All Forum Posts by: Shane Pearlman

Join us in Santa Cruz for the third real estate social meetup of 2015! We'll talk about some of the local and out of area deals that people have been doing. The last event circled around that time obsessing question: are we at the top of the cycle? You'll have to come find out, or read J's post to find out. We also wandered through a lot of beer and casual topics from bridge loans, to out-of-state deals, finding strategic partners, buying apartments and more.

We are going somewhere quieter this time (lesson learned)!

Please RSVP: http://www.meetup.com/Santa-Cruz-Real-Estate-Inves...

When: Friday, June 19, 2015, 7:00pm

Where: Chaminade Resort & Spa (Watch the sun set over the ocean on the decks)

1 Chaminade Lane, Santa Cruz, CA 95065

Please support the local business by spending some money and tipping for the great service we receive! They have both food and nice drinks. It is outdoors, so bring a jacket for after the sun sets (although June is usually warm as long as we are above the fog).

Remember, Friday evening traffic can get a touch thick so give yourself some time. I'll hang there till it ends (about 10pm - 2am depending on how conversation flows).

Can't wait to see you all, reply if you want to come. I promised the coordinated a headcount by early june.

- Shane

People typically come from: Santa Cruz, Felton, Boulder Creek, Scotts Valley, Live Oak, Capitola, Soquel, Aptos, Watsonville, Freedom, Pajaro, Seaside, Castroville, Salinas, Gilroy, Marina, Aromas, Monterey, Carmel, Los Gatos, Campbell, Saratoga, San Jose.

Hey Max,

Welcome to the crew. I think house hacking here is a great practice. We are in the middle of renting one side of a duplex we bought 2 years ago in Scotts Valley, and due to exploding rental prices (and a nice remodel), the rent from one side alone handles our debt coverage and some of the taxes. We actually got our landlord start locally buying a duplex and renting the other side.

Best place to figure out the ropes is to hang out with people walking the walk. We just had our local santa cruz meetup a couple weeks ago. I'm planning the next one for early June. Join us on meetup for an alert: http://www.meetup.com/Santa-Cruz-Real-Estate-Inves.... 

Check out the podcasts if you haven't yet, especially some of the older ones (before they started trying to interview every author they could find). Good stories with details by people doing deals.

If you don't mind the drive, there is a really solid meetup in San Jose (http://www.meetup.com/SF-Bay-Area-Real-Estate-Investing-Club/)that @Johnson H. runs and an Oakland / SF meetup (http://www.meetup.com/REmeetup/) by @J. Martin

I wonder how inflation plays into this. Technically affordability should factor this in (right?) but if four different quantitate easings have pushed massive floods of money into the market, forcing inflation over time, then prices could rise without raising the genuine asset value. Would that cause the same cataclysmic correction? Only if incomes are not rising to match them. This is why I like you using the HAI, but I do wonder how up to date their income measurements are (hence the impact of inflation).

It all starts with your personal investment plan. Why are you buying? Cashflow today, equity growth? How involved do you want to be? All these things play into the equation. With that said:

You can buy a property that doesn't have great returns today, reposition the property and grow cashflow and equity. It is my personal approach to real estate. It requires opportunity and sufficient reward to merit the risk. Your description doesn't quite paint much upside. Also 35% expense ratio could be legit if the building is in great shape in a high rent area, but for a long term hold including CapEx, you might want to double check those expense numbers.

For multifamily, even in good blue chip areas, I personally look for a minimum of 7% combined annualized return since I get that with minimal risk today. Unless you know something specific about the area or the property which changes the return, pass.

If you have specific questions on investing in university student housing, I know that @Jeff Greenberg is in the middle of a substantial deal and has been digging deep into that market.

I had a great time!

For those folks who didn't find us due to the overwhelming crowd from beer week, we missed you!! @Peter Chester and @Account Closed - you were like a beautiful ship passing across the bar. Maybe bunch at my house with the families in a couple weeks?

Bill, Terry, Ben - it was a please! 

Thuy - I'd be curious to talk more about some of the deals you and your husband are exploring. I'm doing a remodel in Scotts Valley right now if you are curious. Happy to show it in the next week or two and talk shop.

@Logan Allec is dead on. You really should work with an agent. Negotiate with the agent as you are bringing the deal and they could represent both sides. I sold a home last your to my tenants in an off market deal, and I was able to get my long time agent to do the deal for 2%. 

#2. Due diligence. I think some of the best decisions in my investing careers are the deals I didn't do. Make sure it is what you think it is. Get an inspection to confirm that the building conditions are acceptable. That the property is ACTUALLY theirs (title search) and that it is unencumbered. Confirm the income, expenses and rents are what you expect them to be. That the tenant under lease has been paying on time and isn't insane. You usually do this in 14 - 30 days depending on what you negotiated. It goes quick.

#3. Loan. Start the loan process and ride it through to the finish.Yu have an advantage as an accountant in that you might have your finances in more order (although the cobblers barefoot kids...). 

There is more, but my kids just walked into the office... =)

There is a maxim in commercial that loans are based upon the property and not the individual. While I'm sure there is plenty of truth to that, my experience is that my personal income, experience and net worth have an ENORMOUS impact on my ability to get loans on properties. I just got off the phone with a commercial banker in the midwest who wanted to see a personal net worth of over a million for the loan I wanted and 9 month of capital in the bank. They also wanted proof of experience. Thankfully I have these, but I didn't start with them. I grew into multifamily of this size one deal at a time.

I know there are people who can hustle their way past any obstacle, but if I was to give advice when you are at a crossroad (since you asked), I would continue growing your career and your cashflow. Lock down some deals and qualify for the loans using your cashflow from the job (unless you have a substantial net worth). Get the experience to back the vision.

@Linda Weygant your sister has my sincere sympathy. I know I got lucky the last time. So has your sister changed her screening habits or how does she plan to lower future risk?

The only situation in which an appraisal plays a role in setting the price is if you plan to get a loan. The bank will only lend on a value which is backed by an appraisal. You can be below the appraised value with no issue to yourself, the government (taxes) or the bank.  

Hey Kerry,

No shortage of investors here! Welcome to the crew. Our "Local" meetup is in Santa Cruz next week on April 10th. If you want to enjoy a beer and meet some good people, definitely come join us. 

I’m trying out meetup this time to better coordinate: http://www.meetup.com/Santa-Cruz-Real-Estate-Investor-Meetup/

Official post: http://www.biggerpockets.com/forums/521/topics/185253-santa-cruz-meetup---friday-april-10th

If you're trying to reach further, there are several FREE monthly meet-ups in the Bay Area. @Johnson H. hosts a monthly meet-up at Whispers Cafe in North San Jose. @J. Martin hosts a monthly meet-up in Oakland.