Investor · Lodi, CA · Member since 2016 · 23 posts · 11 votes
I grew up in an atmosphere where my family had rentals and so now at 32 I currently have a house and duplex that I rent out here in California. I think I will lean towards apartment complexes as my next purchase and maybe out of state as California can be quite expensive. I look forward to networking with like minded people here on biggerpockets.com.
You mentioned San Jose; are you referring to the historical rise in real estate being great in that area? I'm all ears to different perspectives as a newbie. My concern about San Jose (as an example) isn't the future demand, but as rent control sweeps over the entire bay area in the next 20 years, it seems that it would stifle appreciation. I bought lots of great stocks with great historical pasts when I was 16.... March of 2000! My teenage ego was wounded :). Just because San Jose has done well before, may not mean it will later.
Ryan,
At the age of 16, I'm really curious which brokerage did you open your stock account with?
I believe @David Faulkner only used San Jose as a data point as it's much closer to you than he is. You're right that there's no guarantee that San Jose will do well in the future. The big gains are typically in emerging markets. How to identify those markets is another topic. Also, how long does one have to wait for those markets to emerge? Would East Palo Alto a good bet? How about San Bruno? Daly City? The location of these cities are terrific. When will they emerge? Your guess is as good as mine.
With respect to rent control sweeps over the entire Bay Area in the next 20 years, can it be a good thing? As someone who has made millions in the current San Jose rent control market, I'll tell you that rent control is a great thing. Why? Because it keeps the competitions away. :>)
I've talked to enough people to understand what the Oracle of Omaha said has a lot of merits. He said it's human nature to put obstacles in front of us. Everyone I talked to at meet-ups and REIA's KNOWS how rent control doesn't work. When asked have they read the 270 pages of the Rent Control Ordinance? ALL of THEM said NO. Shocking isn't it? They didn't read it, and they knew it doesn't work. :>)
I look at the Rent Control Ordinance like the Internal Revenue Code. It's full of loopholes in there. It's our job to comb through it and use the loopholes to our advantage. After all, we're real estate investors. We get paid handsomely to solve problems. Had someone told you IF you read the Rent Control Ordinance and actually understood it, you would make millions. Would you read it? In fact, how many times would you read it? If you had to spend a year to read it from front to back, back to front, would it still be worth it? The answer is hell yeah. Then why would you discredit rent control as a bad thing before even understanding it?
If you want to join the 1%er, do what others don't and reap the rewards. Everything in our lives is a reflection of our choices. If we want a different result, don't you think we should make different choices?
Ventura, CA · Member since 2016 · 97 posts · 43 votes
10y
Hi Ryan,
Welcome!
Sounds like you're off to a good start.
I've been thinking out of state for my first investment, but I'm also searching for something out of my area and still within Cali before going out of state.
Best of luck to you!
Investor · Lodi, CA · Member since 2016 · 23 posts · 11 votes
10y
Raj Vachani, at this point in my life, out of state grass is greener than my Lodi pastures. I don't know what your price to rent in San Jose is but it does seem that San Jose real estate is expensive even for its high rents. My friend who invested in Indiana is getting almost the same rent per unit for his 4 plex as I get for my duplex... and he paid almost 1/3rd less than I did (supposedly it is in a good area). I don't feel that a investment out of your area under 500k is worth the distance-hassles, but if I can do a million dollar deal on an apartment, it may just pencil for me to take off work and fly somewhere periodically.
Investor · Harlan, IN · Member since 2016 · 87 posts · 24 votes
10y
Hi Ryan,
I am stationed in CA but originally from Indiana. I agree the out of state grass is definitely greener for me. Thanks to BP I have a great team/network established and am soon pulling the trigger on my first bundle of properties. Welcome to BP and wish you great success.
Contractor · Lake Arrowhead, CA · Member since 2013 · 2 posts · 0 votes
10y
Raj, that deal in Indiana sounds pretty good...maybe a bit too good? Get me an address or at least an street and cross street and I'll be happy to check it out. We have a number of positively evolving communities, especially near colleges. You can easily see significant valuation increases in just a few blocks away.
Raj Vachani, at this point in my life, out of state grass is greener than my Lodi pastures. I don't know what your price to rent in San Jose is but it does seem that San Jose real estate is expensive even for its high rents. My friend who invested in Indiana is getting almost the same rent per unit for his 4 plex as I get for my duplex... and he paid almost 1/3rd less than I did (supposedly it is in a good area). I don't feel that a investment out of your area under 500k is worth the distance-hassles, but if I can do a million dollar deal on an apartment, it may just pencil for me to take off work and fly somewhere periodically.
... and in 10 years, what do you suppose that 4 plex in Indiana will be worth? The same as it was 10 years ago, the same as it is today, and the same it will be in 10 years, after adjusting for inflation ... maybe even less. What do you think the rents will be? Same.
What about San Jose? What does the price and rent history there tell you?
Things are often cheap for a reason, and it should serve as a red flag, not a green light.
As a life time resident of Indiana , we bought our first property in 1976 . I'm not sure how to take your cheap remark .
West Coast bias. Something that causes one to think their area is supreme to all other parts of the US. Obviously nothing appreciates in Indiana. In fact, people are just darn dump to live here. Who wants to invest here anyways? It's stupid to buy something so cheap and get 12-15% cash on cash plus some appreciation on the side. I think I'm packing up and moving to CA.
As a life time resident of Indiana , we bought our first property in 1976 . I'm not sure how to take your cheap remark .
Not saying you can't make money there, just that "some" properties (not all) are cheap for a reason. As a life time resident of Indiana, I'm sure that you could spot the local properties that are cheap for a reason vs those that are an excellent value, and make money (mostly through forced appreciation and cash flow I'd venture) investing in those that are an excellent value. I'm also quite certain that a newbie from Lodi could not do the same, and asking a RE agent or turnkey operator to sort the two out for them is like asking a barber if you need a haircut. No offense intended to the fine residence of Indiana.
Investor · Lodi, CA · Member since 2016 · 23 posts · 11 votes
10y
@David Faulkner, I appreciate you pointing out the bigger picture such as appreciation and rent growth potential. Sometimes I overlook those considerations when I hear about "other peoples' deals". After spending my teens and early 20's in the stocks, I have learned that I'm not a great guru on what will appreciate. I wouldn't intentionally buy a property that I didn't think had a chance of appreciating but with a buy and hold strategy, it's not my number one criteria. I got what many considered a deal here in my town at 320k for a duplex (in a great area with great tenants) spitting out 2k in gross rent. Apparently, one must have cash return to calculate a cash on cash return :). I haven't made a dime that I could reinvest in something other than just maintaining the duplex and the basic cash flow to operate my new little side business. If I intend to make any ROI outside of my amortization, I would need to buy something for less, whether or not it is my area. I appreciate any thoughts, banter, feedback or questions... thanks!
@David Faulkner, I appreciate you pointing out the bigger picture such as appreciation and rent growth potential. Sometimes I overlook those considerations when I hear about "other peoples' deals". After spending my teens and early 20's in the stocks, I have learned that I'm not a great guru on what will appreciate. I wouldn't intentionally buy a property that I didn't think had a chance of appreciating but with a buy and hold strategy, it's not my number one criteria. I got what many considered a deal here in my town at 320k for a duplex (in a great area with great tenants) spitting out 2k in gross rent. Apparently, one must have cash return to calculate a cash on cash return :). I haven't made a dime that I could reinvest in something other than just maintaining the duplex and the basic cash flow to operate my new little side business. If I intend to make any ROI outside of my amortization, I would need to buy something for less, whether or not it is my area. I appreciate any thoughts, banter, feedback or questions... thanks!
I will only leave you with this to consider ... picking a stock that is about to appreciate but has no history of doing so is different thing entirely than picking a stock that has a long history of appreciation and dividend increases, which is different still than a stock with a solid dividend but absolutely no growth. Investing in real estate markets is no different. Cash flow is an important thing, but it is not the only thing. If it is the only thing you focus on, though, it is likely to be the only thing you'll get because of the markets you'll choose to get it in. Lastly, investing locally has huge advantages and conversely investing remotely has huge disadvantages (often much larger than newbies realize until it is too late). I've done both invested locally and out of state, invested for cash flow and for appreciation, so I speak from personal experience and have nothing to sell you either way. Good luck to you whichever path you chose. I'm happy to help you however I can.
You mentioned San Jose; are you referring to the historical rise in real estate being great in that area? I'm all ears to different perspectives as a newbie. My concern about San Jose (as an example) isn't the future demand, but as rent control sweeps over the entire bay area in the next 20 years, it seems that it would stifle appreciation. I bought lots of great stocks with great historical pasts when I was 16.... March of 2000! My teenage ego was wounded :). Just because San Jose has done well before, may not mean it will later.
You mentioned San Jose; are you referring to the historical rise in real estate being great in that area? I'm all ears to different perspectives as a newbie. My concern about San Jose (as an example) isn't the future demand, but as rent control sweeps over the entire bay area in the next 20 years, it seems that it would stifle appreciation. I bought lots of great stocks with great historical pasts when I was 16.... March of 2000! My teenage ego was wounded :). Just because San Jose has done well before, may not mean it will later.
Ryan,
At the age of 16, I'm really curious which brokerage did you open your stock account with?
I believe @David Faulkner only used San Jose as a data point as it's much closer to you than he is. You're right that there's no guarantee that San Jose will do well in the future. The big gains are typically in emerging markets. How to identify those markets is another topic. Also, how long does one have to wait for those markets to emerge? Would East Palo Alto a good bet? How about San Bruno? Daly City? The location of these cities are terrific. When will they emerge? Your guess is as good as mine.
With respect to rent control sweeps over the entire Bay Area in the next 20 years, can it be a good thing? As someone who has made millions in the current San Jose rent control market, I'll tell you that rent control is a great thing. Why? Because it keeps the competitions away. :>)
I've talked to enough people to understand what the Oracle of Omaha said has a lot of merits. He said it's human nature to put obstacles in front of us. Everyone I talked to at meet-ups and REIA's KNOWS how rent control doesn't work. When asked have they read the 270 pages of the Rent Control Ordinance? ALL of THEM said NO. Shocking isn't it? They didn't read it, and they knew it doesn't work. :>)
I look at the Rent Control Ordinance like the Internal Revenue Code. It's full of loopholes in there. It's our job to comb through it and use the loopholes to our advantage. After all, we're real estate investors. We get paid handsomely to solve problems. Had someone told you IF you read the Rent Control Ordinance and actually understood it, you would make millions. Would you read it? In fact, how many times would you read it? If you had to spend a year to read it from front to back, back to front, would it still be worth it? The answer is hell yeah. Then why would you discredit rent control as a bad thing before even understanding it?
If you want to join the 1%er, do what others don't and reap the rewards. Everything in our lives is a reflection of our choices. If we want a different result, don't you think we should make different choices?
Property Manager / Investor · San Jose, CA · Member since 2013 · 779 posts · 301 votes
10y
Ah Minh, did you have to just give the rent control secret away :)
I have read that ordinance a couple of times. One of the few?
Watching the city council recently debate the rent control issue was interesting. They stated how many times a few of those "loop holes" were actually used in several years period. Practically zero. Ok, it was like 12. But then they made a big fuss about changing/eliminating them. What was more damaging to the renters was the significant increase of the use of those "loop holes" as a result of the rent control discussions. Suddenly a lot more people were aware...
Investor · Houston, TX · Member since 2015 · 176 posts · 121 votes
10y
Ah @Account Closed Welcome!!! Invest in where you know. I only know 2 markets, and I would have a very hard time investing outside of those markets and still make money. I know the price of the property, the going rents, and if some development is coming that will either hurt or help my situation. It is hard to focus on more than these 2 areas. Maybe some can do it, but I have a full time job as well, so it is hard for me. If I could, I would always invest locally. But that is my preference and works for me.
I've learned that you can give all the secrets away, and 99% of the people won't do anything about it.
Out of those 12 petitions, 5 belonged to us. :>)
Although they shut down my favorite DPT loophole, I've already identified a couple of other loopholes in the new rent control ordnance so all is good.
@Michael Delpier, thanks for the compliment. Guess why I was late for lunch that day? I pulled out of my driveway, drove down the street and saw a turtle in the middle of the road on the opposite lane looking around. I made a U turn. As I approached it, it pulled its head partially into the shell. I picked it up, and it pulled its head all the way into its shell. It was a hot day so I found a creek nearby and put it down there. When I came back from lunch, it was gone. Such a cool experience. Here are a couple of pix. Best of luck with the sale and exchange.