All Forum Posts by: Vince Espiritu

Hi BP members,

I am currently saving some capital to finance my downpayment and closing cost on my first property. I'm planning to purchase a single-family house or small multifamily then househack it. My question is: How necessary it is to have cash reserves on getting my first deal? If it is necessary, should I have 6 months, 3 months cash reserves? What is the minimum amount that I should reserve on this?

It would take longer to get my first deal if I wait to have the full amount for a down payment, closing cost, and 6 months' cash reserves. Since I am planning to acquire an FHA 203k loan, the cash reserves are the most expensive part of my starting capital. What I am thinking is I can come up with at least 2months cash reserves then purchase my first deal. I can then save up more later to have enough money for 6 months' cash reserves.

I would appreciate your answers! Thank you in advance!

-Vince

Hello BP members,

My name is Vince and I am a rookie investor. My goal to purchase my first Rental Property by the end of next year (June 2022- the latest). After reading "How to Invest in Real Estate" by Brandon Turner & Joshua Dorkin and "The Book on Rental Property Investing" by Brandon Turner, I have created this checklist for myself to have clear actionable steps on getting that first deal. I'm also planning to house hack and self-manage this property.

I would like to post it here so I can get your opinion and answers on the checklist I have created. I would greatly appreciate any comments and suggestions that I should add to my checklist.

The question that I have to answer on my checklist right now is "How to buy a foreclosure property?"

What are the steps I have to take and consider when buying a foreclosed property? Are there any extra steps here compared to buying a non-foreclosed property? Or is this a completely different process?

I am attaching a link here to my checklist: 
Getting My First Deal Checklist (biggerpockets.com)

Thanks in advance!

-Vince

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ACTION PLAN: Getting My First Deal

Necessary Steps to Take to Get My First Property:

Step 1: Educate Yourself and Practice.

Learn about:

• How to Find an Off-Market Deal
  • Absentee Owner List
• Drive for Dollar
• How to Purchase a Foreclosure Property

• How to Quickly Analyze a Deal
• How to Estimate Rehab Cost
• How to Estimate After Repair Value
• How to Forecast the Property’s Value and Performance

• How to Obtain an FHA 203k Loan (or other loans that can cover the rehab cost)
• How to Do Your Due Diligence
  • Title Inspection
  • Document Inspection
  • Physical Inspection
  • Other Inspections

• How to Close the Deal
  • Title Company
  • Lawyer
  • Escrow
  • Insurance

• How to Rehab a Property DIY or through a Contractor

• How to Find a Tenant
• How to Screen a Tenant
• How to Evict a Tenant
• How to Manage your Property and Tenants

• How to Refinance Your Property
• Exit Strategies
• How to Find the Members of your Real Estate Team
  
  

Step 2: Assemble Your Real Estate Team.

Find your local:

• Real Estate Agent
• Contractor & Handyman
• Private/Hard Money Lender & Conventional Lender Specialist
• Property Manager (for future use)
• Lawyer
• CPA
• Bookkeeper (QuickBooks/Rental Property Software)
• Insurance Agent

Step 3: Get your Loan Pre-Approved.

• Shop for Loan Options. Compare Interest Rates, Down payment, Premium Mortgage Insurance.
• Contact Lender Specialist to Ask for Requirements
• Prepare All the Required Documents
• Submit All the Documents and Get Pre-Approved

Step 4: Find Your Property.

• Know your Market
  • Types of Neighborhood
• Crimes
• School Ratings
• Businesses
• Vacancy Rate
• Unemployment Rate
• Laws on Rental Housing (Tenant & Landlord)
• Typical Property Price Range
• Typical Rent Price Range
• Analyze Deals

Source of Deals:

• MLS through Real Estate Agent
• Portals
• Absentee Owner List
• Drive for Dollar

Metrics:

• 2% Test
• 50% Rule
• CoCROI (more than 10%, which is the average return on Stock Market)
• Total ROI

• Offer Up on Deals
  • Negotiate on Purchase Price
• Accept the Deal (with):
  • Inspection Contingency
• Financing Contingency

Step 5: Get Your Loan Approved.

• Submit the Property Information
• Appraisal
• Submit More Documents
• Loan Approved

Step 6: Due Diligence.

Hire a Lawyer/ Title Company for:

• Title Inspection
• Document Inspection

Hire a Property Inspector for:

• Physical Inspection

Other Inspection:

• Plumber (Inside Drainpipes)
• Pest Inspector
• Asbestos
• Lead-Based Paint

Step 7: Getting Ready to Close.

• Order Insurance from your Insurance Agent
  • Homeowner’s Insurance or Rental Property Insurance
• Setup your Business Checking & Savings Account
• Preparing all the Necessary Forms on Managing your Property
• Preparing Bookkeeping
• Final Walk-through the Property
• Plan the Rehab (Do this while doing Physical Inspection)
• Double Check the Documents and Sign it

Step 8: The Rehab Stage.

• Present the Rehab Plan to the Contractors and ask for a Bid
• Hire the Contractor with the best service, qualifications, and project history, and reasonable price.
• Create a Checklist for the Project and Give to the Contractor (only pay the contractor each time they get something done on the checklist)

Step 9: Find Tenants.

Advertise your Rental Property:

• For Rent Sign
• Craigslist
• Newspapers
• MLS
• Portals
• Rental App (like Apartmentlist.com, RentCafe.com, RentSpree, Pocketlist)
• Existing Tenants

Step 10: Screen Your Tenant.

• Set your Rental Criteria
• Background and Credit Check
  • Prior Felonies within 7 years
  • Prior Evictions Filed
  • Prior Evictions Carried Out
  • Bankruptcies
  • Judgments
• Criminal Issues or bad financial History
• Verify Income & Renting History

Step 11: Accept Tenant.

• Lease Agreement
• Move-In Condition Report
• Security Deposit and 1-month rent payment

Step 12: Train Your Tenant.

How to handle these scenarios:

• Late Rent
• Neighbor Conflicts
• Moving-In Unapproved Pets or People
• Breaking a Lease
• Drugs

Step 13: Manage Effectively.

• Track Expenses and Income (Bookkeeping)
• Create a System of Action when an emergency repair/non-emergency needs to get done
• Weekly Housekeeping (Common Area & Private Rooms)
• Schedule House Maintenance Check
• Maximize Income Each Year
• Minimize Expenses

@Hai Loc - That's great advice. Totally makes sense to me! It might produce some cash flow but would not probably appreciate as the land gets up in value, but not the house. 

@Joe Homs - No, it would never discourage me. Thanks for your opinion, Joe! I have been avoiding them as an investment as well.

@Steven Ortiz - I appreciate it man! Goodluck on your journey as well!

@Peter D'Auteuil - You're right! I'm considering on house hacking a single-family house with at least 3 bed and 2 baths since small multi-family is not very common in Irvine, CA. 

@Caleb Brown - Thanks, Caleb! That's my next plan after doing my first deal. I am planning to invest out of state as well in markets where cash flow is great.

@Joe Homs - That's great advice! I'll start attending events and meetups so I can potentially meet someone that can guide me in this journey.

Thanks for the awesome welcome guys! I appreciate it. Goodluck on our journey together. Cheers!

Hello fellow investors!

Allow me to introduce myself. My name is Vince. I am currently living in Los Angeles, CA. I am a new real estate investor and in the process of educating myself more while saving some capital to fund my first deal. I am mostly interested in rental property investing and planning to househack my first property in Irvine, CA. My goal is to become a billionaire and own more than 100 units of rental property consisting of small-multifamily and apartment complexes. I want to start first by investing in small-multifamily and eventually trade up to a 24 or more apartment unit complex while taking advantage of the 1031 exchange. (Thanks Brandon on this great idea) Since the market in California is expensive, I'm also considering investing out of state to generate more cash flow. 

"The journey of a thousand miles begins with a single step." - Lao-Tzu

I have taken my single step by reading books about real estate investing, and rental property investing. I am hoping to meet great people and form meaningful friendships in my thousand miles journey!

- Vince Espiritu

Hi fellow BP members! 

I'm fairly new in Real Estate Investing. I'm mostly interested in rental property investing. As I was looking for properties in Irvine, CA and nearby markets, I have come across this property that seems to be in good condition and fits my preferred price range. However, it was listed in the description that there is a Land Lease Fee. I am assuming that I am only purchasing the house but not the land. It seems that this property is a mobile home. As a new investor, would you be able to give a piece of advice on whether it's a great idea to invest in mobile homes without owning the land? Or should I completely avoid this?

Thanks!