All Forum Posts by: Wang Windy

I have bought 2 houses LTR in the Savannah GA area this year, specifically in Ellabell. One of them (house B) just closed less than a month ago. As Hurricane Helena went by, both of the roofs got damaged. Let's call them House A and House B for reference. Both houses have so-called 3-tab shingles that have low wind resistance. House A has a lower (but still high) wind storm deductible at 1%, while house B has a 5% deductible, and no one is occupying it as it was just closed. Considering the high deductible on House B, I am only filing a claim for House A, and coming out of pocket for the cost of repairing or replacing the roof for House B.

Hopefully, my insurance will pay to replace the roof for House A, but I am debating whether to replace or repair the roof for House B. Here are some facts about house B. I have had multiple roofers look at it, and they all recommended reroofing with architectural shingles which are supposed to be more wind resistant.

House B:

1. Has a ten-year-old roof 3-tab, but the condition is more deteriorated compared to its relatively young age. It lost a significant amount of granules from home inspection and multiple roofers. The shingles are in a similar condition to the 15-year-old House A.

2. It is still repairable but would cost 800-1000 to repair, and probably has 3 years of life on it according to the inspector and roofers.

3. I got several estimates from roofers and the replacement cost is around 13k (it's a ~1600 sqft house). If you know roofers with better prices, please let me know!)

Reason to repair:

1. new shingles may still be blown away in the future. Being in its geographic location, hurricanes are not rare.

2. The roof is only 10 years old

3. less expensive for now, but may cost more for repair with another hurricane in the next few years

Reasons of replacement:

1. According to the roofers, new architectural shingles should be more wind-resistant, however, I don't in how they are in real life.

2. According to the roofers, the shingles have lost their granules

Please let me your thoughts on whether I should replace or repair the roof, especially if you know that area well, but all comments are welcome!

0 Votes

Savannah, Georgia

I am helping my mom to sell her property in East Wenatchee, Washington. My mom has no existing mortgage or any form of lien on this property.

We accepted a seller financing offer, and are currently under the closing process. We have a collection company selected. We are closing with First American, and the closing document has a seller finance addendum and promissory note. We did not choose lender insurance on the purchase agreement (our agent misguided us so we thought we did, but just realized we did not). The buyer is paying 20% down with a 7% interest on the remaining balance. There is no other lender involved in this transaction. We are wondering, in the event of default, how we are going to regain the property. How does the process go and how complex it is going to be? Should we add lending insurance out of pocket?

First Amenrican's agent explained to me that the deed of trust is going to be recorded with the county, and that will put a lien on the property. However, she said without lender insurance, it cannot be guaranteed that my mom is the first lien holder. I am confused on that part because upon my research, if there is no other lender in the deal, we are automatically gonna be the first lien holder. So do we get the first lien position with only the deed of trust?

Would really appreciate your insight into a seller financing deal cuz none of my family has done anything like this. Thanks!

0 Votes

Quote from @Daniel Schiff:

Option 3- which is about $135k down and leaves you roughly $225k cash ($300k was 80% of your reserves so I am assuming $360k cash on hand) Keep your powder dry and take the option to use other people’s money as long as the deal really does cash flow for you and pay for itself. Make sure to do due diligence on the property and cash flow- 1-2 years bank statements and receipts / cancelled checks. Confirm the application process that was used and credit worthiness of tenants; ensure they have solid income/careers to ensure their work/industry doesn’t put your cash flow at risk. make sure to know how long that cash flow is in place before needing to rent or renew, and if any capital investments are looming (roof, HVAC, etc) that would detract from you cash flow and success. IE get proof your rent will be stable and remain in place and not become a maintenance money pit. Your cash reserve will ensure you can ride out any uncertainty if the market or economy sours, and if fed reduces rates in next 2 years you can refinance to a clean, lower rate loan.

With you cash you will have flexibility for other RE and not be 80% tied to one property.

DUE DILLIGENCE is your key here (act as if you are an underwriter and eliminate risks). Without provable facts walk away.

Hi Daniel, thank you for your detailed response. I am concerned about the above-market rent, and I do think that's a risk. And it is selling at a higher price compared to other properties in the area with an adu and garage. Do you think that's a problem?

0 Votes

San Jose, California

Quote from @Bradley Buxton:

Also check that the property is actually zoned to be a business and especially a daycare and are they permitted and insured. With 3 buildings can you rent out as separate units? I agree with the other that there is a lot of due diligence here to be done with the math and the operations.

It's a residential zone. It has a converted garage and an adu. My agent said it's pretty common to do daycare in the house in that area. I know someone can use s residential property for a company but not quite sure about day care. My agent said they had their own insurance.

0 Votes

San Jose, California

Hi BP friends, I have a situation here and I would like to get your opinion on this:

I am negotiating on a property with a seller in the Central Valley. After a few rounds of negotiation, the seller gave me 3 choices:

1. 450k purchase price, put 300k down, and the seller finances the rest at a 5% interest rate for 10 years. I have tried negotiating on a lower down payment with 450k, but the seller needs 300k for a 1031 exchange.

2. 470k with 50% down payment and the seller finances the rest with 10yr 5%

3. 470k purchase price, with a conventional loan (I am looking at 7.5% with 25% down 30-year fixed for investment).

The property is an SFH but converted into 3 separate units and currently renting at above-market rent to daycare. According to the number provided by the seller, I will be cash-flowing either way, but around 1k more with option 1. Essentially my question would be: should I put more cash down (around 80% of all my cash reserve) and lose the opportunity to buy in another area (hopefully a primary in the Bay area and house hack) in the near term for a lower purchase price and interest rate?

Alternatively, I can walk away and use my cash to invest in a fixer house in the bay at a B to B+ location but probably need to put all my cash in for down payment and rehab. Hopefully I can rent out 2 rooms to help with mortgage but I will still have a negative dscr in this scenario.

Would love if you can share your thoughts here!

0 Votes

San Jose, California

Quote from @Carlos Ptriawan:

Quote from @Chad Hale:

@Wang Windy Regarding rent control, know specific laws for each city and keep your rents up to market rates and you should be fine. As long as you are an ethical housing provider and not a slum lord, there won't be any issues. Use written leases, follow fair housing, etc, no issues.

Don't buy a property with rents way under the market unless you have a good strategy to bring them up within the confines of the rent control laws. Unless of course you can purchase the property for less money compensating for the low rents.

If folk just investing into SF, those regulation doesn't apply to you.

My problem with bay area market is not because I dont find the deal but there're just too many competition LOL got outbid every week LOL

there are still deals left and right, just needs to be careful.

dont invest out of state, big money can only be made in bay area, and you could become serious investor only if you invest at your own backyard.

time and location is our friend, interest rate is the enemy.

What do you think of Hayward? What are your rules in the bay? Are you finding deals that can cashflow? Is there any submarket you think may appreciate faster/more than other areas?

0 Votes

Oakland, California

Quote from @Arlen Chou:

@Wang Windy

Your question is actually very complicated but is really grounded in your personal financial position. "Cash flow" is based on the amount of money you put into the deal. A cash purchase essentially has a 100% cash flow. A property purchased with a FHA loan will probably have a very difficult time coming close to cash flow.

Each of your options have very different financial and personal commitment levels. They all have their own positive and negatives. At the beginning of your journey understanding these difference will potentially save you headaches in the future. What many newer investors fail to realize is that they are not just buying an investment, in reality they are starting a business.

With that being said, I personally only invest in "buy and hold" in the Bay Area and wholeheartedly advocate this strategy . I have properties that run from Milpitas up to Berkeley on the "Eastside" and I hold properties in Mountain View and Los Altos on the "Pen". I prescribe to the belief that cash flow makes you rich but appreciation makes you wealthy. There are deals to be had right now and there will be more in the near future. Many will say there aren't, but as an example, I am in contract on a 6-plex in South Berkeley for $1.45M. The price is nearly $200k below what the current owner paid for in 2019. The property is at 9.78 GRM (at time of closing) and a .9% on the 1% rule. This is not a dump nor in the "hood". All of the windows have been replaced, the electrical has been upgraded termite inspection only shows $4500 of maintenance type of work. As a side note, because of interest rate challenges, I believe there will be more of these type of pricing drops/opportunities through the rest of the year and into 2024.

As for house hacking, I think it is a great strategy for people who are just starting out with less available cash. Don't think you have to hit it out of the park. You need to find something that will at least get you to cash flow neutral in the near future. That means you must have a plan to get you there, not just hoping the market will get you there.

I personally don't directly invest of state or even out of driving distance because the reality of business is that anybody that you get to take care of your property will probably have larger/more important clients. Getting mindshare is not the easiest thing to do unless you have some mass behind your business. I know many people make it work, but my personal experience is that property managers do not divide their time/resources equally. My out of state investments are through syndications as a "limited partner". My money is safer, because the GP is there to handle everything on the ground. However, this strategy also has its own drawbacks.

Start with taking a good look at your finances, your skills and evaluate the type of operational pain you are most well suited to handle and build a business plan around that. Good luck to you!

Hi Arlen, thank you for your thoughtful response! I do prefer investing locally but the CA rent control and the price scare me. I wonder how you deal with rent control problems? When you are searching for deals, do you have people bringing off-market deals to you or do you look at on-market ones too? I'd love to get a property that's similar to what you are closing in Berkeley and would love to know more about how you find these deals.

0 Votes

Oakland, California

Quote from @Carlos Ptriawan:

Quote from @Becca F.:

@Wang Windy

If I were you, I would lean towards Option 2 or 3. If you can house hack in San Leandro, Hayward, El Cerrito, or other parts of the Bay Area, that might be a good option. Richmond is a bit more affordable. I saw a listing for $299,000 but it needed a lot of work. I don't know much about the South Bay.

I bought a condo in Oakland intending to live in it for a few years then rent out. It was in a great location for commuters near bus stop, easy access to 580, walk to shops and restaurants. Oakland also has high property taxes with 25 Special Assessments compared to San Francisco with 4 Special Assessments. I've also heard from other landlords it's difficult to get non-paying tenants out and they can squat for years. You also can't discriminate against rental applicants with criminal backgrounds (except sex offenders). I wound up selling it because of the high HOA fees with a badly financially managed HOA and the increasing crime in the area (building broken into 3 times).

I invest in S.F. and Indianapolis metro area. Indy is very affordable, landlord friendly and I'm cash flow positive but the appreciation is slow compared to California. The RE market is pretty stable in the Midwest and doesn't go up and down a lot compared to other markets. Property tax rates are 2.77% and 2.78% so a little high. I'm paying almost $5000 tax on a house worth $285,000.

Have you considered Sacramento? I know a few other Bay Area investors buying in the Vegas area and Phoenix (Casa Grande). The property taxes in Nevada and Arizona are low. I'm considering those areas in the near future. You could buy several properties out of state with the amount of cash you have.

Ya just stick in Bay Area for serious money and liquidity…… I can tell you exactly 4 homes that you can house hack as of right now LOL ….

market is kind of good right now in Bay Area standard for primary househack or ADU rental.

I saw one flip yesterday , owner purchased 750k in San bruno q4 22 they are selling for 1.4 now , amazing flips

Do you mind pointing out which houses you have in mind that work better for house hacking?

1 Vote

Oakland, California

Hi biggerpockets friends,

It's my first post on the forum and I would like to get some help on starting my first investment property. I have around 250-320k cash to invest.

I live in the South Bay where houses are extremely expensive and difficult to find cash flow. However, I don't really want to invest in a property that I have to pour a lot of money into every month.

Option 1: After researching, I found the only place that has the potential to cashflow is in the Oakland area. However, I've heard so many horror stories about the area that I am still a little hesitant to buy there.

Option 2: house hacking in San Jose, but even then I probably still gonna have some negative cash flow. Maybe a mid-term rental will provide me with better CF? Would love your insight on this.

Option 3: Out of the Bay, potentially looking into Salt Lake City, UT, Fresno, CA, or Savannah Georgia.

I am young and I have a lot of free time. What do you think is my best strategy?

2 Votes

Oakland, California

All Forum Posts by: Wang Windy

Wang Windy has started 4 posts and replied 9 times.

Post: Should I replace or repair the roofs after the hurricanes

Post: How to protect myself as the seller in a seller financing deal

Post: lower down payment vs. lower price & rate, what should I go for?

Post: lower down payment vs. lower price & rate, what should I go for?

Post: lower down payment vs. lower price & rate, what should I go for?

Post: Where should I invest in the Bay? Is Oakland an option?

Post: Where should I invest in the Bay? Is Oakland an option?

Post: Where should I invest in the Bay? Is Oakland an option?

Post: Where should I invest in the Bay? Is Oakland an option?