All Forum Posts by: Rafael P Martinez

I don't see much difference between distressed property price and renovated ones.  Some have sold for Maybe 100k additional. I have seen renovated ones for same than ugly ones.  It seems that sellers are asking whatever price they see on zillow

Currently I am looking to buy our first home and I'm divided over what property to buy in SoCal.

We have been looking at homes built on the 50's or 60,s  with 3 beds and 1200 to 1500 sq feet listed for $700K to $750k most of then need seriuous updates and very extensive reno work (Over $60k reno cost) My idea was to do a live in flip and force equity.  So basically buying me a headache. End goal was to get some equity refinance get my money out and buy another property.

At same time im looking a new construction homes with over 2500 sq feet, 4 to 5 bedrooms, for $650 to $700K and nothing to worry about. A perfect dream home.

I am divided about what route to follow, why spending more money on a trouble home when I can get one outta the box for less money?  Why should I spent big cash on top of buying price to do renovation work? I could take that reno money and put it down on a different property. Also construction companies are giving some incentives and free updates because of the current market conditions.

I know new build homes have less room to force equity, but there is room to upgrade if I buy the one without any of the upgrades offered.  I could replace carpets for hard floor, do patio features like grill area and patio build, other small cosmetic updates.  I could sit on the property for a year and wait for inflation do its thing,  wait for value to go up as it does here in California. I think this strategy could give me enough equity to refinance and get some cash out.

At the end, my goal is to recoup enough money for another down payment. Let say $60k.

What are your thoughts ?

I wanted to share my thoughts because I am a nurse myself, was a traveler nurse and have many friends that are traveling nurses. Part of the issue is related to decline in covid cases. Two years ago hospitals and healthcare facilities were hiring left and right to every person that had a RN degree, even without traveling experience, paying 2 or 3 times more because how desperate they were. Many nurses left their full time jobs and started traveling. However hospitals are a business at the end of the day and travelers are expensive, and there is no extra covid money flowing to afford them. Healthcare facilities have always run short of staff before pandemic days, and now they are back to it. The facility where I work had 28 travelers, and that was in my unit only !!! They all got their contracts cut off, and we will be going back to be overworked and understaffed. Sadly executives do not care about staffing issues but money. Additionally housing got expensive for travelers. For example in SoCal a simple room in furnishedfinder.com runs for $2000 or $3000 a month, which is a lot. In addition many of this nurses may have a home base where they have to pay a mortgage or rent, plus the STR where they will be traveling to.

Now, many of you believe traveler nurses are just drowning in money with high paying jobs, but that is all relative to where they come from.  A nurse in Florida averages $30 to $40 an hour, but a California RN makes an average of $60 Hr.   So when the Florida nurse gets a travel assignment in California that pays $80/hr then it looks like a lot of money.  Some cities and states pay nurses as little as $20 hr, but if offered a contract for $40 then looks like a lot !! Housing is the most expensive cost a traveling nurse has, it can wipe of about 50% of their contract.  Some nurses travel together or are traveling couples which help them save money, for many is more about the opportunity of traveling and discovering than actually making huge loads of money.  Then you have to add the cost of moving around, storage, private health insurance, etc. 

Big cities are where travelers get paid the less, and where housing is the most expensive. Higher paying contracts are in the cities where nobody wants to go.  Small town's healthcare facilities will see the most travelers in post pandemic days, if I were you I would look in this cities to invest for midterm rentals. Go to any travel nurse agency's website, many will post their jobs openings online. Check for the towns that pay the most, follow the breadcrumbs.

Hope it helps. 

My understanding of FHA loans is that they are intended to buy a primary residence, meaning you have to live in it. As far as I know, as long as you buy the property and live on it for a least a year then you are ok to do whatever you want with it later on. There is no law that rules what you do with the property after you live on it. Hence, you could buy a second home with an FHA loan but you must move in. That is how it was been explained to me by lenders, hopefully someone else can validate what I had explained.

Hope it helps

Quote from @Scott Trench:

I will jump on the "sell" bandwagon here. Here are my thoughts:

- Pretend that you had $150,000 in cash. Would you pool with your brother in law to buy a vacation rental in the South of France to operate from California? Hopefully, this proposition sounds fairly preposterous to you. If you wouldn't do that, you shouldn't do.. that. I hope you don't do that. If the brother wants to keep the property, perhaps he could refinance it, and give you the cash from the refinance. 

- If you want to retire to the South of France, or be able to travel there at will, then build a financial plan that backs into that outcome as fast as possible. I'd take $150K and invest it in US real estate that cash flows and is likely to appreciate, using government insured mortgages that we can access as US investors, that are long-term and low-risk. I'd buy STRs or Long-term rentals in markets that I can easily travel to or know well, spend less than I earn, and invest consistently over a period of time. 

Then, I'd spend the income that my portfolio generated on travel wherever I wanted in the world - including airfare, rent/hotels, and leisure. 

Now, my advice changes if your goal is to move to France full-time as soon as possible, you are willing to self-manage the property, speak fluent French, and believe you will be able to build a sustainable competitive advantage in France. If this is the case, then we should talk about starting Plus Grandes Poches! 

Even then, however, I'd advise not mixing business and family. You can't fire your brother in law.

 Scott thanks for your reply, I see the logic of your argument, honestly from the list of things you mention the only one we have is speaking French since my wife was born there.  

I could see how managing from abroad may be difficult. What do you think of selling and lets asume we keep 100k to invest in USA and taking the other 50k to buy a smaller apartment and rent out? Maybe with a property manager? What about STR with a managing company?

The reason that I insist on this is because our plans for retirement. although we won't live there full time during our golden years we may spend a month or two abroad. However I can see that following your plan it would be posible to afford a STR for the time we would be there, paid with the cash produced from owning several properties in the USA. Which at the end may be just easier as suggested

@Colleen F. Thank you for your advise.  Yes, we would like to have a place there, but not necessarily the paternal house. Agreed with you, have to research if it is worth it to put money to a rehab or sell it as it is.  I think selling and getting a smaller apartment in the best area for airbnb would be better, also like you say we can use whenever we want. 

Actually her brother is a very reasonable man, and not really a man that will fight for $$$, also he is the older brother, so he kind of has the head of family's word. Dad was very smart and had a will done before passing, at this point the house belongs to both brother and sister on the paper.  Brother also lives in another town and owns his own house. 

I think an ideal plan would include buying he brother out before hand if we decide to renovate and rent or renovate and airbnb.  Easiest way is to just sell with no work done,  split 50 - 50 and go our way.

Recently my wife inherited a 4/2.5 house in France, the house is completely paid off and has no obligations.  This home was recently appraised in about 300K, however it needs some TLC. Although the home is well cared for and very much in mint condition, her parents kept the original style. It definitely has a 60s look (like time froze in there) and it needs all bathrooms and kitchen redone to match todays standards, update heating systems, and energy efficient windows.

This home is located in the southern town of Avignon,  a small-city with a historic downtown area that is very popular area among European visitors during summer time.  The downtown area is very old school european and it is filled with is small buildings with tiny apartments or studios that occupied by students, airbnbs, or couples. The inherited home is located just outside the downtown area, probably a 10 minute drive, or a short tram ride.  I must also say the home was inherited by both my wife and her brother, so we have to include him on whatever is planned.  

I would like to hear what are your suggestions about what to do with it,  and here are the ideas I came up with.  

- Keep the home and do reno work, split profits with brother or buy him out before renovations.  It is my understanding that in France people tend to own homes more than renting, so I am not sure if renting such a big home will be a good idea. 

- Renovate and Airbnb it (because its proximity to popular attractions) Then again I am not sure such a big home is good fit for airbnb, usually european families are smaller and a 4 bed home may be too big

- Sell it as it is, split money with brother and use that cash to buy other smaller apartments in downtown area where rent or airbnb may be more attractive. 

- Sell it and invest in the USA, which I think is the worse idea. 

Finally I must say my wife and I would like to have a property in the area for our own, so we can have a place to use whenever we retire and wanted to spend time there with her family, or just enjoying the beauty of the south of France. 

Thanks to all !!! Looking forward to hear those great ideas. 

@Osazee Edebiri @Sam Yin

Quote from @Andrew Garcia:

Hi @Rafael P Martinez, I agree with Conner. 

House hacking is the best way to get started as it requires only 3.5% down and can save you thousands of dollars a month in mortgage payments.

With 60k, you should be able to find something to house hack and still have tens of thousands of dollars left over to put towards your next deal.

With your drastically reduced mortgage payments, you should be able to save $1,000+ per month that you can put towards REI.

The median home price in Atlanta is around $400k so for a newbie, you should be able to get 80-85% LTC financing on a BRRRR.

Therefore, you will need $32k for the down payment and $8k for closing costs to be very conservative.

Then, depending on how much you spent acquiring the house hack, you should be able to buy your first rehab within a few months.

A few months later you can refinance into long-term financing, take all your money out, and repeat the process.

That would be my recommendation.

Alternatively, if the house hack idea does not suit you, you can jump straight into the BRRRR strategy.

Make sure you have a solid contractor, agent, and property manager when investing out of state.

Hope this helps! Let me know if I can be of any assistance.

Thanks for the advice !! it is great info.

I currently live in southern California, in the LA area; however was about in invest in ATL with my friend, but now that he is out I am considering something closer.   I haven't looked too much but multifamily homes aren't much around here, the ones I have seen are in very bad areas and pricing around $400 - 500K.  Following your advice I can look harder into it. Another possibility is buying a house to do a live in flip, that would be much easier and would fit more the example you mentioned.  

I really appreciate it !!!