All Forum Posts by: Amit M.

@Sal G. your purchase price and returns look a lot like ours in San Francisco :) Most people on this site are cash flow investors, and don't operate in high end markets, where cash flow is not the main criteria.

Having said that, if you pay all cash it sounds like you are not relying on the positive cash flow for your living expenses. That being the case, what I would do is leverage this unit for a loan that breaks even for you. That would be about a $400,000 loan, and will leave you +$200/month for miscellaneous expenses. In manhattan, vacancy is normally not an issue if you know your units value, and if this is a new or renovated unit, repairs will be minimal. Then take the remaining cash to buy your next unit.

One caution about making your offer subject to loan. Since you have the cash, why not close all cash- you should be able to either get a better deal, or ensure that your offer will be accepted as it's all cash. Then as soon as you close, get your loan. You won't save much in closing costs IMO, especially not on high end props like this.

So what has the appreciation been like in the last 12-18 months on the upper east side? Also, isn't $655k cheap for that neighborhood (is this a tiny studio)?

yeah, be nice to the mogul.

just keep in mind, we're on an upward market swing and today everything looks good. RE cycles normally last several years, and the key is persevering when the market turns. You'll inevitably be challenged with vacancies/worse tenants, lower values, etc. It's less fun then (trust me :)

unforch I'm out of country for the 11/13, but in the future :)

@Mike Lam My suggestion is that you look for a 2-4 unit property, in an up and coming Bay Area location, that you can live in. You will need some down payment, but if you're innovative you may be able to get a 2nd from the seller (are those still kosher for traditional financing, btw) or maybe some first timers loan with a low DP requirement. Take the smallest unit yourself. Manage everything and learn directly from your experience. Focus heavily on a location that will be more desirable 3-5 years from now; transitioning neighborhoods. Also look for properties were you can add value- reasonable renovations as units vacate to attract higher rents, add laundry facilities, or perhaps storage in an unused basement, or extra parking spaces.

The right ones are like gold, as new tech people get pushed out of the more expensive areas. We are in an upward market now and done right, you could pull cash out (due to appreciation) a few years from now and make your next investment. That's how I did it.

I also recommend a book, buy and hold: 7 steps to a real estate fortune, by David schumacher. Yea he's an old timer, but he really made money with real estate, and had a pretty sophisticated way of analyzing and investing in RE. Get the latest addition, as it has updates, but the core of his advise is sound.

That's the way I approach RE, and it has changed my life. I only recommend what I personally know, but there are tons of people here with very different approaches. I suggest that you study the different approaches and see which resonate best for you.

rule #1- be weary of gurus. They make their money selling books (or worse, "training" seminars), not by real estate.

You must slow down and study more sources, grasshopper.

I look at it differently than cash flow/no cash flow. Most properties will cash flow, given enough of a downpayment to reduce your monthly mortgage. So the question then becomes, how much money do you have to put down?

Let's say you have $200,000 (a lot, I know.) It sounds to me like many cash flow oriented investors would buy 10-15 SFH's or a larger multi unit, and get a decent cash flow. But, that is a lot of props to manage, and in most cases there isn't much appreciation in these types of markets. Or they are in heavy boom/bust cycle areas, and your values flex a lot. I'd be more interested in buying less property, but at a much higher quality- places that you'd actually be willing to live in! They may need 25-30% down to give you an okay return on your down payment. But, if you choose wisely and plan on holding for several years, you can make ALOT in appreciation.

This has been the case with much of costal California, and booming urban areas like Brooklyn, NY. Unlike cash flow oriented deals, you can make a much higher return (inc. appreciation based on your leveraged DP), and need to manage a lot less units. All the better if you live nearby and can a) manage and control the props and tenants yourself b) intimately learn the neighborhoods and what is upcoming and why. You're focusing your efforts this way and leveraging your specific market knowledge. I know many people in the SF Bay Area that made fortunes that way.

him everyone :)

Please keep me in the loop for the next meeting. Looks like a great way to meet local investors.

Out of curiosity, do any of you invest in the local Bay Area market?

if you stay there will be trouble

why hard money? You own a 4 pled in LA, if you have any equity, why not get an loc at ~4%? WF now goes to 85% LTV. I never touch hard money on principal. I'll only leverage what I have and buy using that. Screw that 10-12% due in 3-5 years. No wonder people get in trouble. And if the market turns, kiss your *** goodbye.