Hello from San Diego, California
Indianapolis, IN · Member since 2014 · 13 posts · 9 votes
Greeting fellow BPs.
My name is Tommy Nguyen from San Diego, CA. Have been a long time lurker here but finally decided to post and participate.
A little bit about myself. Currently working as an engineer in a biotech company. I want to start investing in real estate as an exit strategy of the rat race (Rich Dad Poor Dad reference). After 4-5 months discussing with my wife, we want to start with a small multifamily in San Diego area where we can live in one unit and rent the other(s).
I'd love to network with other investors in the area to learn more about RE investing in general and learn more from your insights on San Diego market specifically. I don't know what I can offer in return but I definitely have the energy and appetite to learn the rope of RE investing and will definitely give back in one way or another.
I'm looking forward to hear from y'all.
I have a real example that is unfortunately for is not a 7 digit profit but is a 6 digit profit.
I purchased a SFR in 1992 near the market high at $167k. In depreciated into the low $140k. Today the SFR is worth ~$530k (it has not been appraised in a while). I realize inflation has changed the value of the dollars ($530k is worth a lot less than $530k was worth in 1992).
The point however is that a peak that resulted in close to 20% decline in value today looks like a bargain. If we are at a peak and decline (know one knows) I have a lot of confidence that in the long term the price will not only rebound but increase. Why do I have this confidence? 1) it always has. In the last 50 years there has been many years were values have declined but they have always rebound and increased. 2) supply n demand: San Diego has best climate in continental US and compares with the other best climates in the world. We have good jobs/economy. It is a very desirable location to live. As for supply it is constrained on west by ocean, on the south by Mexico, on the north by Camp Pendleton, and on the East by a quickly harsh climate.
The only people who have lost money in financed buy n hold residential real estate in San Diego in last 50 years are those that sold at the wrong time. Maybe they were over leveraged or could not stomach a decline. Maybe being a landlord was not something they wanted to do. Note purchasing at an unoptimal time such as my 1992 purchase would not result in loss and in fact if financed at 90% LTV (easy to do for owner occupied but in reality I put 20% down) would have cost maybe $20k (20% likely cost ~$36k). That $20k would have resulted in well over $450k of equity. I pulled out my equity in 2002 and in 2010 so my initial investment is no longer in that RE and the equity has been leveraged for other investments (those two refinances were used exclusively for other buy n hold RE investments but my more recent refinances have not yet been placed into RE investments).
So historically San Diego has always appreciated long term. San Diego is a very desirable locale with limited supply. The appreciation is significant when financed with high LTV. The rents appreciate with the value. The equity from appreciation and principle buy down can be leveraged (typically through refi or something like a HELOC) for further investments.
Good luck.
All valid points. Thanks to everyone for your input.
I traded in that dead equity and wend from $6,000 cash flow a year to $2,000 cash flow a month on a 15 unit Apartment complex in Ohio and have already increased the NOI on that apartment complex $9,000.00 in 18 months, increasing the value of the apartment complex by $90,000 according to the bank. So, yes, I could have speculated and waited for appreciation, and I still can with that little condo I still have left in San Diego. However, my cash flow went from $6,000 a year to $24,000.00 a year and I forced appreciation of that apartment complex $90,000 so far and with year 2 increases this summer, the bank will now say I have increased the value another $30,000-$40,000.00 on top of the $90,000 current increase. To think, I only paid a $34,000 down payment on that little Santee condo in 2012. I took that equity in one San Diego little condo and traded it in for massive cash flow and using the Apartment complex business model have a property manager due all the heavy lifting and have become financially free, with $120,000 tax deferred cash flow per year, while forcing appreciation on 6 Apartment complexes and going from 10 rental properties in San Diego to now 87 front doors and counting.
Everybody can do this too. Read David Lindahl's Multifamily Millions by David Lindahl and start listening to Del Walmsley at Lifestyles Unlimited LLC. (LUI). Both of these resources really helped me to utilize the equity, which was really sitting their dead in my San Diego rental condos. The equity is not real, unless you use I think to make more tax deferred cash flow. I chose the 1031 route. You guys could refinance instead. That way you could malevolent that dead equity work for you.
Just be careful on trying to time the peaks and the valleys.
Swanny
I don't know why it said Malevolent that dead equity. I meant make that dead equity work for you.
Take care everybody!! You can become financially free too!!!
Swanny
By the way,
That Apartment complex final purchase price for 15 units making $2,000 cash flow per month and has already increased in value was $592,250 and I took all the money from the 1031 sale $144,000 and put that down on the apartment complex. Originally that was a $34,000 down payment on that little San Diego Condo. So, $24,000 cash flow plus per year on a holding period of 4 years minimum is about $100,000 cash flow and we will have forced $150,000 increased value through increasing NOI.
Then imagine that we did this 5 more times with 5 more Apartment complexes acquired too and one more this summer or fall, we will be at $150,000 cash flow in no time at all. That is coming in my pocket, mail box money. Plus, appreciating wildly, not being at the mercy of comps. That is the beauty of the Apartment complex business model.
I work because I want to. Not because I have to.
Swanny
Thanks for the in-depth insight, Matt. And from your opinion above, it sounds like you're okay with initial negative cashflow at the beginning but you can turn it around with rent raise and forced appreciation in the buy-and-hold strategy. What would be your limit to that negative cashflow and for how long?
It's all speculative about when such hot markets will make a correction, but it seems that price is at all time high in LA, SF, SD (even higher than 2006-2007 peak). How do you weigh the risk vs. reward with your strategy that initial negative cashflow is acceptable?
Four rules @Tommy Nguyen,
1. It must cash flow.
2. It can't lose money.
3. Utilize dead equity to get more cash flow that can't lose money.
4. Replace all w2 earned income with cash flow that can't lose money and you are financially free!!!
Thanks for the in-depth insight, Matt. And from your opinion above, it sounds like you're okay with initial negative cashflow at the beginning but you can turn it around with rent raise and forced appreciation in the buy-and-hold strategy. What would be your limit to that negative cashflow and for how long?
It's all speculative about when such hot markets will make a correction, but it seems that price is at all time high in LA, SF, SD (even higher than 2006-2007 peak). How do you weigh the risk vs. reward with your strategy that initial negative cashflow is acceptable?
It depends on your plan, location etc. I would not be ok with a plan that did not turn any negative flow into positive in short order. There might be many ways to do that. Understand even if prices are back to previous peaks that is still 20% less today factoring inflation. Good luck!
I traded in that dead equity and wend from $6,000 cash flow a year to $2,000 cash flow a month on a 15 unit Apartment complex in Ohio and have already increased the NOI on that apartment complex $9,000.00 in 18 months, increasing the value of the apartment complex by $90,000 according to the bank. So, yes, I could have speculated and waited for appreciation, and I still can with that little condo I still have left in San Diego. However, my cash flow went from $6,000 a year to $24,000.00 a year and I forced appreciation of that apartment complex $90,000 so far and with year 2 increases this summer, the bank will now say I have increased the value another $30,000-$40,000.00 on top of the $90,000 current increase. To think, I only paid a $34,000 down payment on that little Santee condo in 2012. I took that equity in one San Diego little condo and traded it in for massive cash flow and using the Apartment complex business model have a property manager due all the heavy lifting and have become financially free, with $120,000 tax deferred cash flow per year, while forcing appreciation on 6 Apartment complexes and going from 10 rental properties in San Diego to now 87 front doors and counting.
Everybody can do this too. Read David Lindahl's Multifamily Millions by David Lindahl and start listening to Del Walmsley at Lifestyles Unlimited LLC. (LUI). Both of these resources really helped me to utilize the equity, which was really sitting their dead in my San Diego rental condos. The equity is not real, unless you use I think to make more tax deferred cash flow. I chose the 1031 route. You guys could refinance instead. That way you could malevolent that dead equity work for you.
Just be careful on trying to time the peaks and the valleys.
Swanny
That is awesome too. Idk if taking the one off SD example applies always but it looks like it is working good for you. Investing in San Diego has a strong history of opening up doors we can agree.
Four rules @Tommy Nguyen,
1. It must cash flow.
2. It can't lose money.
3. Utilize dead equity to get more cash flow that can't lose money.
4. Replace all w2 earned income with cash flow that can't lose money and you are financially free!!!
Thanks Michael.
#4 is actually the goal of every RE investors, I believe. The question is how to get there. It seems that your strategy is working very well for you.
#1 is my concern at the moment in picking a market to invest it. It seems that it's depending on the risk tolerance of each investor. Many would say that it must cashflow from day 1. Matt seems to tolerate a little bit more but not much.
#3 is right on that one must utilize as much resources as possible. and equity/appreciation is just on paper until you can actually UTILIZE it.
I'd love to have a chat with you over coffee, if possible.
Swanny sort of contrast his own dead equity point. It was not dead. He used it or could have refi to capture it. Equity can be used and is never actually dead. Many of the wealthiest have a ton of "dead equity" at their disposal. I would say it would be wonderful to have a few billion in "dead equity" and guys like Trump really do have billions of it. His is mostly only in the historically highest appreciating equity areas as well.
Thanks for the in-depth insight, Matt. And from your opinion above, it sounds like you're okay with initial negative cashflow at the beginning but you can turn it around with rent raise and forced appreciation in the buy-and-hold strategy. What would be your limit to that negative cashflow and for how long?
It's all speculative about when such hot markets will make a correction, but it seems that price is at all time high in LA, SF, SD (even higher than 2006-2007 peak). How do you weigh the risk vs. reward with your strategy that initial negative cashflow is acceptable?
There will be many times appreciating locations are at all time peaks. That is how it works historically as one peak over takes the last peak decade after decade. How much if any initial negative cash flow an investor might accept varies perhaps. I know folks who purchased beach duplexes that rarely initially cash flow but appreciate one million in 10 years and cash flow greatly improves. Initial cash flow might be the smaller part of the overall investment returns short term. I know of others that cash flow a couple hundred per door then redevelop into 8 figure payday. These might be the bigger picture stuff you miss if you only look for the highest short term cash flow available. If you just want immediate cash flow, Swannys Cleveland area or Detroit type areas on average are much better for that we can understand.
hi @Matt R.
Before the last RE downturn, I had no rental properties. When San Diego RE was in the last peak, I only had my personal residence in Mira Mesa in San Diego. Mira Mesa is about 10 to 15 minutes west of La Jolla. When my little 3br 1ba value was at about $500,000 value before the last RE collapse, I told my wife that we should sell. I could not see how people were getting the loans, based on the wages of their jobs. Many of these loans were risky interest only loans, with balloons. I just couldn't figure out how this was happening at that time. My parents, Inlaws, wife and the herd of cattle kept telling me that would be crazy to sell. I would never be able to afford the American Dream if I sold and rented.
Sooooooo, I took their advice and everything fell apart. My little house went down to about $280,000 and I said, never again. Then I started to investigate (as a Catholic School teacher and part time adjunct professor at Miramar college and my wife a special Ed assistant only making at the time $80,000 combined family income, before taxes) the financial freedom plan of chunking in all my expenses with rental property income. My parents went in with us too, due to a financial planner that lost about $100,000 of their hard earned retirement in a ponzy scheme. We took control and proceeded to buy those 10 rental properties with low interest 30 year loans.
I cashed in all my IRA's, refinanced my personal residence, took my parents money out of that financial planners hands and followed the first 2 rules I said earlier. We were doing well. rents were going up every year. Then in the back of my mind I remembered what happened in the last RE downturn and started researching what people did with their phantom equity that could go away in the next downturn in RE. I started listening to podcasts, reading the millionaire RE investor, ABC's of RE, Advanced Guide to RE investing, and then finally, Multifamily Millions by David Lindahl. About the same time I found a gem of a podcast hosted by Del Walmsley. Then I attended Del Walmsley's 2 day seminar in Houston at his Lifestyles Unlimited Inc. (LUI). I did not become a Preferred investor there, due to my 1031 money could not mix legally in any of their deals. However, for the $500.00 for the two day seminar was invaluable at that point. When, I combined all that education, as a Reading Teacher, I ate it all up and formulated a plan to utilize the frozen equity stuck in the pricey wildly appreciating San Diego area condo's we purchased.
Then, I followed all that education and made connections with the players in a strong cash flowing area of the U.S. that I could purchase much higher cash flowing Multifamily, that I could force appreciation by reducing expenses and raising rents to market rents. These complexes I purchased were owned by frustrated, burnt out landlords that some even lived onsite. A half a block down the road rents were anywhere from $75.00-$150.00 higher. These owners figured a bird in the hand is better than two in the bush. They kept the rents low, rented to people based on handshakes, didn't update units, people were there for 10 to 15 years in a nice blue collar "C" class neighborhood and paying ghetto rents.
When I learned that if I increase the NOI (money coming in minus expenses, not including debt service or Cap Ex fixed expenses) by 1$ the property is valued 10$ more according to my research and verified that through my lender, I was off to the races. The first spring I take over a property rents go up about 10-15%. We fix all their outstanding work orders, offer a new ceiling fan or storm doors, or window AC, or carpet cleaning or touch up painting or ? For them to sign a new one year lease. They are happy and ultimately we are happy.
The best part is that in San Diego I was managing my own properties and now a professional property management company is implementing our plan. I just manage the property manager. So, I now have more time, more cash flow, and forced appreciation, freeing up time for me to find more deals and more opportunities.
As a low paid Catholic School Teacher, I am now financially free. Plus my parents went from depending on social security and their financial planner to make money on them, no matter if he does his job or not, now they have $60,000 cash flow per year, plus social security in their late 70's. I also have $60,000 and growing cash flow too. In the next year approaching $70,000 to $75,000 each. Remember, after taxes, my W2 take home was barely $55,000, working 60 hours per week, with me working 2 teaching jobs and my wife working 25 hours per week. So, we have surpassed 30 years of being in the rat race in 6 short years, since we first purchased a little investment Condo in May of 2011. 6 short years ago. We now have 5.5 million in RE and 2.5 million in Equity. When we combine with all our personal funds, we have about 3 million in net worth and growing every day!!
If I can do this, many of you make three to 5 times my combined family W2 earnings. Send me a personal message if you are looking for opportunities like this too and need a paradigm change right away. For me, speculation is over. I don't want another job flipping, wholesaling, etc... I can go to Vegas with my mad money for that. Remember my 1st two rules from now on. It can't lose money and it must cash flow. Pretty hard to get burnt when you follow those 2 rules. Also, I am stashing away $4,000 in savings each month in preparation for opportunities and safety at the moment. When this all comes crashing down again, I believe cash will be king. I do agree with Matt that we could have an increase 10-15% more as all of these credit standards are being eased to, allowing many morons to get loans at higher interest rates. Of course, that is only speculation. I do know that single family are valued based on comps and when the flipping craze heats up, traditionally, that is when we have to be very careful. I love having literally ZERO money in stocks and not being at mercy of comps.
If you change the way you look at things, the things you look at change right before your eyes!!
Swanny
Hi Tommy,
Welcome. I just posted for the first time myself yesterday. I live in Long Beach but my wife went to school in SD and absolutely loved it there (if it were up to her we would be living there now). Good luck!
hi @Matt R.
Thank you for the post Michel. Very inspiring. I hope to achieve similar success with RE investing myself.
I am in solid "C" class areas, please do not compare to the bad "D" class areas of Cleveland and Detroit. Look them up. Painesville, Ohio and Euclid, Ohio and Shaker Heights, Ohio (solid B class), and my lowest is Cleveland Heiights on the border of South Euclid. My property manager feels extremely safe visiting the properties after dark on Friday and Sat nights. Comparable communities in San Diego would be Santee, and Lakeside.
Swanny
@Michael Swan a very nice and detail background story, Swanny. There're many things i can learn just from reading it
@Randy Castle thanks for the warm welcome. Good luck to you in Long Beach as well ;)
hi @Matt R.
Before the last RE downturn, I had no rental properties. When San Diego RE was in the last peak, I only had my personal residence in Mira Mesa in San Diego. Mira Mesa is about 10 to 15 minutes west of La Jolla. When my little 3br 1ba value was at about $500,000 value before the last RE collapse, I told my wife that we should sell. I could not see how people were getting the loans, based on the wages of their jobs. Many of these loans were risky interest only loans, with balloons. I just couldn't figure out how this was happening at that time. My parents, Inlaws, wife and the herd of cattle kept telling me that would be crazy to sell. I would never be able to afford the American Dream if I sold and rented.
Sooooooo, I took their advice and everything fell apart. My little house went down to about $280,000 and I said, never again. Then I started to investigate (as a Catholic School teacher and part time adjunct professor at Miramar college and my wife a special Ed assistant only making at the time $80,000 combined family income, before taxes) the financial freedom plan of chunking in all my expenses with rental property income. My parents went in with us too, due to a financial planner that lost about $100,000 of their hard earned retirement in a ponzy scheme. We took control and proceeded to buy those 10 rental properties with low interest 30 year loans.
I cashed in all my IRA's, refinanced my personal residence, took my parents money out of that financial planners hands and followed the first 2 rules I said earlier. We were doing well. rents were going up every year. Then in the back of my mind I remembered what happened in the last RE downturn and started researching what people did with their phantom equity that could go away in the next downturn in RE. I started listening to podcasts, reading the millionaire RE investor, ABC's of RE, Advanced Guide to RE investing, and then finally, Multifamily Millions by David Lindahl. About the same time I found a gem of a podcast hosted by Del Walmsley. Then I attended Del Walmsley's 2 day seminar in Houston at his Lifestyles Unlimited Inc. (LUI). I did not become a Preferred investor there, due to my 1031 money could not mix legally in any of their deals. However, for the $500.00 for the two day seminar was invaluable at that point. When, I combined all that education, as a Reading Teacher, I ate it all up and formulated a plan to utilize the frozen equity stuck in the pricey wildly appreciating San Diego area condo's we purchased.
Then, I followed all that education and made connections with the players in a strong cash flowing area of the U.S. that I could purchase much higher cash flowing Multifamily, that I could force appreciation by reducing expenses and raising rents to market rents. These complexes I purchased were owned by frustrated, burnt out landlords that some even lived onsite. A half a block down the road rents were anywhere from $75.00-$150.00 higher. These owners figured a bird in the hand is better than two in the bush. They kept the rents low, rented to people based on handshakes, didn't update units, people were there for 10 to 15 years in a nice blue collar "C" class neighborhood and paying ghetto rents.
When I learned that if I increase the NOI (money coming in minus expenses, not including debt service or Cap Ex fixed expenses) by 1$ the property is valued 10$ more according to my research and verified that through my lender, I was off to the races. The first spring I take over a property rents go up about 10-15%. We fix all their outstanding work orders, offer a new ceiling fan or storm doors, or window AC, or carpet cleaning or touch up painting or ? For them to sign a new one year lease. They are happy and ultimately we are happy.
The best part is that in San Diego I was managing my own properties and now a professional property management company is implementing our plan. I just manage the property manager. So, I now have more time, more cash flow, and forced appreciation, freeing up time for me to find more deals and more opportunities.
As a low paid Catholic School Teacher, I am now financially free. Plus my parents went from depending on social security and their financial planner to make money on them, no matter if he does his job or not, now they have $60,000 cash flow per year, plus social security in their late 70's. I also have $60,000 and growing cash flow too. In the next year approaching $70,000 to $75,000 each. Remember, after taxes, my W2 take home was barely $55,000, working 60 hours per week, with me working 2 teaching jobs and my wife working 25 hours per week. So, we have surpassed 30 years of being in the rat race in 6 short years, since we first purchased a little investment Condo in May of 2011. 6 short years ago. We now have 5.5 million in RE and 2.5 million in Equity. When we combine with all our personal funds, we have about 3 million in net worth and growing every day!!
If I can do this, many of you make three to 5 times my combined family W2 earnings. Send me a personal message if you are looking for opportunities like this too and need a paradigm change right away. For me, speculation is over. I don't want another job flipping, wholesaling, etc... I can go to Vegas with my mad money for that. Remember my 1st two rules from now on. It can't lose money and it must cash flow. Pretty hard to get burnt when you follow those 2 rules. Also, I am stashing away $4,000 in savings each month in preparation for opportunities and safety at the moment. When this all comes crashing down again, I believe cash will be king. I do agree with Matt that we could have an increase 10-15% more as all of these credit standards are being eased to, allowing many morons to get loans at higher interest rates. Of course, that is only speculation. I do know that single family are valued based on comps and when the flipping craze heats up, traditionally, that is when we have to be very careful. I love having literally ZERO money in stocks and not being at mercy of comps.
If you change the way you look at things, the things you look at change right before your eyes!!
Swanny
That's awesome. I don't know the ABCDF areas of those Cleveland or Detroit locations. I might add if you were able to pick up multis in SD as compared the longer term numbers could be significantly higher we can understand too. I also agree commercial real estate is another animal and commercial real estate in high appreciating areas can be at level beast mode.
hi @Matt R.
Before the last RE downturn, I had no rental properties. When San Diego RE was in the last peak, I only had my personal residence in Mira Mesa in San Diego. Mira Mesa is about 10 to 15 minutes west of La Jolla. When my little 3br 1ba value was at about $500,000 value before the last RE collapse, I told my wife that we should sell. I could not see how people were getting the loans, based on the wages of their jobs. Many of these loans were risky interest only loans, with balloons. I just couldn't figure out how this was happening at that time. My parents, Inlaws, wife and the herd of cattle kept telling me that would be crazy to sell. I would never be able to afford the American Dream if I sold and rented.
Sooooooo, I took their advice and everything fell apart. My little house went down to about $280,000 and I said, never again. Then I started to investigate (as a Catholic School teacher and part time adjunct professor at Miramar college and my wife a special Ed assistant only making at the time $80,000 combined family income, before taxes) the financial freedom plan of chunking in all my expenses with rental property income. My parents went in with us too, due to a financial planner that lost about $100,000 of their hard earned retirement in a ponzy scheme. We took control and proceeded to buy those 10 rental properties with low interest 30 year loans.
I cashed in all my IRA's, refinanced my personal residence, took my parents money out of that financial planners hands and followed the first 2 rules I said earlier. We were doing well. rents were going up every year. Then in the back of my mind I remembered what happened in the last RE downturn and started researching what people did with their phantom equity that could go away in the next downturn in RE. I started listening to podcasts, reading the millionaire RE investor, ABC's of RE, Advanced Guide to RE investing, and then finally, Multifamily Millions by David Lindahl. About the same time I found a gem of a podcast hosted by Del Walmsley. Then I attended Del Walmsley's 2 day seminar in Houston at his Lifestyles Unlimited Inc. (LUI). I did not become a Preferred investor there, due to my 1031 money could not mix legally in any of their deals. However, for the $500.00 for the two day seminar was invaluable at that point. When, I combined all that education, as a Reading Teacher, I ate it all up and formulated a plan to utilize the frozen equity stuck in the pricey wildly appreciating San Diego area condo's we purchased.
Then, I followed all that education and made connections with the players in a strong cash flowing area of the U.S. that I could purchase much higher cash flowing Multifamily, that I could force appreciation by reducing expenses and raising rents to market rents. These complexes I purchased were owned by frustrated, burnt out landlords that some even lived onsite. A half a block down the road rents were anywhere from $75.00-$150.00 higher. These owners figured a bird in the hand is better than two in the bush. They kept the rents low, rented to people based on handshakes, didn't update units, people were there for 10 to 15 years in a nice blue collar "C" class neighborhood and paying ghetto rents.
When I learned that if I increase the NOI (money coming in minus expenses, not including debt service or Cap Ex fixed expenses) by 1$ the property is valued 10$ more according to my research and verified that through my lender, I was off to the races. The first spring I take over a property rents go up about 10-15%. We fix all their outstanding work orders, offer a new ceiling fan or storm doors, or window AC, or carpet cleaning or touch up painting or ? For them to sign a new one year lease. They are happy and ultimately we are happy.
The best part is that in San Diego I was managing my own properties and now a professional property management company is implementing our plan. I just manage the property manager. So, I now have more time, more cash flow, and forced appreciation, freeing up time for me to find more deals and more opportunities.
As a low paid Catholic School Teacher, I am now financially free. Plus my parents went from depending on social security and their financial planner to make money on them, no matter if he does his job or not, now they have $60,000 cash flow per year, plus social security in their late 70's. I also have $60,000 and growing cash flow too. In the next year approaching $70,000 to $75,000 each. Remember, after taxes, my W2 take home was barely $55,000, working 60 hours per week, with me working 2 teaching jobs and my wife working 25 hours per week. So, we have surpassed 30 years of being in the rat race in 6 short years, since we first purchased a little investment Condo in May of 2011. 6 short years ago. We now have 5.5 million in RE and 2.5 million in Equity. When we combine with all our personal funds, we have about 3 million in net worth and growing every day!!
If I can do this, many of you make three to 5 times my combined family W2 earnings. Send me a personal message if you are looking for opportunities like this too and need a paradigm change right away. For me, speculation is over. I don't want another job flipping, wholesaling, etc... I can go to Vegas with my mad money for that. Remember my 1st two rules from now on. It can't lose money and it must cash flow. Pretty hard to get burnt when you follow those 2 rules. Also, I am stashing away $4,000 in savings each month in preparation for opportunities and safety at the moment. When this all comes crashing down again, I believe cash will be king. I do agree with Matt that we could have an increase 10-15% more as all of these credit standards are being eased to, allowing many morons to get loans at higher interest rates. Of course, that is only speculation. I do know that single family are valued based on comps and when the flipping craze heats up, traditionally, that is when we have to be very careful. I love having literally ZERO money in stocks and not being at mercy of comps.
If you change the way you look at things, the things you look at change right before your eyes!!
Swanny
That's awesome. I don't know the ABCDF areas of those Cleveland or Detroit locations. I might add if you were able to pick up multis in SD as compared the longer term numbers could be significantly higher we can understand too. I also agree commercial real estate is another animal and commercial real estate in high appreciating areas can be at level beast mode.
There are some really areas in Cleveland. Some try to pass off warzones as being good investments, but they are not.
I am sure Cleveland and Detroit have good investment areas and like anywhere else some not so good. For the most part any areas I have checked in those cities were worth more 20 years ago but I know for sure that is not the case for the whole enchilada.
I am in solid "C" class areas, please do not compare to the bad "D" class areas of Cleveland and Detroit. Look them up. Painesville, Ohio and Euclid, Ohio and Shaker Heights, Ohio (solid B class), and my lowest is Cleveland Heiights on the border of South Euclid. My property manager feels extremely safe visiting the properties after dark on Friday and Sat nights. Comparable communities in San Diego would be Santee, and Lakeside.
Swanny
I did a quicky wiki check Euclid vs Santee.
Nearly same population overall and that is where the demo sameness ends.
Euclid median household income 35k 2000
Santee median household income 70k 2008
Euclid population minus - 2.5% 2010-15
Santee population growth +8% 2010-15
Euclid 2000 66% white, 32% African American
Euclid 2010 44% white, 52% African American
Santee 2010 82% white, 16% Hispanic 2% African American
Correct me if I am wrong as these demos are not very close to the same according to wiki.
Greeting fellow BPs.
My name is Tommy Nguyen from San Diego, CA. Have been a long time lurker here but finally decided to post and participate.
A little bit about myself. Currently working as an engineer in a biotech company. I want to start investing in real estate as an exit strategy of the rat race (Rich Dad Poor Dad reference). After 4-5 months discussing with my wife, we want to start with a small multifamily in San Diego area where we can live in one unit and rent the other(s).
I'd love to network with other investors in the area to learn more about RE investing in general and learn more from your insights on San Diego market specifically. I don't know what I can offer in return but I definitely have the energy and appetite to learn the rope of RE investing and will definitely give back in one way or another.
I'm looking forward to hear from y'all.
I live in San Diego as well (Mission Hills area). I look for rental properties all the time but the returns are laughably bad. If you find something that even remotely works, please PM me so I can check it out (wait till you're under contract if you are worried I might snatch your deal).
I looked at a 6 unit that was $300k a door! Rents were $1200 month. How on earth does that make sense? In Houston, in a good area, I could pay $80k/door and get $1000/month rents. And I realize that San Diego is nicer than Houston but I'm not living in these places so that benefit is lost.
Edit: I replied before reading that 100 people have already said the same thing :)
Four rules @Tommy Nguyen,
1. It must cash flow.
2. It can't lose money.
3. Utilize dead equity to get more cash flow that can't lose money.
4. Replace all w2 earned income with cash flow that can't lose money and you are financially free!!!
Thanks Michael.
#4 is actually the goal of every RE investors, I believe. The question is how to get there. It seems that your strategy is working very well for you.
#1 is my concern at the moment in picking a market to invest it. It seems that it's depending on the risk tolerance of each investor. Many would say that it must cashflow from day 1. Matt seems to tolerate a little bit more but not much.
#3 is right on that one must utilize as much resources as possible. and equity/appreciation is just on paper until you can actually UTILIZE it.
I'd love to have a chat with you over coffee, if possible.
That's not everyojnes goal. People buying in San Diego are not buying for cash flow. They're buying hoping that prices will go up and they'll be able to sell it for more to someone else not looking for cash flow. Or they just want the ego that comes with owning in San Diego.
I pay the 'sunshine tax' on my PERSONAL home in San Diego. I let my investment properties OUTSIDE of San Diego pay for this lifestyle.
No. no. No Matt. Euclid is a "C" class area. I was comparing the $400.00 cash flow per door on single family to what I was getting in Santee and Lakeside. They were the same cash flow returns for those small $30,000 a door all in for Euclid. Back in 2004 those same single family were going for $80,000 to $90,000 minimum, before the crash. I have a 4/1 bathroom 1200 square feet single family listed right now at 23325 Roger that was just listed last week for $55,400.00. I purchased it for $31,000 in 2015. It rents for about $925.00 or higher. So, if I get $50,000 for it, it has appreciated what? About 50-60% plus two years of cash flow?
That was not my point Matt. Again, I purchased in 2014, 2015, and my apartment complex in Feb one year ago my 12 unit in Euclid cash flowing also $2,000 a month and we are still building our reserves to about $25,000 on that property. I have had 3 vacancies in all my Euclid properties, 20 front doors, since 2014. I have 8 single family and when we sell that one single family on Roger, I will have only 19 total front doors out of my 87 front doors. Did you do the same for Painesville (I have 42 front doors. Check near. Lake Erie college. How about Shaker Heights near my 3255 Warrensville center Rd. 8 unit. Let me know what you find Matt. 12 unit giving off $2,000 a month we purchased for $480,000 in Euclid, 25 unit in Painesville we purchased for $900,000, 15 unit I talked about in Painesville, purchased for $592,250.00, 12 unit one block from Lake Erie College purchased at $490,000, but that was 12 one thousand Square feet townhomes at purchase cash flowing $1,000.00 a month and 11 townhomes about $120.00 under market rents. Remember, every time I increase NOI by 1$, the bank says the property is worth 10$ more that I purchased it. In San Diego Apartment complexes here cash lowed about 2% and remember appreciation is not based on comps! no matter what area of the country you live in. In 2015 and 2016 investing in Apartment complexes here would have been a big mistake!!
Do you understand now Matt? Do more research and get back to me.
Swanny
No. no. No Matt. Euclid is a "C" class area. I was comparing the $400.00 cash flow per door on single family to what I was getting in Santee and Lakeside. They were the same cash flow returns for those small $30,000 a door all in for Euclid. Back in 2004 those same single family were going for $80,000 to $90,000 minimum, before the crash. I have a 4/1 bathroom 1200 square feet single family listed right now at 23325 Roger that was just listed last week for $55,400.00. I purchased it for $31,000 in 2015. It rents for about $925.00 or higher. So, if I get $50,000 for it, it has appreciated what? About 50-60% plus two years of cash flow?
That was not my point Matt. Again, I purchased in 2014, 2015, and my apartment complex in Feb one year ago my 12 unit in Euclid cash flowing also $2,000 a month and we are still building our reserves to about $25,000 on that property. I have had 3 vacancies in all my Euclid properties, 20 front doors, since 2014. I have 8 single family and when we sell that one single family on Roger, I will have only 19 total front doors out of my 87 front doors. Did you do the same for Painesville (I have 42 front doors. Check near. Lake Erie college. How about Shaker Heights near my 3255 Warrensville center Rd. 8 unit. Let me know what you find Matt. 12 unit giving off $2,000 a month we purchased for $480,000 in Euclid, 25 unit in Painesville we purchased for $900,000, 15 unit I talked about in Painesville, purchased for $592,250.00, 12 unit one block from Lake Erie College purchased at $490,000, but that was 7 one thousand Square foot townhomes at purchase cash flowing $1,000.00 a month and 11 townhomes about $120.00 under market rents. Remember, every time I increase NOI by 1$, the bank says the property is worth 10$ more that I purchased it. In San Diego Apartment complexes here cash lowed about 2% and remember appreciation is not based on comps! no matter what area of the country you live in. In 2015 and 2016 investing in Apartment complexes here would have been a big mistake!!
Do you understand now Matt? Do more research and get back to me.
Swanny
What I understand is it is possible one can get better initial cash flow in lower cost and perhaps declining areas. After 5 mins of researching, it appears to be part of your investment geography and that is ok too. We can check back over the coming years and see how this type of strategy matures. It is not a right or wrong deal imo, rather just one observation. It may have future challenges and market forces good or bad IDK. Thanks for sharing either way.
Good luck!
Greeting fellow BPs.
My name is Tommy Nguyen from San Diego, CA. Have been a long time lurker here but finally decided to post and participate.
A little bit about myself. Currently working as an engineer in a biotech company. I want to start investing in real estate as an exit strategy of the rat race (Rich Dad Poor Dad reference). After 4-5 months discussing with my wife, we want to start with a small multifamily in San Diego area where we can live in one unit and rent the other(s).
I'd love to network with other investors in the area to learn more about RE investing in general and learn more from your insights on San Diego market specifically. I don't know what I can offer in return but I definitely have the energy and appetite to learn the rope of RE investing and will definitely give back in one way or another.
I'm looking forward to hear from y'all.
I live in San Diego as well (Mission Hills area). I look for rental properties all the time but the returns are laughably bad. If you find something that even remotely works, please PM me so I can check it out (wait till you're under contract if you are worried I might snatch your deal).
I looked at a 6 unit that was $300k a door! Rents were $1200 month. How on earth does that make sense? In Houston, in a good area, I could pay $80k/door and get $1000/month rents. And I realize that San Diego is nicer than Houston but I'm not living in these places so that benefit is lost.
Edit: I replied before reading that 100 people have already said the same thing :)
Mission Hills is a pretty sweet location. I used to stay at a house there overlooking the city on that street straight up from Old Town ( Juan?). Close enough to everything, beach, downtown, stadium, Mission Bay etc... In some ways you are sort of living in an investment with I imagine many forced appreciation possibilities as is. Good location choice!