Hello from San Diego!

21 Replies

Hi all,

My name is Krystle, I'm a real estate newbie with absolutely no real estate assets: no house, no condo, no anything. In a matter of fact, my husband and I are renters. However, my husband and I are active duty military and we're transitioning out to civilian life and are diving into the exciting world of REI. So far we're saving up and educating ourselves as much as we can to be able to purchase our first investment property (which will also be our first home).

Pleased to meet everyone, I've already begun scavenging the forum for good ideas on getting started. If you've got tips for a couple of newcomers, we'd love to hear whatever you've got. 

Krystle

@Krystle Padilla  

Welcome to Bigger Pockets!  Your post was delightful and honest, so thanks for posting.  Thank you for your military service and welcome back to civilian life.  It is wonderful that you are looking to make your first real estate investment (your home).  Ownership is great and everyone wishes you success with your first purchase.

Use an agent for your purchase. Working with a good agent will help you tremendously through the process. When looking for an agent, choose one that you both like and who is familiar with the area you choose for your new home. All agents have access to the MLS and can sell any listed home. However in working with a local agent, they can give you information beyond the listing information. You may want to know about community activities, shopping areas, schools and other things known to the locals.

 It is important to pick one agent and to work with them exclusively. When you find someone who understands what you want, it is easier for both parties to work together.  Real estate is primarily a relationship business, so once you establish a working relationship with an agent you want to work with, stick with them.  You'll find that loyalty to an agent will save you time, energy and frustration.  Let the agent deliver to you the information you need and help you with your research. 

Hello Victoria,

Thank you for the kind words.  How do you know that you've found a good real estate agent? I think we've found one in a town we're looking to invest in but since it's long distance it's difficult to tell. So far he generates generic emails regulary which I don't think is a bad thing, and if I have a question he's honest and helpful with his answer. From what we see he seems very proactive. I'm worried that we're going to end up with a dead-beat agent because a close friend chose the wrong one and their agent ended up being incredibly lazy and they had to take their house off the market.

Krystle

@Krystle Padilla  Greetings Krystle,

Thank you for your reply.  In response to your question, "How do you know if you've found a good real estate agent?"  From your own words, you mentioned that you think you've found one in a town that you're looking to invest in but it is difficult to tell because of the long distance.  Also, you said he answers your questions and he is honest and helpful with his answers.  He also sends you automated emails regularly that you think is something good. 

From these words, it appears you have a good agent.  The close friend that was unfortunate enough to align with an agent not in harmony with their wishes is their opinion and experience.  Respectfully, I ask you, how is that relevant to what you are currently experiencing with your agent?  

We tend to get what we expect and if you are expecting more of the positive interaction with your current agent, then you will experience more of the same.  Take the opinions of others in the spirit for which they are intended.  The good news is that you get to choose what you want to do regardless of the opinions expressed by other people.

I am looking forward to hearing the good news about your new investment.  I hope this is helpful to you.

I see you state you are from Escondido. That is our (H3 Properties) area of expertise on multi-family (duplex through quad) BRRR residences.

I believe we are better at estimating the price on those multi-family homes than any realtor I have yet to encounter.  Why?  Because we have personally seen everyone that was not priced too high for the market range, kept track of what they sold for, and mentally know about how long they took to sell.  In addition, we own quite a few properties and do regular rental analysis.  I have yet to encounter an Escondido realtor that has seen more than a few of the multi family properties.  I have heard from realtors significantly off rental prices (usually they are significantly lower than market which is good to let them continue to have their ignorance).

You do not indicate where you are looking to invest or what type of REI you intend (BRRR, Flip, whole sale, etc.). However if you are considering a mulit-family (duplex through quad) in Escondido for BRRR I would be willing to tell you what I think of the price point.

Also if you are considering in our area of expertise (Escondido multiplexes) do not use list price to obtain price reference (not even as a starting point).  There is a huge difference between the listing price for these properties and the selling price.

Final recommendation: Read up on capital expenses before placing any offer.  So far on our units, cap expense is much higher than maintenance and vacancies together.  Southern Cal has high labor cost; cap expense here will be higher than almost anywhere else.  If self managed maybe use 5% each for maintenance and vacancy (total for both 10%), and $250 to $300 per unit per month (maybe 15%) for cap expense.  This would imply to have any positive cash flow you need rent to be at least 25% above Mortgage including escrow.  Also if not self managed there is the management fee but I also increase both the maintenance and vacancy percentage (no one manages your money more carefully than you but it takes time to manage properties).

Good luck

Hi @Krystle Padilla ,

Welcome to BP! Sounds like our situations are very similar. My Wife and I are also looking to get started with REI by house hacking a small multi. We currently rent and can't stand the money just going down the drain anymore, lol. Im currently trying to find creative ways to find off market properties for sale.

You've definitely have come to the right place. BP has more info than you will know what to do with! Be sure to set up your keyword alerts as well. This is a great tool that will let you know when someone is discussing a certain topic you are interested in. You can set up things like San Diego or Escondido. Its really keeps you connected to other BP users who are in our local area. 

There is a local BP meet up on the 19th, be sure to check it out. https://www.biggerpockets.com/forums/521/topics/26...

Best of luck!

@Krystle Padilla Welcome to BiggerPockets! 

Below are some links to get you started. I received this info from @Nathan Sharp when I first started. 

http://www.biggerpockets.com/renewsblog/2013/01/04/how-to-rent-your-house/ (house rental guide)

http://www.biggerpockets.com/renewsblog/2013/02/22/buying-rental-property/ (how to buy a rental property)

https://www.biggerpockets.com/renewsblog/2013/04/09/how-to-buy-a-small-multifamily-property/ (How to buy a small multifamily property)

http://www.biggerpockets.com/renewsblog/2014/07/19/how-to-buy-a-duplex/(guide to buying a duplex)

https://www.biggerpockets.com/renewsblog/2015/11/16/how-to-choose-areas-multifamily-deals/ (Choosing multi-family deals)

The bottom line is that you must take action to start.

Don't get bogged down with analysis paralysis. You must take risks, but, ensure that they are calculated risks.

Below are some more links to get you started.

https://www.biggerpockets.com/courses/a-beginners-introduction-to-real-estate-investing (video courses)

https://www.biggerpockets.com/real-estate-investing (Ultimate beginner's guide to REI)

REI books suggested by BPers

https://www.biggerpockets.com/renewsblog/2015/11/13/7-real-estate-books-beginner-investors/ (7 absolute must read books for beginner REIs)

http://www.biggerpockets.com/renewsblog/2013/04/14/best-real-estate-books/?utm_source=search&utm_medium=internal&utm_campaign=books (books recommended by BPers)

Before making your 1st REI purchase please visit the link below for some useful tips

https://www.biggerpockets.com/renewsblog/2014/12/19/real-estate-investing-success-smart-tips/

Simply, bone up on the areas that you need to expand knowledge in such as, Forums, Marketplace, Learn, Network, Analyze and Resources.

Continue to feast on the Podcasts, #askbp Podcasts, blogs and webinars

Lastly, this site thrives on interactions and as such we encourage two way exchanges and look forward to educational and thought provoking ideas relevant to REI.

Hi Neighbor,

Welcome to BP. This is definitely the place to learn and earn from some top notch and experienced PROFESSIONALS. We're RE Brokers, general & manufactured home contractors, developers, interior designers, investors and property managers in the North County Coastal area. Should you ever want to venture up our way we'd be very happy to meet and work with you.

We're here to help.

Warmest Regards,

John

Welcome @Krystle Padilla !  Thank you for your service and I am excited for you.  I know this contradicts what was posted earlier but I am not working with one broker exclusively.  I probably will as I become more experienced but we are looking for our first duplex and I am trying to find it off market as well, without a broker.  I am worried about being pinned down to someone so early in the game.

Welcome @Krystle Padilla ! I grew up and lived around Escondido most of my life. Good luck on your transition to civilian life. I did it once and it wasn't easy for me, mainly because I didn't have a great plan. You can learn so much from this site and the podcasts!

All the Best to you and your husband, and thanks for your service to our Country.

A couple of RE tips: #1.  Learn about all taxes on RE, especially when your selling.

#2. Learn how to evaluate RE deals based on Net Prevent Value and not emotion.

 #3. Remember that "All that glitters is not  gold", "Luck favors the prepared individual" & 

"There are more than just a few snake oil salespersons and also good folks in the RE and 

finance world." :-)

Hello Krystle,
I just joined BP myself and am stationed on Coronado island. I too am just starting my adventure in the world of REI so we are in very similar boats so to speak. My goals are to fix and flip at least two properties before my contract expires in the summer of 2017. I have been absorbing info like a sponge since I decided to go the REI route and I can say that J Scott's books are immensely helpful. If you haven't heard of him yet it's definitely worth asking petty officer Google for more info haha. I just wanted to introduce myself and wish you and your husband much success in the future. God bless,
Kevin

@ Dan Heusche

We are exploring all of our options but generally want to go the BRRR method. Eventually we will purchase our first REI in Denton, Texas but in the meantime we're doing our research and want to be involved. Multi-family residences mixed with single family homes is what our goal is.

How do you ususally differentiate between price point and list point? I'm confident that when were with an agent we'll know wht market value is versus the list price, but what factors go into it?

Good point with cap expenses. We've been able to figure them out alot easier with single family homes, but multi-family homes we're still trying to figure that out (because we're pretty sure our first home will be a single family).

@Marlon Wilson

Thank you!

@Brandon Heath

Thanks Brandon! I agree renting is the worst, nothing like paying it each month and seeing your money go to nothing. Have you and your wife been able to find a good deal yet? I'll definitely check that out, thank you!

@Jesse Peña

That's awesome, thank you for those links I'll check them out. I've noticed how excited and involved people are in this community and that makes this site perfect for starting up.

@John Arendsen

Hi John,

Thank you for the warm welcome, ever since I've been to this site I feel incredibly comfortable. It's like taking a breath of fresh air to be surrounded by like-minded people.

@Laura Thorne

Thank you :) They may be the best route for you too especially to be able to get the price lower. Getting your first duplex sounds very exciting, good luck!

@Matthew Deines

Escondido is a nice community with many options for people. So many people are scared of the transition, but I'm lucky to have been blessed with a great partner in crime who has the same drive to be successful. Thank you Matthew!

@James Gorman IV

Thanks for those tips, so far we've been looking more at the expenses that come with buying but that's a good point we need to look at too. Also, I haven't heard of Net Prevent Value but if it deals with emotion I think I may know where that comes into play.

@Kevin Gauthier

Hi Kevin, it's good to know there's other service members in the same boat as us (no pun intended). That's great, how close are you to purchasing your first property? My contract ends May 2017 and we thought that timeline was a little tight, but if you got a HML and the flip was successful, I can see that happening. Let me know how your progress goes I'd love to hear!

@Jonathan J. Miller

Thank you Jonathan

@Krystle Padilla welcome to the BP website and to investing.

If you'd like to meet other local investors you should come to our real estate club, The North San Diego Real Estate Investors meeting. We have a meeting next Tuesday and I'd be happy to have you as my guest. Send me a message if you are interested.

Originally posted by @Krystle Padilla :

@ Dan Heusche

We are exploring all of our options but generally want to go the BRRR method. Eventually we will purchase our first REI in Denton, Texas but in the meantime we're doing our research and want to be involved. Multi-family residences mixed with single family homes is what our goal is.

How do you ususally differentiate between price point and list point? I'm confident that when were with an agent we'll know wht market value is versus the list price, but what factors go into it?

In Escondido do not look at the MLS active listings of multi family units to determine the market price. Look at the price of recent sold properties. Escondido is full of listings of multi family homes that will never sell at close to their currently listed price. A multi family home priced correctly in Escondido in recent times has always sold in less than a month.

As an investor ideally your price point is below the market price but that is every investor's goal. This typically means the rare value on the MLS which will have multiple offers in a week or off market properties.

However, in Escondido you can positive cash flow on multi unit properties at market value assuming traditional financing.  So you do not require below market but as I indicated even the market rate multi families go quite fast (less than a month). 

Good luck

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