contingency/buffer!! In the industry, 5% contingency is kinda typical but for the smaller multi-family / sfh investment property projects it nearly needs to be closer to 20%