All Forum Posts by: Ryan Wamsat

You're right, which is I like to take a top-down approach when investing out-of-state, it narrows my focus.  Do this:

1. Look at is the State laws.  Do they lean in the landlord's favor or the tenants?

2. Start looking at the major cities in that state, because that's where people want to be.  Then, if you're like me and realize that you can't afford anything *in* the city, start looking at the surrounding towns where it may be a short'ish drive to the city.  This step increases your available options... so, you need to start narrowing them again.  

3. Start looking at websites like City-Data.com and determining their Price-to-Income ratio (Median Home Price / Median Income) and large employers in the area (Military, Amazon, FedEx, etc) for each of those cities.

4. If you're happy with all of that, then start using your favorite RE website to look for properties.  Or, if you're still in Analysis Paralysis mode... start looking at various websites for school, housing, crime, and job rates.  You can also look at the Flood Zones and review Climate Reports (so that you stay away from hurricanes and tornados), etc.

Hope that helps.  Good luck!

You're priced at the top of the market.  Though, there are a few others nearby that share your price-point.

5121 Durley Dr. was recently marketed at the same price.  Market it on FB Marketplace and/or lower your price a bit to try to attract more applicants.  Or, wait it out.  It's a good market, you'll get someone sooner or later.

Ryan

@Ashish Acharya, my total cost was just below $3,000.  If memory serves, it was $2,897.

I read somewhere (couldn't find it again, for reference) that if I replace an item, such as an AC, in one unit of a fourplex, I can capture 100% depreciation in that tax year.  The logic being that I replaced only 25% of the ACs in the building.  Therefore, since it wasn't a material change, it can be fully depreciated immediately.

Is there any truth to this?

@Edward Alcantar Yes, there is.  Check out Meetup.com.  Look for "Stanislaus Country Real Estate Investors".  It's ran by @Jenell Poncabare, though I don't believe they've held a meeting since April/May timeframe.  There is also a local Facebook group, but I don't have that info for you... Sorry.

Videos: I'm a big fan of Ken McElroy.  Though he's into large apartments, he commonly has videos for the new investor.  Very down-to-Earth guy.  I'm not so much of a fan of Meet Kevin or Graham Stephen... their stuff is ok, but I find it too sensationalized.

Resources: Personally, I highly recommend a property manager.  I've met @Kyle Kinsley and he strikes me as very knowledgeable and honest.  He once explained to me that he had to drop a landlord from his service because he/she refused to make needed repairs to their property.  A PM who is willing to give-up clients (income) for the good of their reputation is a PM worth checking into.  If you choose not to go with a PM, check out Cozy.co for online rent payments, tenant screenings, and online work orders.

Books: There are hundreds of them.  Literally.  Anything by Brandon Turner is good.  The ABC's of Real Estate Investing (Ken McElroy) is among my favorites.  And, look up anything having to do with cash flow.

Advice: Plan for the unexpected! Especially financially. New landlords simply think about covering PITI. But, you should also be considering repairs, vacancies, capital expenditures, and property management. A word about property management... include it in your costs regardless as to whether you plan to manage it yourself or not.  Worst case scenario, you get more money in your pocket.  Best case, if/when you want to use a PM, you've already budgeted for the expense.

I don't rehab (yet), so take this advice with a grain of salt.  However, I've listened/learned from those that do.  That said, I'm sure others can provide you with much better responses.  First thing... It doesn't matter what the seller's asking price is.  This needs to be right for you, or don't do it.  So, submit your offer and see if it's accepted.  I've heard that rehabbers submit like 20 offers for every one that is accepted.  Second, I recommend over-estimating every expense line item and underestimating your income line item(s).  Leave yourself enough room to fail and still make some money.  You can adjust these values as you gain more experience.

Lastly, here is a formula that I've seen elsewhere to estimate your offer price:
([After Repair Value] x .7) - [Repair Costs] - [Hard Money Costs or Initial Financing Costs] - [Estimated Purchase Price Closing Costs] - [Refinance Closing Costs] - ([Monthly Taxes & Insurance] x [Months loan held]) ≥ Purchase Price

It's all about the risk that you're willing to assume. However, I would not pull a HELOC from my personal residence. If things go bad, and they typically do for first-time rehabbers, then that could leave you in a worse financial position than where you are now. And, now your personal residence is at-risk. I would stick to hard money lenders, family, or possibly a partnership to supplement the missing amount. As hard-money lenders are a short-term loan, cash is not your only option.

Good luck, and welcome to BP.

@Account Closed, thank you.  I'm not sure how I missed that.  Section 5 indicates that section 1954.52 of Chapter 2.7 of Title 5 of part 4 of Division 3 (jeesh!) includes 2(A): It is alienable separate from the title to any other dwelling unit or is a subdivided interest in a subdivision, as specified in subdivision (b), (d), or (f) of Section 11004.5 of the Business and Professions Code, and the owner is a natural person who owns no more than two residential dwelling or house units.

It'll be interesting to determine the answer to questions 1 and 2, specifically regarding whether the number of out-of-state rentals plays into this law.

Thanks again,

Ryan

@Account Closed, thank you for the quick response to my question.  Though I have no doubt that you're correct, where is this specified?  The text I read, which was presumably the prop itself, didn't have these kind of details.