All Forum Posts by: Paul Wolfson

@Ali Boone thank you, the articles contain very informative material. Seems like my strategy is mentioned somewhat in the article.

I also noticed in one of the linked articles, “How to Determine a Market’s Trending Direction”, goes into great detail about certain market trends, stats, ect.

However, there wasn’t a reference or mention on where can one find these market trends and stats.

Do you have an resources you can recommend on market trends and stats?

I’m talking g about the following bullet points that were mentioned. I’m not sure where one can find this type of information.

* New residential high-rises have massive waiting lists.

* 16,000 jobs are expected to be created with the $4.5 billion campus for Center Corporation alone; construction has already begun.

* A $1.45 billion project is already underway for BNSF Railway, a company supported by a $44 billion investment by Berkshire Hathaway (Warren Buffet’s company).

* It’s seen a steady 8.5% increase in the median rent over the past year (top 5 in the country).

* It has a lower than average unemployment rate compared to the nation (5.2% vs. 5.6%).

Hello All,

I'm looking to invest out of state as I live in a very expensive market.

I've identified my goals and identified several markets on WalletHub Fastest Growing Cities. This list looks at things like job growth and population growth.

Once you've narrowed your search to several markets, how do you analyze them?

Goals

• Must Have: Cash Flow
• Nice to Have: Appreciation
• Strategy: Buy and Hold - Rent Ready (turn key based on pictures)
• Property Type: SFH
• Budget: Under 200k

Market Analysis Strategy

Step 1: On Realtor.com, search a specific market, and select the least expensive SFH that is rent ready, and use it in my calculation below.

Step 2: On Craigslist, search comparable properties to get the Rent Income.

Step 3: Run below formula:

Cash Flow = Rent Income - Principal and Interest - Tax - Insurance - Vacancy - Maintenance - CapEx - Management

Invested Amount = down payment + closing costs

CoC = Cash Flow / Invested Amount

The CoC is the number I use to determine if that particular market is the "right" market for me.

Am I doing this right or is there a better way to analyze markets?

What do you all think about Mashvisor as they have market analysis tools as well for a cost?

Thanks @Jonathan Oh for your input. 

BRRRR can be a great vehicle for ROI since your initial capital is low if you are able to get your money out in the refi, however the the cash flow after the refi is usually rather small. $100+/mo on average, which isn't all that much. Granted you could recycle this money and now do 10 more BRRRRs. I'm comfortable investing long distance if I can get more bang for my buck than in LA.

You hit the nail on the head in terms of considering the cost of the house as a whole.

Right now, my cash flow is -$2,500/mo. This is the mortgage on my current primary residence.

I'm in the market for a primary home, and intend to house hack. Live in the main house with my family, and rent out the ADU for $1,500/mo. That's a significantly higher cash flow than an out-of-state BRRRR, but the ROI is low because of how much capital you invested in building the ADU.

I ran the numbers on renting out the ADU, and only got 3.2% CoC, considering the house as a whole.

• SFH Price: $570k
• DP: 10%
• Closing Cost: $11.4k
• ADU Conversion: $80k
• Total Cash Invested: $148.4k
• PITI: $3,100
• Gross Rent: $1,500
• Reserves: $500
• Rent Savings: $2,500 (current primary residence)
• Cash Flow: $400
• CoC: 3.2%

*Note: Cash Flow = Gross Rent - Reserves + Rent Savings - Mortgage

This is what it looks like when comparing the house as a whole.

@Brian Kemp have you also considered investing out of state? If so, what was your reason to choose to stay local? Were the cash flow returns better with your creative approach?

@Brian Kemp thank you for the thoughtful response. I can definitely relate as I explored these avenues as well. I think the only criteria I have that’s different than yours is that the duplexes I’m looking for are mostly in neighborhoods that are not very safe. In other words, my wife and kids would be scared to take a stroll around the block after sunset. 
Which neighborhood did you end up settling in?

@Allen Tracy I considered out of state BRRRR as well, but after the rehab and refi, the cash flow wasn't that great. I'm considering Buying and moving into a house with a detached garage and converting it into an ADU (house hack). The cash flow is nice, but requires to park so much capital up front. 

Curious if anyone ran the numbers comparing the returns on both strategies. 

I’m from Los Angeles in the earlier stages of real estate investing.

Curious to hear what strategies have worked for investors with families, in terms of cash-flow, with around $150,000 or under in cash to invest.

Open to hearing all strategies, including:

• out of state
• house hacking
• traditional investing

Which brought you the best returns on investment?

Thanks!

Hello everyone. 
I'm looking to buy a SFH in Santa Clarita and build a new ADU in the back yard. To be clear, I'm not talking about converting a detached garage. I'm talking about new construction of ADU in the back yard.

Unfortunately most of Valencia is HOA controlled, so I'm looking at Saugus which has no HOA. My question probably touches upon Zoning and perhaps some new 2020 laws that went into effect.
Am I allowed to build a new ADU in Saugus?

Hi all. 

I'm trying to analyze deals and am not sure what values to use for estimating expenses. 

@Scott Trench recently posted a great piece on his Instagram account, basically saying the "50% Rule" is misleading. Many just use 5% for maintenance and 5% for CapEx, which I suspect they picked up from watching the BiggerPockets webinars.

It would be silly to say that a SFH rents for $2000 per month, therefore needs $200 allocation, but same structure across town with rents of $4000 per month, needs $400 allocation.

Having said that, I wanted to know, for those with investing in SoCal, how much do you estimate vacancy, maintenance, and CapEx?

@Karen Margrave so it seems like a lack of a full kitchen maybe a loophole to continue to allow AirBnB