All Forum Posts by: Paul Choi

@Virgilio Mateo Update us! :)

also - curious if anybody can recommend a good roofer and dry rot/termite contractor?  Quick and cheap.  Isn't that what all rehabbers are looking for? LOL!

@Kiran Tatiparthi Howdy neighbor!  Congrats on taking the first step.

Since you have multiple players involved, I would find an attorney to get contracts among you guys so that it's legit.  Meaning, how much each puts in, who does what, how much is the payout % to each party after acquisition of property.  Do you have the option to offer and buyout each other shares if a price is agreed. Exit strategy. Verbal agreements mean nothing...get it down on paper.  Prevents disagreements and he said she said drama.  If you don't want an attorney involved, you can maybe draft up contracts among yourselves and have it notarized.  I'm not an attorney so take my comments with a grain of salt.

You will need to get an agent or agents and figure out financing at the same time.  How much money you can borrow will give you an idea what kinda properties you can look for in what area, which will help the agent identify properties for you.  If you think you can get a loan for $1 million and you tell you agent that, but later find out from the bank that can only pre-approve $600k, you just wasted your and the agent's time.

Finding a property that cash flows in the SF Bay area is tough. Practice running the numbers on real properties for sale on the MLS using the BP calculators. Are you guys OK with having negative cash flow and making it an appreciation play? Or are you guys only looking for positive cash flow? Many thing to consider and everyone has to be on the same page. How many people is "a couple of friends"? If too many cooks in the kitchen, nothing will get done. Who takes the lead and makes the decision? Lots of things to consider...

@Derek Luttrell Congrats on a great start!

ANY property can cash flow if you throw enough money at it.  To me, that's not a good investment strategy.

As an investor, you want to take advantage of the current market and opportunities, such as low interest rates, maybe a fixer to build sweat equity, other people's money (including bank's), etc.  

Owning something outright is great but with that strategy, it will take forever to grow your portfolio.  Throw all you money into the property, then how long will it take to save for the next downpay?  Having no mortgage is something I've heard from more seasoned investors who have multiple properties and is looking for large passive income as oppose to acquisition and aggressive growth.

@Angela Jossy I think it's great to commit to 1 plan and work towards it but when you're starting out and working with various restrictions, I think it's good to keep your options open.  Adaptable and flexible to the market and opportunities that may come your way.  For example, you may be deadset on househacking a multiunit but a wholesale deal may land on your lap. 

I would househack a smaller multiunit, partner up with someone, or maybe work on wholesaling.  A quadplex may be tough with a small downpayment unless you partner up. Leverage your experience managing properties to investors, market it as something you can bring to the table and has value.

@Shawn Allen making a buyer's list is less important that landing a deal.  Land a deal and the buyers will come outta nowhere LOL!  I agree with what @Nicholas Armstrong said about networking, reaching out to buyers directly, etc.  

On another note, I recently started looking at investment properties in Hawaii.  My business partner grew up there and is very familiar with Honolulu and that area.  I love going there for vacation but if I were to buy properties there, more reasons to go!

@Nicholas Armstrong Congrats on your success!  I agree that bagging a deal on the first mailer is not the norm but does happen with some good due diligence and strategy.

4 cents per letter is great but I think it might be misleading not to include postage costs. I mean, you are spending money to buy postage right? Unless you drive to each property and hand deliver it, then you have to include the cost of gas :) My point is that it is important to sum up ALL costs, small and large, to assess ROI correctly.

When I said a wholesaler typically needs a couple of thousand dollars to start, I was speaking in general terms.  Here's a general breakdown:

 - Targeted list (owner absentee, pre-forclosure, etc.) - Gotta get the list of seller from somewhere. Some go to Listsource, some have other sources.  Maybe past due tax bills from the County (cheaper but requires alot of time). That's a couple of hundred $$.

- mailing campaign - letters or postcards or whatever.  typically 40 cents to 70 cents each, including postage.  If your targeted list is lets say 500-1000 addresses, that's anywhere from $200- $700 for each mailing campaign.

- Most send out a mailer to that targeted list every few weeks. If we say once a month, that's a couple of thousand right there.

There are other posts in BP that show the average rates of return, such as for every 1000 mailers, you get around 40 calls, and from that 40 calls , you land 1 deal.  It's usually the 3rd to 5th mailer that yields a deal.

Of course this is generalizing here and costs can vary widely.  For example if you do alot of the leg work yourself, such as doing things in-house, you save money but not time.  Some have less time and spend more money as a trade off.  I follow the latter because I don't have much time.  I can identify 500 addresses that fit my criteria in a region, pick out a postcard or letter and have it all ordered and mailed in less than an hour.  Sure I spend 60 -70 cents per mailer including postage but I save time to work on other deals.  Gotta spend money to make money.

@Shawn Allen Good luck!

@Shawn Allen I believe in staying local when wholesaling.   When sellers contacts you, you will need to go see the property, talk to the seller, help solve their problem and agree on a offer.  All this would be difficult if it's long distance.

@Rose Srini congrats!  Curious if it cash flows in this market.

@Adam Stinson Hi Adam - good to hear that that you want to cater to investors.  IMO, it's difficult to find agents with an investor's perspective.

As an investor, I would also look for someone who knows market trends and "hot spots" or "up and coming" neighborhoods in a particular city. Another plus is to identify properties, both on the MLS and off markets that investors would be interested in. That said, most will look for off-market deals since there is much less competition. Not sure about the day to day interactions of an agent, but I'm sure some will come across properties and sellers through their network where going straight to the MLS is not a viable option. Maybe a past client's brother is going through pre-foreclosure and came to you to get some advice and time is running out.

I wonder if working with investors will be more beneficial for business-minded agents than working with individual home buyers/sellers.  You would be doing more transactional volume where a single investor is probably looking for multiple properties to purchase and sell, whereas a couple off of Main St is look to buy a house and not see you for years until they sell.

It's also helpful to have a ballpark for rehab estimates so that you can identify distressed properties that investors would love to see.  I believe good investors have a strong "buy side" network and foundation already set.  Your advantage is the "sell side" aspect of that equation just by through your career, network and more exposure to people who come to you to sell their property.  Putting them together correctly will result in deals being made.

@Yan Yuan I second Chris Mason.  He knows his stuff!