All Forum Posts by: Robert Whitelaw

 Congrats Jeremie! If the pundits are right, you are jumping into the Sacramento market at the right time. 

I am actually just getting started with shopping for a duplex or bigger in Sacramento myself. I live down in Silicon Valley, but Sacto is looking pretty sexy from a return perspective.

R

 There is so much talk about lack of housing units and no viable paths to home ownership, I gotta think I can talk the powers that be into thinking well of an idea like this - even in California. Anyway, I would love to get a feel for the lay of the land and see if I can find a way through.

R

 Hey Adam,

It kind of depends on where your property sits in the overall price spectrum. Also what the ground truth is in the market you are in.

1. Sell it when its ready. If there is stuff to be done, do it before "Listing" it. Possibly put it up as a "Coming Soon" listing and then gauge the interest level. Whenever I do "Coming Soon" listings, I put up a sign with ONLY a phone number. No flier, no web site, nothing but a number. I want to use this "Coming Soon" thing to gauge serious interest. If I get lots of calls, I know there is a good market for it. Once you tell them the asking price, you can gauge their reaction as well. You may even find that during this period, you find a buyer who is ready to go.

2. Check the data for your area. I know Zillow projects the best month to buy in different markets, your local real estate agent can do a more focused job. Run the numbers for the last few years in that area for that kind of property and see when average price tends to peak. You can usually spot a yearly peak at around the same time for your area. In my area for instance, I tend to make top dollar in May. If the dollar difference between now and the peak month does not more than equal your holding costs - sell that puppy now.

Also, keep in mind that there is talk of rates continuing to rise. I am not terribly convinced about a huge jump, but if that is a concern, you should sell sooner rather than later. But even that has a condition. If your home is priced a little below the average for the area, a rate increase would HELP your property. The reason is that buyers will shift their price downward to compensate for the rate increase and keep their monthly the same and that would result in your home suddenly showing up for more buyers.

Hope that helps.

R

It is sad to say, but for the most part, real estate agents are a daffy bunch. This is over 25 years of real estate agent experience talking. They don't like "Different" or "Unusual" and most of them see investor clients as more work for the same amount of pay. However, in their defense, there are lots of folks who identify themselves as "Investors" and the vast majority of them go nowhere - so some agents are just playing the odds on this one.

Your first challenge is to track down an agent that does not suck. This will be hard. Once you have, you chat with them about what you are looking for and they create a search for you that emails you with whatever frequency you want, the properties you are looking for. You then interact with the agent and call out properties you like that are showing up. If you act like an active client, a good agent will treat you like an active client. 

R

 What you will find is that it comes really down to a few minutes a day. You will get an email that someone wants to rent your unit. You will go to the site, verify it is not taken on the calendar (The system already defaults to a "The property is not available" response template for you) or that you were thinking doing something else with it during that time. Maybe the potential renter asks a question or two. You answer and include a link to book the time and you are pretty much done. Then you can go days without having to deal with it at all. It really is ridiculously easy, given the pay off.  Just make sure you are able to reply as quickly as possible and take advantage of VRBO facilitating the renter paying by credit card. There is a fee, but the added convenience of booking and paying online is what I believe gets my unit rented before other peoples.

R

If the online route fails you, try going into the county seat (Wherever that is for your county) and getting the info in person. I know that here in California, I can pull up the information regarding tax records online as a real estate agent. Try checking with a local real estate agent in your area and see if they have the same kind of access.

Good Luck,

R

Howdy all,

I was reading Risk Game by Francis Greenburger last week and I got to thinking about the strategy that really started him off to becoming a real estate investing billionaire. He took multis and turned them into co-ops/condos.

So that got me wondering about doing that today - he did it with great success in the '70s and '80s in New York. Perhaps even just the process of turning a duplex into two zero lot line/attached SFR properties. I have no idea what the costs/process is so I thought I would check here to see if anyone has done it.

My interest is focused on how to get it done in California, but insights into any part of the country would be helpful.

Just to be clear, my goal here is to buy a multi unit property, then sell the units off individually. This is not a question about converting a duplex into a single SFR property - which is a topic discussed in some other areas here on BP.

Cheers,

R

PS: I have done some googling on the subject without much success. There are mentions of wanting to do it, but not any firm "This is how it works" style stuff. For those of you in San Francisco - there are some interesting rules on this: http://www.andysirkin.com/HTMLArticle.cfm?Article=...

 Hi David,

I do have some suggestions. First, check the more popular sites that deal with vacation rentals and see what units in your area are going for. Let me suggest vrbo.com for no other reason other than this is where I have my vacation property listed and so far, it has worked out well. Once there, you can get an idea for what folks are charging and which units are getting rented. When you go to make a reservation, check out the times that are blocked to get an idea of how far ahead these things are getting rented.  I am finding that my place is pretty much completely rented at least 90 days ahead.

I am nearly 2 years into my first vacation property and I have absolutely learned some lessons. Let me hit those first:

- Manage It Yourself - Sort Of. I have owned long term rental properties and now vacation properties and they present two very different property management challenges. For my long term rentals, I was perfectly satisfied handing the job over to a property management firm. The world of vacation rentals is different. Now this is not just me blowing smoke. This particular property was previously owned by someone else who also tried renting it to vacationers. It was managed by a local property management firm and it did horribly. It was rented maybe a week every other month. After buying this property, I start shopping for property managers and find their rates to be ridiculous (30%-50%!). I end up working out a deal with a independent local manager to take care of my place for substantially less, but I handle all the bookings, collecting of money, etc. They handle greeting the people getting them settled, dealing with emergencies and handling them leaving. Also, this property manager is the SAME manager the previous owner used with no success. I submitted my property to VRBO for renting last year and within 72 hours, I was booked for the next 2 months. It helped that I priced my place $5 lower than most of the competition, but offered more. So what explains this? Conflict of interest. These property managers make more if they rent the more expensive units first, plus many of them own units themselves. So where do you think your property might come in given those priorities? Well, here it is over a year later and the property has been very positive each month. In fact, I had my housekeeping person ask how I was getting it so rented. She cleans quite a few of the vacation rental units in the development and said mine was renting far more than the others - all of which are managed. How much of a pain in the butt is it for me to manage it myself? Nearly not at all. VRBO handles all the billing and notifications. I just approve the rentals and deal with the occasional change in plans from guests. Also, my housekeeper and property manager seem determined not to use the online calendar I created, so every week, I have to send them a PDF of upcoming reservations, but that is it. It probably adds  up to maybe a total of an hour a week. 

- Visit the property regularly. I just got back from a stay at my vacation rental. I had settled on the idea that I would visit it about once a year. It is clear to me now that I need to go at least twice a year. Despite the fact I have a housekeeper and a property manager who regularly are in the unit, I found that there were quite a few things that needed attention that I was never made aware of. A screen door that needs replacing left just sitting on the balcony, a broken light fixture, framed renter instructions that had gotten broken and repaired with duct tape.... just very dumb stuff that I do not want to tolerate when it comes to how guests see my unit. My feeling is that guests will take their cue on how to treat my unit by the example I set - and that kind of stuff just will not fly. So poor me, it looks like I will be having to go to Hawaii twice a year instead of once. Life is hard!

Anyway, I hope that helps. Vacation renting has been a huge win for me, but I have also heard horror stories. You really need to accumulate as much ground truth as you can to make good decisions.

Good Luck,

R

 What kind of numbers were you seeing on the properties you analyzed?

 This is actually great advice in general. I regularly run the searches suggested by Ryan - particularly the ones where seller financing is mentioned - and frequently find room for some creative stuff with those folks. This works for everyone, not just wholesalers.