Uber bought me my second property

17 Replies

Hey BP. 

I am exhausted. But I am stoked to say between all of your help as a community I finally closed a couple weeks ago on my first deal, a 4plex in Bakersfield. I will be self managing from San Diego and once all the units are turned over and brought up to market rent within the next 18 months, I aim to cash flow $1,666/mo with 10.9% CoC and a 7.86% cap rate (calculated from the beginning purchase numbers) . End sale price was $515k with 25% down. The numbers at closing are cash flowing -$17 mo with a -.14% CoC and 3.94% cap. More then half of the down payment came from a HELOC on my condo, and the other half just working an extra 30 hours a week driving Uber.

It was a journey to say the least. I started out last summer buying into all the typical internet rookie stuff like investing out of state. 4 months of late research nights and early morning phone calls later I flew to Ohio and almost purchased a couple places there (thank you to @Ryan Deeter, @Bryan Thomas, and everyone else that put up with my relentless phone calls and emails. If you are looking for a dedicated real estate agent or attorney in Columbus hit up Ryan and Bryan first!) but it just wasn't right to me and it just didn't make sense for my situation. 

Timing was everything and just as I was starting to reconsider OOS, @Casey Murray decided to put in his .02 on a thread I started where I was trying to get some convincing to invest in my back yard of San Diego. Big shout out to him and his time spent on the phone and in person with me lending me his vision and perspective on things. Value adds and other ADU conversions was the answer I was looking for, and I spent the next 5 months networking with locals and placing offer after offer on deals. Also big shout out to @justin R for letting me come onto his development sites to help out and learn some tricks of the trade. Now though, COVID was inflating the market so fast here that my original goal of leveraging as much as possible just was not going to happen, and I would be soon outpriced long before more inventory came to market.


So, I expanded markets anywhere that I could self manage from San Diego, and after a few weeks of briefly studying all the markets within a 6 hour drive, I landed my focus on Bakersfield and finding deals in traditional multi family units that needed work and were severely below market rents. 10+ offers later on everything from FHA, conventional 4 unit, the seller financing route, 5+ unit commercial lending, I finally got an offer accepted as the 2nd offer weeks after it had expired. @Brendan Winans was relentless and matched my persistence, and I could not have connected with a better local agent that understood investors looking for the deal. 1 tenant got evicted during escrow, so in the 2 weeks following closing I was able to get a signed lease and received security deposit and rent for market rate. It has been a serious learning curve but hopefully have this HELOC paid off within the next 6 months and keep on looking for the next deal either in San Diego or Bakersfield, or anywhere in between.

I just want to say thank you to this community and all its members that met with me, picked up my phone call, answered an email, or met with me for coffee. It isn't easy to start out in REI, especially in San Diego. If anybody reading this is struggling with starting out (because I really struggled), especially in todays inflated market, you just have to be persistent. Researching is great, but analysis paralysis will hold you back more then anything. Instead of trying to find the answers you are looking for on google, call up the first lawyer that comes up on Yelp or the nearest bank to you, and get real answers that are specific to your question. Instead of combing through pages of listings, put in offers. My condo down payment was funded 100% from Uber hustle, which then provided the HELOC for this 4plex and also the rest of the down payment. Looking forward to more learning and more connections!

@Peter Eberhardt this is an awesome and inspiring story. I too live in San Diego but can’t make Real Estate investing work for me in this market so I’ve taken my focus out of state. Hearing what direction others take when in the same situation provides motivation and additional options and ideas!

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Originally posted by @Peter Eberhardt :

Hey BP. 

I am exhausted. But I am stoked to say between all of your help as a community I finally closed a couple weeks ago on my first deal, a 4plex in Bakersfield. I will be self managing from San Diego and once all the units are turned over and brought up to market rent within the next 18 months, I aim to cash flow $1,666/mo with 10.9% CoC and a 7.86% cap rate (calculated from the beginning purchase numbers) . End sale price was $515k with 25% down. The numbers at closing are cash flowing -$17 mo with a -.14% CoC and 3.94% cap. More then half of the down payment came from a HELOC on my condo, and the other half just working an extra 30 hours a week driving Uber.

It was a journey to say the least. I started out last summer buying into all the typical internet rookie stuff like investing out of state. 4 months of late research nights and early morning phone calls later I flew to Ohio and almost purchased a couple places there (thank you to @Ryan Deeter, @Bryan Thomas, and everyone else that put up with my relentless phone calls and emails. If you are looking for a dedicated real estate agent or attorney in Columbus hit up Ryan and Bryan first!) but it just wasn't right to me and it just didn't make sense for my situation. 

Timing was everything and just as I was starting to reconsider OOS, @Casey Murray decided to put in his .02 on a thread I started where I was trying to get some convincing to invest in my back yard of San Diego. Big shout out to him and his time spent on the phone and in person with me lending me his vision and perspective on things. Value adds and other ADU conversions was the answer I was looking for, and I spent the next 5 months networking with locals and placing offer after offer on deals. Also big shout out to @Justin R. R for letting me come onto his development sites to help out and learn some tricks of the trade. Now though, COVID was inflating the market so fast here that my original goal of leveraging as much as possible just was not going to happen, and I would be soon outpriced long before more inventory came to market. 


So, I expanded markets anywhere that I could self manage from San Diego, and after a few weeks of briefly studying all the markets within a 6 hour drive, I landed my focus on Bakersfield and finding deals in traditional multi family units that needed work and were severely below market rents. 10+ offers later on everything from FHA, conventional 4 unit, the seller financing route, 5+ unit commercial lending, I finally got an offer accepted as the 2nd offer weeks after it had expired. @Brendan Winans was relentless and matched my persistence, and I could not have connected with a better local agent that understood investors looking for the deal. 1 tenant got evicted during escrow, so in the 2 weeks following closing I was able to get a signed lease and received security deposit and rent for market rate. It has been a serious learning curve but hopefully have this HELOC paid off within the next 6 months and keep on looking for the next deal either in San Diego or Bakersfield, or anywhere in between.

I just want to say thank you to this community and all its members that met with me, picked up my phone call, answered an email, or met with me for coffee. It isn't easy to start out in REI, especially in San Diego. If anybody reading this is struggling with starting out (because I really struggled), especially in todays inflated market, you just have to be persistent. Researching is great, but analysis paralysis will hold you back more then anything. Instead of trying to find the answers you are looking for on google, call up the first lawyer that comes up on Yelp or the nearest bank to you, and get real answers that are specific to your question. Instead of combing through pages of listings, put in offers. My condo down payment was funded 100% from Uber hustle, which then provided the HELOC for this 4plex and also the rest of the down payment. Looking forward to more learning and more connections!

  @Casey Murray and @Justin R. are good people to listen to and learn from.   I suspect both encouraged investing in San Diego area.  I have self managed LTRs for many years and would not try to do so from as far as Bakersfield.  However, if you can successfully self manage at that distance, you likely are ready to invest anywhere. 

Congratulations on getting started.  I suspect you will learn a lot that will help you succeed in RE investing. 

Good luck

@Peter Eberhardt Right on - I'm stoked to hear you found something and made it work for you!  It is, of course, just the beginning of the journey to actually turn that property into an asset ... but, I know you know that.  :-). I admire how you put yourself out there to learn in the real world and talk about specifics instead of trying to do it all in Excel -- I think that's what many people miss.

Siempre adelante!

@Peter Eberhardt

Congrats!  Awesome to hear a story about hard work paying off.  It seems like everywhere I turn, I keep hearing that there's no such thing as hard work.

Anyway, I was curious about your strategy for "and once all the units are turned over and brought up to market rent within the next 18 months...".  Are you going to be paying tenants to leave or are their rents already close to market? 

We have a 4plex a little further north in the Central Valley that cash flows, but the rents are definitely not up to market.  We bought this about a year ago and haven't had a chance to do too much yet due to existing leases, but I'd love a strategy moving forward if you (or anyone else) wouldn't mind sharing.  There's no real incentive for California tenants to ever leave once they're rents fall behind...

Thanks and congrats again.

Congrats! There's nothing better than hustling, saving every penny and buying a property. It means more when you have to scrape and work to obtain it. Like you, my first buy was a 4-unit value-add. I'm still doing improvements all these years later (bought in late-2016) but the value-add reality and rent bumps is as real as it is wonderful. 

Congrats @Peter Eberhardt !

Glad to hear you stuck with it and finally found a place that worked out. I remember us having several conversations about analysis paralysis...it's a real thing! Also, great advice about reaching out to professionals. Sometimes it's just better to pickup the phone than trying to Google everything.

Originally posted by @Dan Heuschele :

  @Casey Murray and @Justin R. are good people to listen to and learn from.   I suspect both encouraged investing in San Diego area.  I have self managed LTRs for many years and would not try to do so from as far as Bakersfield.  However, if you can successfully self manage at that distance, you likely are ready to invest anywhere. 

Congratulations on getting started.  I suspect you will learn a lot that will help you succeed in RE investing. 

Good luck

 Right you are Dan, and also thank you to you as well for the advice packed messages you sent me. I am sure we will cross paths again soon and hopefully my next deal can be within San Diego County! 

Originally posted by @Justin R. :

@Peter Eberhardt Right on - I'm stoked to hear you found something and made it work for you!  It is, of course, just the beginning of the journey to actually turn that property into an asset ... but, I know you know that.  :-). I admire how you put yourself out there to learn in the real world and talk about specifics instead of trying to do it all in Excel -- I think that's what many people miss.

Siempre adelante!

Thanks Dan! Yes I got a long learning curve ahead of me on this one and my next one but I feel more confident with good guys like you running around the streets! 

Updated about 1 month ago

**Justin

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Originally posted by @Chris John :

@Peter Eberhardt

Congrats!  Awesome to hear a story about hard work paying off.  It seems like everywhere I turn, I keep hearing that there's no such thing as hard work.

Anyway, I was curious about your strategy for "and once all the units are turned over and brought up to market rent within the next 18 months...".  Are you going to be paying tenants to leave or are their rents already close to market? 

We have a 4plex a little further north in the Central Valley that cash flows, but the rents are definitely not up to market.  We bought this about a year ago and haven't had a chance to do too much yet due to existing leases, but I'd love a strategy moving forward if you (or anyone else) wouldn't mind sharing.  There's no real incentive for California tenants to ever leave once they're rents fall behind...

Thanks and congrats again.

 Hey Chris, the rents are about 35% below market so severely under,  yes AB1482 was defiantly not a celebrated bill on our side haha. I have a "loophole" in the fact of my 4plex was built in the 60s and has thick asbestos everywhere, which I would need the tenants out if I cared to do away with all that. I myself am still seeking legal consul on the that specifically but it looks like that is the direction we are headed



@Peter @Peter Eberhardt  

Congrats! I love the story and I love the hustle. I am also a newer investor looking to purchase my first flip property in Bakersfield. I have pretty good insight on the neighborhoods and surrounding, since I spent a great amount of time there. Would love to connect!

@Peter Eberhardt congrats again on your recent purchase! I admire the hard work you put into finding the right property.

Although the San Diego market is competitive with low inventory and high demand, I see abundant opportunity to maximize real estate investments by employing creative strategies.

Stay in touch!

Originally posted by @Chris John :

@Peter Eberhardt

Congrats!  Awesome to hear a story about hard work paying off.  It seems like everywhere I turn, I keep hearing that there's no such thing as hard work.

Anyway, I was curious about your strategy for "and once all the units are turned over and brought up to market rent within the next 18 months...".  Are you going to be paying tenants to leave or are their rents already close to market? 

We have a 4plex a little further north in the Central Valley that cash flows, but the rents are definitely not up to market.  We bought this about a year ago and haven't had a chance to do too much yet due to existing leases, but I'd love a strategy moving forward if you (or anyone else) wouldn't mind sharing.  There's no real incentive for California tenants to ever leave once they're rents fall behind...

Thanks and congrats again.

Hey Chris, Just an update for you and anyone else who comes across this thread in the next 9 years: My plan on the loophole on the hazard abatement might have worked but was risky and I don't think would have held up in court. However in my findings and talking with attorneys AB 1482 clearly allows for the owner to serve just cause termination with owner intent to occupy. section (e)(8) is a little confusing reguarding the ownership of the property not being held in a LLC or trust, but as I do not have a LLC it looks like I am able to serve notice to one of the units and move into it which I plan to do. 60 day notice and relocation assistance equal to one months rent.

Hopefully it will be as easy as it seems which we all know to not be the case.