All Forum Posts by: Ryan D.

Quit-claim deeds are the least desirable form of deed, as they don't actually convey title. All a quit-claim says is "I renounce any claim I have in this property" which has NO baring on claims ANYONE ELSE may have on the property. If I was a potential buyer, I would be suspicious of this situation. For what reason does your friend want to use a quit-claim? Is the title clouded? Are their liens? If the tenant is not reliable, and your friend is unwilling to evict, then he is essentially (& knowingly) selling a lemon. I don't understand, why not just evict?

We have 16 units, & each year we give all our tenants a good sized Thanksgiving turkey (or alternate if they prefer). It has had a noticeable "good will" effect with some of the tenants, though it's naturally difficult to quantify the effect.  Either way, it feels good to give back, & sets a good example to our sons. 

Union Bank will write a HELOC on residential investment properties, up to 65% total LTV. The property has to be in California, Oregon, or Washington.

Dave, check Union Bank. They will write you a line of credit up to 65% LTV of TOTAL debt on an investment property. The property has to be in California, Oregon, or Washington. The advantage to the line of credit vs a loan, is that you can set up the LOC way before you actually draw upon it (vs the loan where the give you a pile of cash then & there where you are ready use it or not). Also, the interest rate is lower. One you draw on the line, you can also convert it to a fully amortised loan if you wish (at a higher rate).

What to do with $1M in the Bay Area? Well for starters, Don't invest in the Bay Area!

Market here is GROSSLY over-valued, & your CCR will be terrible. Look into other markets where the purchase price-to-rents ratio is reasonable.

Keep in mind that BRRR can involve a WIDE variety of "Rehab" - this can be as involved as a total gut job, or "near turn-key" only needing some relatively minor cosmetic work like new paint & fixtures.

Originally posted by @Tom Goodwin:

Originally posted by @Ryan D.:

Also, the most "reasonably priced" (and that terms takes on a grossly distorted meaning out here) area in the South Bay with good schools is Scotts Valley. Everywhere else that is "affordable " has terrible public schools.

 Hi Ryan,

Thanks for the tip. I wholeheartedly agree on the "affordable" question. 5 years ago I lived in Eau Claire, WI, and we had a 4/2 house there, only 2 blocks from the downtown strip, for $75k.

Unfortunately, at least in terms of living, Scotts Valley is outside of our comfortable range. My Mother in law lives in Cupertino and my sister-in-law (with twins the same age as our son) live in Campbell (so yea, really, really cheap areas), so really we are looking at places with 20-25 mins or so of those two locations.

We have actually looked at some land that is available in the outskirts of Los Gatos (and are part of Los Gatos schools), and have thought about buying that and even building like a tiny home there at first, and then over time building out the property.

This all sounds so familiar! We (wife & I) looked into the very same thing over the last 2 years, What we have discovered is that any plot of land within Los Gatos that is flat enough to build will cost you hundreds of $K for just the land alone! I found a nice fellow willing to sell me a 0.1 acre plot for only $180k, and then I discovered the whole plot is a 45 degree slope - completely unusable! So you're basically relegated to plots up in the mountains, where you'll likely (though not definitely) need to drill a well, which will cost $50k for just the permitting & plans. Welcome to California!

We have effectively  settled on the Campbell area as well. Its a nice place to live, though the schools (like most towns in the valley with houses under $1.3M) are not good.

The Bay Are housing problem can be summed up as follows: over the last ~4 years >360k jobs have been created here, while only ~60k new housing units have been built, and the local municipalities are VERY development unfriendly. Google is also building a new campus in downtown SJ, which will further impact that immediate area. 

Silicon Valley is a wonderful, but VERY challenging place to live. We have investments in SoCal that we bought after the crash, though the cash-flow ROI one can expect from properties here is far too low for most investors, thus we continue to buy out of state. IMHO the major metro areas of the entire west coast are very overvalued now, from an investment point of view.

Its difficult at best to compare living in Cali with elsewhere in the country (we're from the east coast originally) - the way people live here is so very different. For example, there really aren't any suburbs as you think of them from the Midwest or elsewhere. Most people (with houses) have a little bit of land, but no one has a lot of it. The distribution of population density is much more flat than elsewhere in the country. 

At any rate, it sounds like we are fairly close, geographically speaking. Send me a message if you want info on schools, towns, areas of investment, etc. I'd be happy to share what I know. 

Also, the most "reasonably priced" (and that terms takes on a grossly distorted meaning out here) area in the South Bay with good schools is Scotts Valley. Everywhere else that is "affordable " has terrible public schools.

Hi Tom, welcome to the world of RE investing! I'm in San Jose also (have lived in California for more or less the past 15 years), & have been investing here for the last decade or so. I recommend you closely examine the performance metrics for investing in multi family in the Bay Area. If you are looking for cash flow, your ROI here is going to be very very low. If you are looking for appreciation, that is more speculation, and given how over inflated the housing market here is at the moment I advise you consider what would happen if your purchased & your value suddenly declined by %25. Consider this: when you are buying for cash flow (and this is the only reason I would ever advice people to invest in residential RE) you are basically purchasing a revenue stream. As you move up in area class (D to C to B to A), and as you move up in market valuations (Sac to SJ for example), the amount of money you have to pay to buy $1 of revenue increases, sometime quite dramatically. For for example, housing costs here are more-or-less 2x (& I'm using Very round numbers to illustrate the point) what they are in say, Sacramento, BUT rents here are not 2x, they are less than 2x. So, for comparable properties in both areas you'll pay twice as much to buy that same house here, but you won't get twice as much revenue, so your ROI will less.

Be aware you will also pay higher closing costs and higher interest rates on the commercial loan vs the residential loans you currently have.