All Forum Posts by: Wes Brand

I must be missing something...you're not looking for cashflow and you don't want to speculate. What are you looking for then? (And don't say you're looking for cashflow after a few years, that's speculation!) 

@J. Martin

Thanks for the info! I'll definitely check it out. I was searching for REIA in SF and kept coming up with events to the south in Burlingame or San Mateo.

 You don't have to walk around Oakland, but if you want a deal with no rehab needed, and not too many days on market

Not at all. I'm completely fine with managing rehab local-ish to me. I just don't want to get into a deal where it only makes sense if I'm the one personally doing the labor for the rehab because we're discounting labor costs.

As an example, let's say the place is selling for 425k, and would rent for 4500/mo, but needs improvements totaling 60k, making it a 485k house, for 4500/mo rent. That deal doesn't make sense to me, even though if I were personally doing the rehab I could probably do it for 30k or less, and that brings us to a bit low but not crazy 455k for 4500/mo rent. If that same place were 375k with 60k of rehab needed I'd be all over it (assuming the same numbers)

@Lance Knapp What if the market for your midwest duplex at 650 rent for 40k crashes? What if the area starts going downhill as urban renewal projects aren't renewed? What if a couple of gangs decided that the boarded up houses two streets over look like great territory to setup a drug house inviting far more crime to your area? Or, more likely, what if the population for area you're going to invest starts shrinking and you go from 650/mo this year, to 635/mo next year, to 600/mo the year after that...and in 20 years you end up with 300/mo rent and a property you can't give away because it wasn't in the lucky part of Detroit. But it had really good cashflow! (Of course, if you studied the market and knew where the likely "good parts" of the city were...)

No investments are safe. You can't rely on houses always appreciating and you can't rely on stable areas remaining stable. There are different risks, which is why people are saying to research the market you're thinking about investing in, and not to invest solely because the cashflow numbers make sense. Or, to rephrase: Don't invest because the cashflow is good today, invest because you think the area is going to go up in value and bring you more money in the future. Unless (and this is a big one) you're currently poor and *need* the cashflow today. If you can't afford to carry a house that's break-even or barely breaking even for a few years until it triples in value because it's a hot market, then you might have to invest for present cashflow. But that doesn't make it the best investment possible.

@Jack Slattery: Type @ and then start typing someone's name. If they've participated in the thread or are on your contacts list a menu will pop up with their name after a second or two.

I was coming in to say exactly what @Maggie L. said already. If I contact a real estate agent and they ask me a few basic questions and then setup an MLS feed, I'm out. They aren't someone I want to work with.

It's when they spend some serious time talking to me about my goals, where I want to invest, what types of properties I'm looking for, how much work I'm willing to put in, and so on that I start to take them seriously. Another big plus is if they show that they know the area extremely well (you want to stay north of this street, but south of that other one, and no, don't even consider that over there based on your goals...). Anyone, even a non-agent, can setup a few MLS drips, that's not really adding any value to the process and gives me no reason to think you'll be better than the next guy.

@J. Martin Thanks for the links to people and the reply! I'll start reading through their posts. I'm fine with something out as far as Richmond as long as there's BART access to the city (also fine with heading south, as long as there's bart access). I'm also willing to relax my "no house hacking" rule after really considering it. I love living in SF, and I couldn't afford to move back here if I moved out, but I can always hang on to my below market apartment and leave it vacant for a year if the deal is good enough.

I'd love to join you guys, but I can't seem to find real estate meetups in SF...can you send me details on where/what time it is?

If I'm understanding the owner-occupied exemption right, you buy the property, live in it for a year, and then raise the rents to current-market. Then you move out and the unit becomes rent controlled again, but you're now getting current market rents at 1 year ago prices?

And the deals not even appearing on MLS seems to be one of the big sticking points. Most of the ones on MLS/Loopnet are not exactly great (there's one in the Richmond I was interested in, but it's been there for 45 days so there's probably something wrong with it). Do I need to spend hours a day walking around Oakland in the hopes of stumbling across a good deal? It feels like there should be a better way...

I believe, assuming I'm reading it right, that @Account Closed's point is that indy is riskier because the population metrics are saying you're going to be stuck with 375 net forever if things go well. You'll break even after 11 years, because that money you're getting isn't going to go up or down. If you're unlucky and things don't go well it might be 20+ years before you recover your investment. Additionally, your 375 net doesn't change (much) with inflation because no one wants to live there and salaries haven't risen to match.

If you invest in LA, AND the numbers in LA say it's a good market (read: everything indicates it should appreciate, people are moving in, salaries are growing, etc) then you get break even returns on cash, but the home value goes way up and you make it up on sale, OR the rental market goes way up and you make it back on rents. 

For an example of this, 3 years ago 1 beds in SF were going for ~2600, nowadays they're going for ~3400 on the low side. That's almost $1000/30% extra rent per month in 3 years (or, 10% / year returns on top of everything else); you're not going to see that kind of rise in rents in indy. You can then take that extra money and use it to justify a higher sale price, or just pocket it. Is now a good time to buy in SF? No idea, I'm priced out of the market, so I haven't investigated it :) 

In LA? You'll need to run the market numbers to find out.

 Diversify your income. If you plan to go forward with this, make sure you manage investments from other investors, not just him. That way, when he dies and the properties get sold, you'll still have income coming in.

@Matt Owen This property was in Rochester NY. I also haven't seen anything in California that approaches the returns and ease of renting I want. 

Just FYI: Depending on your state you may have to issue receipts for rent if requested. For example, in New York article 7 section 235-e of Real Property Law requires it for certain forms of payment and leaves it on request only for others. 

Update here, and question: 
I was going to move forward, but the rents on the leases don't match the advertised rents. They're not off by much (30/mo), but it seems shady that they'd do this...it's not like I'd go through a purchase without getting copies of the leases and it's pretty obvious they don't match (if it were gross / 12 didn't match the lease amounts I could understand). 

Is this common in duplexes, or should I walk? (I'm leaning towards walking since that means rents don't match, roof needs repairs, they did a bunch of reno but left some major things like furnace + water alone, seems like a lot of small problems adding up to 'not worth it')