All Forum Posts by: Grey Stone

That is an excellent point!

 Ughh....I love you😂😂😂I hate to poke fun, but buddy you are overthinking it. If you buy right, are cash flowing well, have reserves and correctly screen tenants....why are you worried? No one knows how this will play out. There are so many factors at play. You could be right and prices come crashing down....BUT then again what if there is a reset of the global currency and the price of assets spike. I think the best route now is to be cautious, never panicked. I thought prices were high in 2016....and thank god I kept investing. I always think, if I buy this property, what will make me sleep easy? Usually it's all of the things I listed. I'm a little OCD in the beginning, so that I can be completely confident in my choices. If prices drop next year would I be bummed that I didn't wait...yes, but not really because I know by sticking to my plan in 20 years I should still be ahead. Besides there is a housing shortage that would take years to fix and Americans still love the idea of owning their home. Unless there are mass layoffs or mistakes made with monetary policy, I'm really not expecting a repeat of the great recession. I think it would take a lot to get 50% off housing.

What am I doing? I'm apart of an investing group with other minorities. We try and uplift our communities. Many of our tenants are black and brown,
and I intentionally try to buy homes in better school zones.

I am a black millenial and my upbringing was very different from the stereotype. My dad was very successful. Education, financial literacy and ownership were always at the forefront. My dad would take me to visit his CFP, CPA and for negotiations in RE. So these concepts always seemed normal to me. It was normal because my parents would talk to me about building wealth from a very early age because they were successful and because they were successful they have always wanted me to carry the torch and were able to help me and let me know it is possible. I think it was the same for other black people that I went to school with too. Unfortunately, too many of us have not seen this and do not know how to get started. I've noticed by changing someone's environment, it can alter many things about them. So by buying homes in better school zones, I know that many of my prospective tenants are black and brown and I can atleast help place one family in a better area and in a better school. I strongly feel that much of who I am, is attributed to the opportunities I had because of where I grew up and watching my parents succeed and seeing other people around me do well. 

Btw, some people feel discriminatory practices do not still exist....I wish that were true, but it's not. I have worked with agents that would discourage me from buying in specific areas, have questioned the legitimacy of my proof of funds (standard Chase acct), give bad information (awful advice). You can even learn about the last financial crisis to learn about predatory lending.

The past is important. It is important to know our history so that we can make better choices to improve our future. Many black Americans were not able to undo the damage that was done to us, so I try to help people that I know need it. Sometimes the things that are not that important to you can be amazing to someone else. 

From what I've seen I think it depends on the area of California. I grew up in Rancho Cucamonga where prices are much higher and cash flow is much lower than the AV. Fortunately and unfortunately this area attracts investors from other areas. I have very little experience with doing deals out of state. So I'm not saying you're wrong, but I really am trying to understand how someone new would do well out of state. Can you share steps and tips from your experience with investing out of state? I'm really curious because I hear people doing it, so maybe there is something I'm missing. 

Why do people assume this? This is just not true for all of California. I have 2 deals I found on redfin with 24% and 19% CoC return. One of them is zoned for up to 4 units in which the cash flow should be even higher if I build them. Both cash to close are under $75k and if I refi, I may be able to pull that money back out. If he is new why recommend to invest out of state....where he has to trust people to tell him about a process he hasn't seen before? Maybe there's something I'm missing. Seems a lot of people recommend that.

I'd be happy to help

Is the place you currently live, a home that you own? If so, the best options IMO are to either:

1. SELL IT- Take the money to buy a cash flowing , preferably value add 2-4 unit property. You can buy a 2-4 unit with 3.5% or 5% down owner occupied loan. Live there a year and then buy another and so on.

2. BUY A NEW HOME-If you've lived in your current residence for over a year, you can get another owner occupied, low down payment loan. The key is to make sure once you move out of this property, it will cash flow.

Both optioms will allow you to buy real estate with little down and best loan terms. And make sure you find an investor friendly lender. They will make sure to help you structure a great plan based on your personal situation. 

I disagree with a lot of investors that say your primary is not an asset. If you buy a good deal and can rent it out or when you pay the loan down it provides benefits that you will never have as a tenant.

You said earlier you want something better....so I'm assuming you want something to live in. But that comment concerns me. This market is hot, but does not mean it will stay that way. So if you're looking at things that are shiny and new you are probably going to pay a high premium for that.

I strongly recommend looking at different markets in So Cal before investing in another state. I love investing in the Antelope Valley because I live here and understand this market very well. I have also heard of people doing well in San Bernadino and Victorville (also currently growing). 

Right now and actually always cash flow is important. With a lot of uncertainty I am only buying with equity and with strong cash flow to where if rents drop 20% I would still be satisfied with my return.

In my area we're not supposed to have a previous relationship with the tenant. And the big thing is if they see her name on title or previously owned that home you could get denied. Good luck and let us know how it goes. This is a really interesting scenario.

The largest hurdle would be getting her an expedited voucher. In Los Angeles county we have a homeless incentive program that helps homeless families get vouchers very quickly. I would contact your local housing authority and see if they have a program to get her in quickly, otherwise it literally could take years. I strongly encourage you to learn about your local housing authority because they are all different. I think you are basing your decision on the likelihood of her dying soon, although this may be true, how would you feel if she lived to be 100? I would renegotiate a better deal where I couldn't care less about her getting on section 8. Older people usually have deferred maintenance especially when they are alone. Remember to plan for repairs.