All Forum Posts by: Ryan Chaw

@Beth Cannon I would definitely screen all the tenants thoroughly for certain. I get the last 2 month's bank statement and credit score. I have discussed payment options with tenants before. It is best to call them up and strike up a deal/lease. That is how I personally minimize vacancies. One trick you can use is give first month's free but charge a little more subsequent months. For example $400x12 months is about equal to $430x11 months (1st month free) though the latter sounds much better generally. It also allows the tenant to come up with the money after putting down a large security deposit. I always ask for 1.5x rent for security deposit. Hope that helps.

Why not take a portion of it and try a SFH first? It is tough to know how to run a MFH without having done a single SFH first. I know what Grant Cardone preaches, but even he started with SFH. He made his mistakes there. I definitely think there is value on starting small so if you lose, at least you learn and only lose a portion of your capital. Risking all of your capital on one MFH with no prior real estate experience is not the best idea in my opinion. But I'm sure it is possible. I invested in 3 SFHs to give you my background. I have a model I use though that guarantees higher ROI since I rent out per room rather than per house. So each house is rented as if they are 4 units each.

Hello BP members,

Please post here which strategy you prefer and why. 

Are you fix/flip or buy/hold? 

What are the pros and cons of your strategy?

What are some of your personal investments you are most proud of?

What kind of financing do you use for your deals?

If you are a buy/hold, what would you say the fix/flippers are missing out on?

If you are a fix/flip, what would you say the buy/holders are missing out on?

Who here uses a mix strategy?

Who here uses a completely different approach?

Thank you in advance.

Hello @Aaron K.. I have friends throughout California that I trust if I need help with property management. But I would say within 100 miles preferably from Sac. What experience do you have with the NorCal market? 

What investments do you own currently? Can you give me a breakdown of the numbers? Down payment, monthly mortgage, monthly rental income? Do you rent out residential or commercial?

Hello @Aaron K. Thank you for your reply. No I do not expect to be in the boonies haha. Out of state investments will require me to hire a PM. In order to get adequate returns with using a PM, I believe I will also need to invest in a high number of units, which I am not prepared to do. I also do not have anybody that I know out of state that I can trust and oursource operations to.

Hello @Russell Brazil. I am aware that CAP rate is simply put NOI (net operating income -> rental income minus vacancies/expenses) divided by the purchase price of the property. I do use it as a measure on ROI, though I understand it isn't an all inclusive measure and does not include buyer financing stats. I actually do own this specification of property already, but am breaking even on 2 investments and about $300 cash flow per month on the other. They are on 15 year mortgages however, which is from my understanding a much different strategy than most since most do 30 years. I am hoping to find some advice on what markets are out there in California. I believe the Bay Area is a poor market to establish cash flow. It is great for appreciation, but that isn't the type of investment I am looking for. I try for buy and hold cash flow generating.

Thanks.

Hello @Clifford G. 

I use MLS and my real estate agent to help me find cash flowing properties.

I find the Zillow app useful as well.

I'm not sure what zip codes are great cash flowing markets. This is what I am hoping to gain some input about from the Bigger Pockets community haha. 

Thanks.

Thank you for the reply! I was wondering if you could run those numbers by me. How much were the properties sold for? What was the downpayment on the mortgage? Do you happen to know the loan's interest rate? Or the sold date so I can estimate? Finally if you happen to know, what was the rental income, vacancy rate, expenses?

Much appreciated.

Ryan

Hello All.

I was wondering from everyone's experience with buy and hold single family home properties, what cities in California have you seen the highest return?

I am looking for cap rates of 8% or higher and positive cash flow (meaning the mortgage monthly payment is covered fully by NOI) off a 15 year loan with 20% down.

Let me know if you guys know of any. From what I hear, based off the Bay Area housing market prices, it is very hard to establish cash flow.

Thank you,

Ryan

Hello All. 

I was wondering from everyone's experience with buy and hold single family home properties, what cities in California have you seen the highest return? 

I am looking for cap rates of 8% or higher and positive cash flow (meaning the mortgage monthly payment is covered fully by NOI) off a 15 year loan with 20% down.

Let me know if you guys know of any. From what I hear, based off the Bay Area housing market prices, it is very hard to establish cash flow.

Thank you,

Ryan

@Angela Holmes I currently own 3 single family homes that I rent out by room that does around 9% cap rate each. I recommend you calculate how much you can rent it for, then calculate the mortgage if you do 15 or 30 years and 20% vs a higher percentage down. 15 years will give you a lower interest rate, but you have a higher monthly payment. Figure out if rental income minus expenses is positive. In my opinion, I would leverage because since you are entering a market you haven't gone into before, you may or may not be able to establish a cash flow you are satisfied with. Leveraging your money allows you to buy more houses in Modesto if this one works or buy houses elsewhere if the one in Modesto does not work. Hope this helps. I have a personal calculator you could use to calculate cash flow if you would like.