All Forum Posts by: David Faulkner

Because I really like RE (always have) and it affords me a nice lifestyle that I enjoy, and definitely in that order.

There are good deals and money to be made in RE everywhere, but there are serious and very real disadvantages the further away your investments are from you (and newbies always under estimate this), so I recommend that new investors look in their own backyard. It may sound harsh, but if they can't afford to buy in their own backyard, then frankly they can't really afford to live there, rent increases will completely price them out of living there sooner or later, and their best course of action is likely to move somewhere where they can afford, or change their financial habits such that they can afford it, or both. Also, I would say don't get married to just one strategy ... in dynamic, vibrant, and highly profitable markets like SoCal, the market is always shifting, which makes some opportunities more attractive and others less attractive ... the best long term professional investors I know in this market have the ability to shift their strategy as the market shifts to take advantage of the best opportunities available at the time, while still hedging their bets to protect their downside if the market shifts away from them on stuff they already own. Personally, I am still working on this skill to adapt my strategy, which is why I've been less active lately as the market has shifted away from my preferred strategies (note this does not mean that there is no profits to be made), but I am already very good at protecting my downside, which is partly why I've been successful over long periods of time.

 Hmm ... I would suspect a few things going on in your case ... first, as you've mentioned, commissions on a $30k deal is peanuts, so why would any agent, be it the listing agent or buyer's agent be interested in doing much of anything for you. In that price range, I would try to go off market to find the owners directly ... but honestly, the better advice may be don't play in that space unless you already have vast experience in it or that is all you can afford ... I think the risks across the board and the caliber of professionals you are likely to encounter would go up a good deal if you look at $100k+ properties ... that is not to say there are NO good professional agents etc. working in $30k properties, just that the incentives are not there and I'd bet the good ones are working more exclusively with huge investors in high volume.

It doesn't make sense that the buyer's agent would help you much, though, because the buyer's agent would have to deal with all the same lazy listing agents anyhow, just as you would going directly to them ... but hey, if it works, go for it. 

I have my primary residence in Huntington Beach and my rental properties in LA county, and have done quite well with them ... I do not have any investments in San Diego, but I really like the market there as well. I've also invested out of State (Phoenix) for 5 years, after I had some success in CA, and it was an unmitigated disaster because of the lack of honest, reliable management. So much so that I fired 7 property managers in 5 years trying to find a good one, and my out of state properties being "managed" by PMs were far more work that my self managed properties in CA ... the only thing my PMs managed to do was to rip me off and create tenant issues that I would then have to drive to Phoenix to sort out myself.

That is why I ask if your CA investments are working ... because if it ain't broke, then my advice is don't try to fix it ...I hear you about the market being hot ... I would flip in this market if I found a great deal, or do hard money lending, or just build up reserves for the next downturn, but I have not been as active on the buy and hold side, and I wouldn't advise going out of state because you give up your control and have to be 100% reliant on others (who may or may not be competent and/or have your best financial interests at heart) in a market you are less familiar with and have limited access to. A lot of people on here selling a lot of properties and services out of state, so of course the advice skews in that direction ... I have nothing to sell you either way, just a guy with 15 years of experience investing both in and out of state sharing what I've seen and experienced in both.

 Brian, you realize that the original post was over 2 years ago, right? Thomas, seeing as how this post got revived recently, care to give us an update? What did you end up doing, how did it work out, and what have you learned in the process?

Yes, PMs worth anything should be well versed in market rents. IMO, though, you may be going at things backwards.

1)Get familiar with the market, neighborhoods, pricing, rents, etc.

2)Find a great PM if you are going to use one

3)Find a great deal on a property

If you don't do #1 first then you won't know if you have a great deal in #3, and the greatest deal in the world means nothing if you don't have a great team to manage it for you (#2) ... all are important and order is important to because you can't spot a great deal without knowing the market, a horrible PM can ruin a great deal, but a great PM can't save a horrible deal.

Have your San Diego and Palm Desert investments not worked out well for you?

 If you already know exactly what you are looking for, then a buyer's agent won't do you a ton of good anyhow IMO ... go find the properties that you want to buy ... if they are listed, then call the listing agent and have them show you the property, and let them know that if you offer then you will put the offer in through them and let them double end the deal. You will find no better spokesman with a direct line to the seller (except for maybe you talking directly with the owner on an unlisted property) than an agent who stands to double end it if they close with you. Plus, it is much easier to put in 100 offers in through 100 different listing agents than to expect one buyer's agent to put in 100 offers for you.

I don't think it is like grade school, it is more like Dad (Sr), Son (Jr), grandson (the 3rd), ... Henry the 8th, I am, I am ... whoever is born (records) 1st is more senior, those born (recorded) after are Junior to them ... and 1st lien is not always the most Senior either ... the tax man has been around forever and always takes his cut first :)

I agree that if the PM is the same one that found and placed these tenants then that is worse. However, if the tenants are 3 weeks late and the PM has not already issued each and every one of them the proper notices required to initiate the eviction process, then by all means, you need to throw the PM right under the bus. Each and every time I've made excuses for my PM about how it is really not their fault, and I should give them a second chance ... each and every single time I've done this, I've come to later regret it. If you think it may be time to fire your PM, then DO IT and DO IT NOW. Trust me, these type of issues don't tend to get better over time, even if you sit down and have a conversation with an warning/ultimatum.