Aspiring investor from Turlock (Central Valley) California

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Aspiring investor from Turlock (Central Valley) California

Tim Palecek
Contractor · Turlock, CA · Member since 2015 · 11 posts · 1 vote

Hi everyone!

I'll try to keep this short because I could really type a wall of text here. My name is Tim and I'm 25 years old. I have been interested in real estate since I was probably about 16 years old. I'm finally at a point in my life where I feel I can pursue my real estate dreams at least part time. I've been researching REI for quite a while, reading blogs, listening to podcasts, and hundreds of google searches usually beginning with something like "How do I...." or, "Should I...." A majority of those searches brought me here, so I thought it wise to pay Bigger Pockets some attention.

After 8 months of looking and waiting for a great deal, I purchased my first home back in July 2013.  Because of the great price I received, some renovations, and inexplicable(to me at least) appreciation I seem to have $70-80k in equity.  After a lot of research, it seems like a great idea to put part of this equity to use through cash-out refinancing and using this capital to invest in a flip house.  My long term goals however are to build up a portfolio of rental properties for long term cash-flow.  Now my goal is to figure out what path to take to get me there.

Thanks to the BP community for the vast wealth of knowledge present here, it is truly invaluable!

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Craig Shute
Landlord · Syracuse, NY · Member since 2011 · 120 posts · 96 votes
11y
Tim Palecek If you're looking to do a flip, I would get a home equity line of credit rather than doing a cash-out refi. I got one where they paid all the closing costs and the first 6 months is a half percent interest and prime plus 0.25 thereafter. The advantages are low or no fees, less paperwork, and you only pay interest when you're using the money. Plus with mine I can convert to a 15-year fixed whenever I want to without paying a fee. A cash-out refi would make sense if you have a high rate on your existing mortgage but since you bought 2 years ago your probably don't.
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  • Larry Fried
    Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
    11y

    @Tim Palecek

    Hi and welcome to BiggerPockets! It’s a great place to learn more about investing and meet the people you want to meet. If you haven't yet, be sure to check out the The Ultimate Beginner's Guide to Real Estate Investing and don't forget to set up your Keyword Alerts!

    0Reply
  • Brandon TurnerPro Member
    Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
    11y

    Hey @Tim Palecek welcome to the site! Definitely start jumping into the community here! Be sure to read through The Ultimate Beginner's Guide to Real Estate Investing to help you get started.

    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

    How to Be a Landlord: Ten Tips for Success

    Finally -be sure to setup some keyword alerts - especially for "Turlock" so you can jump into local conversations.

    See you around the forums!

    Podcast Guest on Show #92
    0Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    11y

    Welcome Tim! I'm a cash-flow buyer too. Where you thinking about buying?

    0Reply
  • Tim Palecek
    OP
    Contractor · Turlock, CA · Member since 2015 · 11 posts · 1 vote
    11y

    Thanks for the welcomes and tips. Turlock, my home town, would be great but prices here seem to be very cost prohibitive.  Ideally I would like to buy in or around Modesto, but really anywhere within about an hour of Turlock would work.  I'd like to avoid anything long distance at least until I have some experience.  I am a painting contractor and have construction contacts in my immediate area so staying local will drastically simplify the rehab process.

    I'm still very much in the learning mode right now, but will certainly also be keeping my eye out for potential buys and ways to finance them.  Oh and I am starting the process to become a licensed real estate agent.  I don't know how much I will gain from having it but I don't see a downside with such a low cost of both time and money if I can gain some knowledge in the process.

    0Reply
  • Mary lou L.
    Investor · Wichita Falls, TX · Member since 2014 · 382 posts · 123 votes
    11y

    Hi Tim! Isn't  this site great? I am also local and interested in the Turlock market as well! At this point Im researching and doing  drive bys. Trying to get as much info and data as i can.

    Good to see  you on here! 

    0Reply
  • Tim Palecek
    OP
    Contractor · Turlock, CA · Member since 2015 · 11 posts · 1 vote
    11y

    Hello Mary! It really is. Theres so much here, sometimes its hard to know where to begin. I've just been reading everything that catches my eye and listening to the podcasts when I have spare time.

    0Reply
  • Terry Alexander
    Rental Property Investor · Windsor, CA · Member since 2015 · 28 posts · 11 votes
    11y

    Hello @Tim Palecek welcome to the forum.

    0Reply
  • Mary lou L.
    Investor · Wichita Falls, TX · Member since 2014 · 382 posts · 123 votes
    11y
    There are a couple of houses on the mls that seem like good prospects! The area south of main and west of lander but not too far south. There was a rehab on 215 Columbia that turned out beautiful! If you do a search for it there is a before after video on youtube. (Some ads though with video) It looks like it was purchased for 110 8/14 then rehabbed. Listed for 189 1/15 sold for 166 3/15. So there are rehabbers out there in the area!
    0Reply
  • Account Closed
    San Diego, CA · Member since 2015 · 16 posts · 1 vote
    11y

    Yes, This video really helpful for purchasing a home. 

    Keep sharing Good stuff Here......!!!!

    0Reply
  • Tim Palecek
    OP
    Contractor · Turlock, CA · Member since 2015 · 11 posts · 1 vote
    11y

    Thanks for the welcome Terry, glad i found this great resource.  

    Found the video, they did very nice work.  Good to see that the rehabbers are still around.  Back in 2012 we did all the painting for a very large company.  We painted over 130 houses for them in 1 year, and then they moved on because we went from 3 houses a week to nothing at all.  

    Yeah that area does seem to have potential.  A huge part of Turlock is just so highly priced, it seems like the demand for homes is huge and rising every day.  Turlock as a whole is really becoming the place to be.  It seems more and more people are trying to move to and do their shopping in Turlock instead of Modesto now.  The whole main street area has absolutely blown up in the last couple years.

    0Reply
  • Mary lou L.
    Investor · Wichita Falls, TX · Member since 2014 · 382 posts · 123 votes
    11y

    Esp with all the new commercial area North! And it seems to still be expanding! I spoke with a realtor about some properties on Syracuse. She said there were offers but it seems he is waiting for the one that will take them all. There are two that are his . And one next to it for 75 (different realtor) and is completely gutted. It looks like the rehab was started but stopped.  There is also an empty corner lot next to it for sale. 

    0Reply
  • Craig Shute
    Landlord · Syracuse, NY · Member since 2011 · 120 posts · 96 votes
    11y
    Tim Palecek If you're looking to do a flip, I would get a home equity line of credit rather than doing a cash-out refi. I got one where they paid all the closing costs and the first 6 months is a half percent interest and prime plus 0.25 thereafter. The advantages are low or no fees, less paperwork, and you only pay interest when you're using the money. Plus with mine I can convert to a 15-year fixed whenever I want to without paying a fee. A cash-out refi would make sense if you have a high rate on your existing mortgage but since you bought 2 years ago your probably don't.
    1Reply
  • Tim Palecek
    OP
    Contractor · Turlock, CA · Member since 2015 · 11 posts · 1 vote
    11y

    That's true Mary!  And it definitely is expanding, I'm actually bidding the paint jobs on some of the stuff going in there.

    Craig, thank you for the advice!  I had read some about home equity lines of credit, but didn't give it much thought since I assumed it would  have a much higher interest rate.  I guess I was thinking more of unsecured lines of credit.

    My interest rate is 4.5% so I assume I can get it down about a half a percent. The big thing though is I'm paying PMI, which really feels bad when my LTV is probably around 60-65% now. I figure I will be refinancing regardless of whether I do cash out or not to get rid of PMI. Even so a home equity line of credit sounds pretty hard to beat. Half a percent for 6 months sounds amazing for flips.

    0Reply
  • Andy Petersen
    Fresno, CA · Member since 2014 · 15 posts · 3 votes
    11y

    Fresno county, Bakersfield county. Still a good market for Buy & Hold rental cash flow.

    0Reply
  • Craig Shute
    Landlord · Syracuse, NY · Member since 2011 · 120 posts · 96 votes
    11y

    oh yea then definitely refinance to get rid of pmi!

    0Reply
  • Frank Patino
    Investor · Fresno, CA · Member since 2015 · 13 posts · 4 votes
    11y
    Originally posted by @Craig Shute:

    Tim Palecek
    If you're looking to do a flip, I would get a home equity line of credit rather than doing a cash-out refi. I got one where they paid all the closing costs and the first 6 months is a half percent interest and prime plus 0.25 thereafter. The advantages are low or no fees, less paperwork, and you only pay interest when you're using the money. Plus with mine I can convert to a 15-year fixed whenever I want to without paying a fee.
    A cash-out refi would make sense if you have a high rate on your existing mortgage but since you bought 2 years ago your probably don't.

     Can you please let me know what lender you used for equity line of credit? Just reply or message. Tnx. 

    0Reply
  • Craig Shute
    Landlord · Syracuse, NY · Member since 2011 · 120 posts · 96 votes
    11y

    It's a local bank in Central New York. The credit unions around here seem to be offering the same terms.

    0Reply
  • Robin F.
    Turlock, CA · Member since 2015 · 4 posts · 0 votes
    11y

    Hey Tim! I live in Turlock too! Indeed Turlock prices seem cost-prohibitive, but it is a university-based town to begin with. I wouldn't be surprised if Merced is a bit more expensive ten years from now, considering the new UC campus. I'm in a similar boat, I have a property in Vegas that built a fair amount of equity and am considering whether to utilize that equity or just keep saving.

    A friend told me you can still find some good deals of 2/4-plex units in the Modesto and Merced areas. I think I have a lot more learning to do before I'm ready to pull the trigger.

    0Reply
  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    11y

    Glad to have you here @Tim Palecek You are in the good company and you are in the right place to learn all about REI! All you need to do is read the blogs or post a question and the responses will be educating and gratifying. See you around the site!

    0Reply
  • Tim Palecek
    OP
    Contractor · Turlock, CA · Member since 2015 · 11 posts · 1 vote
    11y

    Thanks Tom, I'll take a look.  Fresno isn't too far from home.

    Robin, good to see another local investor!  That's very true, I think CSU Stan is definitely a major reason for the high prices.  I live less than a mile from campus so I think that is one thing that I owe some of my equity to.  That would make sense if Merced followed the same trend.

    Dmitriy, thanks for the welcome!  I'm certainly glad to have found this place, I learn more and more every day!

    0Reply
  • Jo-Ann LapinPro Member
    Loan Officer · Tustin, CA · Member since 2015 · 3k+ posts · 713 votes
    10y

    Welcome . Everyone here has given wonderful advise. It is a true gift that you can work on the next property that you will own. The key now is find the right deal and the right strategic partners to work with.

    [email protected]
    0Reply
  • Emma Morris
    Investor · Modesto, CA · Member since 2016 · 20 posts · 9 votes
    10y

    Hello from Modesto,

    I agree that the prices are better outside of Modesto and Turlock but there are still good deals here too.  We just have to talk, talk, and talk to people, find out about their situations, their friends and their family situations.  Just gave a broker a deal that had over 75K equity.  Remember to always talk real estate to everyone.  This spring in my Spanish class, real estate was brought up, because of that conversation my professor decided to buy another property, of course he's buying right this time and renting out his home.  It felt good to teach my professor something about investing in real estate and how to do it right.   Also, because of that conversation I got a couple of leads as to buying their homes, hasn't happened but I am grateful that I was able to educate a couple of other students in the business of real estate and investing.   Real estate is just great fun and exciting!

    Emma

    1Reply
  • Rahul Bhatt
    Fremont, CA · Member since 2015 · 289 posts · 63 votes
    10y
    Hi Tim ,

    welcome to bp. How is the market in Modesto and tulock? 

    Originally posted by @Tim Palecek:

    Hi everyone!

    I'll try to keep this short because I could really type a wall of text here. My name is Tim and I'm 25 years old. I have been interested in real estate since I was probably about 16 years old. I'm finally at a point in my life where I feel I can pursue my real estate dreams at least part time. I've been researching REI for quite a while, reading blogs, listening to podcasts, and hundreds of google searches usually beginning with something like "How do I...." or, "Should I...." A majority of those searches brought me here, so I thought it wise to pay Bigger Pockets some attention.

    After 8 months of looking and waiting for a great deal, I purchased my first home back in July 2013.  Because of the great price I received, some renovations, and inexplicable(to me at least) appreciation I seem to have $70-80k in equity.  After a lot of research, it seems like a great idea to put part of this equity to use through cash-out refinancing and using this capital to invest in a flip house.  My long term goals however are to build up a portfolio of rental properties for long term cash-flow.  Now my goal is to figure out what path to take to get me there.

    Thanks to the BP community for the vast wealth of knowledge present here, it is truly invaluable!

    0Reply
  • Rahul Bhatt
    Fremont, CA · Member since 2015 · 289 posts · 63 votes
    10y
    Hi Emma great post lets connect and see if we can work together.


    Originally posted by @Emma Morris:

    Hello from Modesto,

    I agree that the prices are better outside of Modesto and Turlock but there are still good deals here too.  We just have to talk, talk, and talk to people, find out about their situations, their friends and their family situations.  Just gave a broker a deal that had over 75K equity.  Remember to always talk real estate to everyone.  This spring in my Spanish class, real estate was brought up, because of that conversation my professor decided to buy another property, of course he's buying right this time and renting out his home.  It felt good to teach my professor something about investing in real estate and how to do it right.   Also, because of that conversation I got a couple of leads as to buying their homes, hasn't happened but I am grateful that I was able to educate a couple of other students in the business of real estate and investing.   Real estate is just great fun and exciting!

    Emma

    0Reply
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