All Forum Posts by: Rob B.

Gina,

I would buy a 4-plex with an FHA loan and 3.5% down and live in it for a year. It's a pain in the but, but the leverage would be extraordinary and you're profit would be great. Then I would look at the rest and try to buy a second 4-plex with a long 30 year loan with fixed interest rate before rates go up. If you're DTI is too high, I would look at buying an apartment complex instead of the second 4-plex.

Also, when you say $4,000/Mo in income, are you referring to cash flow or just profit. Because debt reduction and appreciation are the real money makers. 

I use Costar to do a search every few days. There are a ton of properties, so I just filter out anything that's been on the market since before my last search. I also have my specific criteria (>10 units, built after 1960, mainly 2/1s or larger, Cap rate 6%<, DOM ___). Make a commitment not to buy anything until you know the area. If you're like me, you'll want to buy every property that you see, just because it looks nice and the numbers are appealing. 

Also, since you're a first time investor, have you considered buying a few 4-plexes first? The financing terms and down payment requirements on residential properties (4-units or less) are much better than apartment complexes. My wife and I keep a residential and a commercial portfolio. You might consider buying two 4-plexes at 25% down on a long term 30 year mortgage while rates are still low, and then put the remaining money into an apartment complex when you're done. One lesson I learned is that it's always better to make your mistakes on a small deal first, rather than jumping in with both feet. My first purchase was a short sale house for $75,000. Little by little I've been increasing in quantity and size of my purchase. 

Also get to know LLCs. If you're looking to play on any scale, you want to protect yourself. 

Feel free to contact me directly with any questions. 

Agreed. I would never finance in the first place unless there was something wrong with the property or I was getting a lot more than it was worse. And I definitely wouldn't want the headache of managing it if I wasn't going to be getting paid extra for it. 

Of course, there's no harm in doing your research. 

Thanks Eric,

That makes sense. I knew there was something that I had to be missing from the equation. 

Also don't forget, your primary residence can be a great investment. I don't know what your living situation is, but you can buy a 4-plex with 3.5% down at a much better rate than an investment property. My wife and I own four houses and a 16 unit apartment complex, including our personal residence, and we're planning on moving into a 4-plex for a year just because it's such a good investment move. 

I've had great luck with long term buy and hold (1-2 years). Its steady money for very little work. But as an agent, I keep thinking how much I could save compared to most flippers by not having to pay commission or pay loan fees. I wouldn't want to go farther than Stockton/Modesto on a regular basis. But there are a lot of houses between here and there. 

Hi Jan,

Glad to hear from someone familiar with the area. I noticed you are out in Mountain House (love the area by the way, I've got friends who live out there in a gorgeous 5/3 that costs the same as my 3/1 in San Leandro). Do you do flips? If so, do you do Modesto or Stockton area? I've thought that it would be easier out there; I could buy multiple houses at a time, which would make things a lot easier. Downside is it's an hour away, but that's not the end of the world. 

Thoughts?

My question is in regards to getting your offer accepted when trying to buy a house to flip. I have been a landlord since 2012; I'm up to four houses and a sixteen unit apartment complex. I live in the East Bay Area (Oakland area). I got my real estate license in 2014 since I do a lot of of transactions and it has saved me $30,000 in the last 12 months in commissions. 

I've got some cash available to invest into some additional real estate. I'm debating between purchasing another apartment complex or trying to flip a few houses. I have read dozens of books about people who flip houses with little money, having an agent work with them and I continually think that if they can do it, I can do it. I have the cash to purchase and repair properties all cash; I also have my license, so I can save over half of the commission. 

My question is this: how in the world do you get your offer accepted if you're doing to follow the 70% rule? As a listing agent, I would be insulted (and have been insulted) by some truly ludicrous offers sent in by people who had done no research on the property. Aside from not wanting to be obnoxious, I also have to think of my reputation. If I become known as the agent who always lowballs, my clients will be hurt whenever I submit offers on their behalf. Is it just a matter of submitting enough offers until one gets accepted? Or do you wait until a house has been on the market for a long enough time? We're in a strong sellers market out here and I can't imagine accepting anything that was 70% of ARV. In fact, I just closed on a house in Hayward that we discovered needed $80,000 in repairs, and I still managed to close it within $20,000 of asking price.

Any thoughts on this would be appreciated. Aside from repairs, commission and loan costs are the two most expensive parts of a house flip, and I could avoid both, so it would be very lucrative for me.