Cautiously Optimistic in San Luis Obispo, CA

New Member Introductions
12yFollow

Cautiously Optimistic in San Luis Obispo, CA

Kristin Horowitz
San Luis Obispo, CA · Member since 2014 · 27 posts · 6 votes

Hi guys,

I suppose it's time to post here. I've been listening to the podcast and reading the forums and articles for a few months. I got started thinking about real estate investing a few months ago because a woman I rent sheep from (I have a peculiar hobby of training dogs to work livestock) told me that's what she did and had me read Cashflow Quadrant.


I'm the sort that does as much research as possible before jumping in, though the message here seems to be JUST DO IT.

My family has a history of real estate investment, none of it long-term successful, so I am trying to figure out the pitfalls instead of be dazzled by the possibilities. My mother liked to buy investments that 'were a sure thing' that I knew were not and my brother got rich house flipping until he stepped into the development end and got stuck with a property he couldn't develop and then the housing bubble collapsed.

I'm a small business owner - I run one fairly passive income (for me) non-profit and a VERY energy sucking event business (my husband's dream). The nice thing is I live off the first job and the second job, when it makes money, is gravy (aka, investment potential). I figure I'm about six months from a down payment on the type of investment I want. I'm looking at some solid industry-based towns that have low barriers to entry (specifically down payments and big rental markets) an hour or two away from where I live.

I rent my own residence, and I have very little chance of breaking into the buyer market with my current income. Ultimate goal would be to comfortably afford to buy a 10 acre farm in town (about $1,000,000).


I think the plan is to do buy-and-hold investment, using the cash generated from the cashflow to continue to buy more. At least for now. I think I've got the marketing and managment aspects dialed: I'm a professional marketer now and I manage so many people's needs and have been the house manager for every rental/roommate situation I've been in, so not scared of that.

But I'm having a really hard time with the confidence aspect of this stuff. I just know sometimes "too good to be true" is, and I don't have a lot of cash to spare (and lose) if I make mistakes.

Here's me and my prize winning stockdogs at a trial. :P

3Reply
43 views

Most Popular Reply

Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
12y

@Kristin Horowitz

If you can make a move to the mid west you can buy your dream farm for 100k not 1 mil.... but then you have to live there :)

Podcast Guest on Show #222
JLH Capital Partners51 Review
WebsiteView Page
2Reply
See this reply in the discussion

36 Replies

Jump to latestLatest
  • Jean BolgerPro Member
    Aurora, CO · Member since 2012 · 2k+ posts · 1k+ votes
    12y

    I love sheepdog trials! And I love San Luis Obispo.
    I think you've got an advantage due to having seen how things can go wrong, like what happened your family members. You can use that, and the info you pick up here, to avoid the mistakes that many new investors make. It's true that many folks are prone to analysis paralysis, and never get off the bench and make a deal, but others jump into things too quickly and get burned. If you keep reading, studying and analyzing properties for the next six months while you build up your cash, you'll do great!

    1Reply
  • Kristin Horowitz
    OP
    San Luis Obispo, CA · Member since 2014 · 27 posts · 6 votes
    12y

    Thanks Jean, I'm glad you think I'm being wise with my taking my time. That's extremely encouraging!

    0Reply
  • Paul Timmins
    Specialist · Rockland, MA · Member since 2010 · 7k+ posts · 2k+ votes
    12y

    @Kristin Horowitz

    Welcome. Time to build the foundation below.

    Check out the Start Here page http://www.biggerpockets.com/starthere

    Check out BiggerPockets Ultimate Beginner's Guide - A fantastic free book that walks through many of the key topics of real estate investing.

    Check out the free BiggerPockets Podcast - A weekly podcast with interviews and a ton of great advice. And you get the benefit of having 60 past ones to catch up on.

    Two Great reads, I bought both J. Scott The Book on Flipping Houses,The Book on Estimating ReHab Costshttp://www.biggerpockets.com/flippingbook

    Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and all the cash buyers (rehabbers) you will need.

    Consider checking out HUD homes for small multi's owner occupied gets first crack.

    Check out see if there are any govt assistance programs buying a farm.

    Good luck

    Paul

    1Reply
  • J. MartinPro Member
    Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
    12y

    Hi @Kristin Horowitz ,

    I grew up and lived in the Nipomo/ Arroyo Grande/ San Luis Obispo area, went to Cuesta, and then moved up to the Bay Area to finish school, and working and investing in the East Bay now.

    You can always go inland or out of state for more cash flow.. Or you can do the student rental, or general buy and hold down there.. but probably not a cash flow just renting to families. The other option, without a lot of capital, if you're a bit flexible, is buying a 2-4 unit place with 3.5% down FHA financing in SLO or thereabouts, and live in one of the units - rent out the rest. Your purchase price goes up by a lot when they qualify you with the income from the other units, and you only have to put 3.5% down..

    Just an idea! Good luck Kristin!

    1Reply
  • Kristin Horowitz
    OP
    San Luis Obispo, CA · Member since 2014 · 27 posts · 6 votes
    12y

    Great thoughts, both of you.

    @Paul Timmons I haven't seen the Bigger Pockets Flipping book, so checking that out. Appreciate the gov't assistance tip (not sure where to start with that, but, hey look, it's Google!) and the HUD start.

    @J Martin, where in the Bay Area? Grew up in Danville. :) Maybe we switched. I told my husband about your idea with the multi-unit family and we'll definitely look into it. My plan is go more inland, as you suggested and focus on strong, but overlooked areas. :)

    1Reply
  • Brandon TurnerPro Member
    Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
    12y

    Hey @Kristin Horowitz welcome to BP! I'm glad you're listening to the podcast. You should definitely start jumping right in the forums! Also, if you haven't yet, try to setup some "Keyword Alerts." It's great for getting into local conversations.

    Also - here's a couple articles you might enjoy:

    The 21 Best Real Estate Investing Books Ever

    How to Rent Your House: The Definitive Step by Step Guide

    See you around the site!

    Podcast Guest on Show #92
    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Kristin Horowitz

    If you can make a move to the mid west you can buy your dream farm for 100k not 1 mil.... but then you have to live there :)

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    2Reply
  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    12y
    Originally posted by @Jay Hinrichs:
    @Kristin Horowitz

    If you can make a move to the mid west you can buy your dream farm for 100k not 1 mil.... but then you have to live there :)

    Yeah, but it's 50 acres instead of 10 acres. Or if your budget is still a million, it's 500 acres.

    0Reply
  • Kristin Horowitz
    OP
    San Luis Obispo, CA · Member since 2014 · 27 posts · 6 votes
    12y

    @Jay Hinrichs, that's what my dog's breeder said (in Iowa). Paaaaaaaaaaaaaaaass. :) So far I'm making do by renting sheep and a friend lent me space to put livestock on hers for now. :P

    @Brandon Turner, done. Thank you!

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Kristin Horowitz

    I am a bay area guy so I hear ya... my son went to college in San Luis,,, and now we are going way back I did my long cross country for my pilots license and landed at San Luis Obispo then had to fly back to Reid Hillview in San Jose in my trustee Cessena 150.. the wind coming down the Salinas valley was strong the cars on the 101 were going faster than me.. Took 2 hours for that leg.. Circa 1976.... Ugh...

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Kristin Horowitz
    OP
    San Luis Obispo, CA · Member since 2014 · 27 posts · 6 votes
    12y

    @Jay, hah! I had a mild interest in flying when I was younger and my ridealong experience wasn't much different so I quit that path. Got into rock climbing instead.

    0Reply
  • J. MartinPro Member
    Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
    12y
    Originally posted by @Jay Hinrichs:
    @Kristin Horowitz
    If you can make a move to the mid west you can buy your dream farm for 100k not 1 mil.... but then you have to live there :)

    Ha! Spot on Jay. Didn't know you had the connection to SLO too..? I actually had the chance to fly my buddy's Cherokee over SLO and the area after he got his pilots license.. It was awesome! Do you still fly?

    Funny we switched spots Kristin. Although I was in SF, then Richmond briefly, now Oakland.. Never quite Danville though.. I loved it down there. Although not quite as diverse, and not as much to do as the Bay.. But more room for a farm! Have you thought of Paso Robles? Although that's getting a lot more expensive too.. Maybe Atascadero or Santa Margarita? Too far..? lol

    0Reply
  • Kristin Horowitz
    OP
    San Luis Obispo, CA · Member since 2014 · 27 posts · 6 votes
    12y

    I own a brick and mortar in SLO and I'm not fond of commuting. So, you know, rather than make a concession, dream big!

    0Reply
  • J. MartinPro Member
    Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
    12y

    Btw @Jay Hinrichs , not sure if your son was a big sports fan, or @Kristin Horowitz , if you are - but my Dad is a Cal Poly grad and flew out to (Iowa?) the other week because the Mustangs made it to the NCAA tournament as seed 66 or something.. They got slaughtered, but they made it to the big show! Go stangs!

    Kristin, definitely look into the FHA 4plex if you are feeling ambitious. You can buy a lot of real estate with not a lot of cash, if you're comfortable with the numbers and the debt load.. Good luck!

    0Reply
  • Kristin Horowitz
    OP
    San Luis Obispo, CA · Member since 2014 · 27 posts · 6 votes
    12y

    @J Martin, that's awesome! Go Dad for supporting our boys. The whole town was psyched about it. I'm not a sports fan, but even I cared!

    Did a cursory looksee on the possible multifamily opportunities in the county - none. But I will keep looking. Like I said, more interested in less developed markets (but stable ones). My husband was pretty excited about it when I told him your suggestion.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @J. Martin

    SR-22/G 800 hours single engine land IFR rated. Bought it new from the factory in Deluth in 04 one of my proudest moments I love to fly,, And then fly to fish ... We need an adventure spot on this site so we can all talk about cool things other than Real Estate that can get boring... But provides us with a nice living so we can buy and fly planes and take the vacations we deserve!!! ( had to throw that Deserve in there to pick up on the Guru lines)

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Nicholas Spohn
    Rental Property Investor · Davenport, IA · Member since 2013 · 54 posts · 18 votes
    12y

    you can knock Iowa (keyword alert!) but I just bought a SFH for 35 k that after repairs (30k) will bring in 1600/mo. Two buddies live with me now so I basically live for free and I just bought my first livestock With my income! I may be looking for a good cattle dog! (PS anybody looking for some high quality grassfed Iowa beef?)

    2Reply
  • J. MartinPro Member
    Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
    12y

    @Kristin Horowitz ,

    Just remember you're signing to owner-occupy the property if you use the sweet 3.5% down financing. So you'll have to do it in town, unless you want to move inland.. The lenders basically use 75% of rents from the non-owner occupied units to add to your income when they are calculating your front-end and back-end ratios. So talk to a loan officer/broker first and have them give you the DTI ratios so you can calculate what price you can afford with a given level of rents.. Vacant units will defer to appraisal rents.. Has to be 1-4 units for FHA. No 5+.

    I currently see 10 2-4 unit properties on market in SLO proper; 5 of which are between $500-700K. You may up your purchase price to $500k+ with the rents, depending on how it pencils out (Mine went up from $250K to $900K on some deals..)

    Here's a small duplex (looks like split SHF)
    http://www.redfin.com/CA/San-Luis-Obispo/2137-Harris-St-93401/home/49817234

    This next one might be better for your style, because there are 2 single family homes on one lot. I own 2 SFH on one lot in Richmond too.. Great way to roll up 2 properties in one loan, and have the second one qualify for itself, all as owner-occupied.. (if 1 is, the whole loan is owner occupied..$595K. I wouldn't call this "downtown" exactly as the listing says, but not too far away..

    http://www.redfin.com/CA/San-Luis-Obispo/446-Sandercock-St-93401/home/51615540

    Just to spur some ideas... Sign up for Redfin notifications if you are not already..

    1Reply
  • J. MartinPro Member
    Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
    12y

    @Nicholas Spohn , that's bull!! ($65K ARV for $1,600..) haha pun intended. Nice numbers!! Would be interested to hear your all-in costs and time after you're done.. Doing the work yourself? Or all pretty "passive?" I have to fork over about double ARM to get the same gross in the SF Bay Area. Rapidly escalating rents and prices though here in the Bay, and can control/oversee what goes on, so that means a lot to me.. Let me know how it goes!

    @Jay Hinrichs , I took a 6-week vacation in Europe in Sept/Oct last year, partially because it was overdue, and partially to celebrate (and enjoy) the success of the strong cash flow coming off my 4plex, along with a good purchase of 2 SFH a few months before I left. With my leases locked, systems humming, and great handyman in place, I was able to take a month and a half break..

    Going to refine my systems more for my next "deserved" vacation. Next year or 2016, I'm planning on taking 3 months to go explore Asia. Don't plan on flying my own plane! lol But I do enjoy the fruits of my labor (along with plowing lots of my returns and my salary income, and borrowings.. into new deals). Cheers to enjoying what you "deserve!"

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @J. Martin

    Well its important to stop and smell the roses.. Although living in CA we are ahead of many of the rest of the world.. And those that live in Oregon of course think we are Oregon everyone wants to be US:) I still Pine for the Napa Valley though that was the best place I ever lived.. spent 10 great years there.

    Bottom line for weather culture fun and many other reasons there is a reason 40 million plus people live in CA....

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Kristin Horowitz
    OP
    San Luis Obispo, CA · Member since 2014 · 27 posts · 6 votes
    12y

    @Nicholas, definitely not actually knocking Iowa, but I want my cake and to eat it, too. As I said, my first dog's breeder has a gorgeous spread out there, but I have far too much for me here to leave, even if I have to work harder for what I want. (Because I also want to mountain bike, climbing, surf, hike in the mountains, etc right out of my doorstep, which I do now.) Great cattle! Congratulations!

    @J Martin, thanks for the tip on this redfin site: I was using a SLO based MLS search that brought nothing up. The world just opened up with this opportunity you're laying out! My goodness, you're right that the Sandercock place is definitely up my alley. Now to get the cash in reserve to have the down payment and make sure we'll get approved for a loan (yay working for yourself - I got batted out of a land purchase last year that I qualified for up until I filed my taxes - it's so much more volatile when you own a business, even if you have a salaried job on top of it). Or yes, I know there are a number of ways to get that loan elsewhere, but again, I'm a baby at this. I need to think less complicated right now before I launch into complicated. My brother had me extreme couponing in college and in the end . . . I should have just bought the lap top I was gaming the system for. :) But perhaps I am wrong on this? You're already killing it with ways to show me how to get into this right now.

    0Reply
  • Kristin Horowitz
    OP
    San Luis Obispo, CA · Member since 2014 · 27 posts · 6 votes
    12y

    @J Martin, I told my husband about your leads and we was absolutely ready to move, but by my calculations, we'd end up with a mortgage that was WELL above anything that could generate a positive cashflow, so I wanted to ask if you were just pointing out that they were for sale or if you really see potential there and why?

    0Reply
  • J. MartinPro Member
    Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
    12y

    @Kristin Horowitz , glad I could inspire/inform you about some other opportunities out there, in case it works out for you. W/ 3.5% down on FHA, that's only about $20K. Regarding cash flow, I doubt that a lot of properties in SLO will CF right off the bat. You will probably have to wait for some rent increases over time..

    But compare it to your current situation.. (not sure if you're renting or own..?). If you believe prices will generally rise with inflation, (let along being Oprah's "happiest place in US" or whatever), wouldn't you rather have the additional appreciation, annual principal paydowns on $550K worth of real estate, some tax benefits, and likely rising rents and CF over time? While it won't be a cash cow, I think it could help you get closer to your goal of trading up from this to your dream farm in the future.. That's what I would probably do.. Just a thought! Investigate what's out there, and good luck!

    0Reply
  • J. MartinPro Member
    Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
    12y

    Another reason I like this Sandercock property @Kristin Horowitz is because it's a good location, without anywhere to build around it, I think good appreciation prospects, relatively easy to manage, and you can keep an eye on it (without having to share walls with tenants.) You can control it because it's not out of state. Plus you can get into it today w/ FHA probably, before prices and rates go higher. You can probably refi when your equity goes up (like I'm about to on my 4plex I bought a year and a half w/ FHA) - but will take you longer. You should be comfortable with it at those payments though if you're going to do it..

    0Reply
  • Kristin Horowitz
    OP
    San Luis Obispo, CA · Member since 2014 · 27 posts · 6 votes
    12y

    @J Martin, makes sense from that perspective. My own personal income can't cover the kind of mortgage that's going to take, even with a supplemental rental income to defray it. We'll look into it for sure, but I suspect the SLO market is way out of my league for the meantime. :)

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free