Bay Area Newbie ready to combat "analysis paralysis" Help needed!

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Bay Area Newbie ready to combat "analysis paralysis" Help needed!

Nate Baum
CA · Member since 2017 · 18 posts · 4 votes

Hello BP community!

I was unable to find a good 1-800 number for analysis paralysis, so I figured this would be a great place to start. Thank you for building such an amazing place with a treasure trove of information, podcasts, fascinating books by David Greene, Brandon Turner, Anson Young and data... data.... data.... o man, there we go again.

My wife and I are new to the world of real estate investing. For the last 7 months, we have been getting ready to get off the sidelines and invest for our future. We moved to Mountain View, CA from Charlotte, NC about a year ago, I am a financial analyst and she is an analyst in the field supply chain management. We were both unemployed before the move, living off of savings and are truly blessed to have amazing jobs in the Bay Area while saving close to 70% of our income. 

Our goal is to invest out of state in one or two Duplex/Tri/Quad "Mom and Pop" houses, get a solid cash flow of around 10-15% and get rich slowly. We built crazy models with censuses, Zillow, labor statistics, crime rate data and have little to show for it other than wasted time. We did Identify Cincinnati & Pittsburg as a possibility along with the usual suspects (Austin, Denver, Phoenix...) 

This out of state is a little nerve wrecking and I am wondering if there are others out there that had the same reservations/fears before they invested far far away from home.

How did you determine the best location to peruse?  

Is now a good time to get in or does it make more sense to wait?

What was the "Aha!" moment that pushed you over the edge to take that first step?

What do you wish you knew back then that would have helped things go more smoothly?

Is there an active community in the Bay Area with meet-ups?

Thanks,

Nate

2Reply
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Most Popular Reply

Johnson H.Pro Member
Investor · San Francisco, CA · Member since 2010 · 910 posts · 889 votes
8y

Hi Nate, welcome to BP. When I first started investing in 2010, I was also a keyboard warrior looking at a few cities before selecting Phoenix. From there I flew out there three times, found the right agent to work with beforehand and we drove from one end to the metro to the other looking at properties I found online. Every trip my search parameters narrowed and I started to figure out which areas and types of houses I liked and wanted to invest in. After the third trip I had two offers accepted and I closed on two properties in the same month. After that I was able to make offers regularly and comfortably. 

For me to get comfortable with investing out of state, I had to see the area, street and property with my own eyes before buying something so expensive. Would you buy a used car without seeing it in person and test driving it? I couldn't! How do you really know an area is a B vs C area? I would see with my own eyes kids playing in the street, guys loitering at the 4plex next door, or hear a loud dog barking at a neighbors house. The internet can't tell you that. Driving around I could tell right away if the vibe of the area was right for me or not.

Also, leverage is a double edge sword. It's great if you buy a $100k house, put 20% down and the market goes up 10% you made 50% more money on your down. However on the flip side, if you have a bad tenant and found out the location is not as great as you thought and wanted to sell at the same price you bought it for, with seller commissions, closing costs and rehab to sell, it could easily be 10% of the purchase price meaning you just lost half your money. I am a big believer in "making money when you buy" so make sure you buy right so that you have the peace of mind to sleep well at night.

I just sold my last rental in Phoenix last month. What was my biggest regret now looking back eight years ago? I should have never left the Bay Area and invested in my own back yard. Come by my meetup tomorrow night in Milpitas if you would like to chat more. Good luck with your investing!

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  • Mike V.
    Rental Property Investor · Campbell, CA · Member since 2017 · 419 posts · 499 votes
    8y

    find the right deal and see how fast your paralysis vanishes. 

    When you’re looking at the numbers when you finally find the right one you won’t be able to move fast enough. Sounds to me like you need to keep looking. Perhaps you’re not convinced on the right strategy you want to peruse yet?

    2Reply
  • Nate Baum
    OP
    CA · Member since 2017 · 18 posts · 4 votes
    8y
    Thanks, Mike! The goal is to get the first one in a B area, not a ton of rehab and use a 30yr/25% down mortgage, that will allow us to have a solid base and get our feet wet, hire a property manager, handymen, contractors, lawyer, accountant... Once we get a handle on that it should be easier to pursue a BRRR or SFR. The issue is how we make sure we pick the right one, and make sure we are looking it the right city since we are not limited to one location. Do you invest in the Bay Area or long distance?
    0Reply
  • George Blower
    Retirement Accounts Attorney · Southfield, MI · Member since 2017 · 3k+ posts · 1k+ votes
    8y

    @Nate Baum

    Welcome to Bigger Pockets.

    1Reply
  • Larry Fried
    Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
    8y

    I got started in my OOS investing with a turnkey company in FL in 2012 that everything under one roof, and they made it easy for me - a busy publisher/editor at the time.  Turnkey is how a lot of OOS investors get started and get past analysis paralysis.  

    2Reply
  • Sam Josh
    Sunnyvale , CA · Member since 2017 · 373 posts · 362 votes
    8y
    Welcome to BP. I have a finance background myself and have worked in ibanking in the past and now in tech for the last many years. Trust me your analysis is not a waste of time. But it’s best to start the buying hustle as well. Get out, checkout properties, talk to bankers etc. The analysis will help you challenge anyone who is trying to sell you stuff they think they can but stuff you don’t want. The realtors, bankers and others I have worked with in the past have only appreciated the informed and researched perspectives I have brought to the table as we have done deals.
    2Reply
  • Nate Baum
    OP
    CA · Member since 2017 · 18 posts · 4 votes
    8y

    Thanks, @Larry Fried ! Love the Do Good Investing mission! 

    After your first experience with the Turnkey company did you start doing deals on your own?
    How did you find which city to target and then contact a TK in that local?

    The goal is to learn as much as possible for the first few purchases and gain the practical know-how to build wealth. I actually have the time to spend on finding deals and am worried that turnkey could slow that process of success and even lesson filled failure. 

    Thanks,

    Nate

    0Reply
  • Nate Baum
    OP
    CA · Member since 2017 · 18 posts · 4 votes
    8y

    Thanks, @Sam Josh ! 

    I appreciate that, the financial analysis part was really fun but with so many indicators and no real focus on one location it was a bit overwhelming. 

    How did you find your first property?

    I see that you are in Sunnyvale, CA. Are you investing in CA or Out of the state?

    How are you liking ibanking to tech transition? (I will never go back)

    0Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    8y
    Nate Baum first off congrats on getting the right idea of growing rich slowly. That’s the right mentality. Secondly have others been scared of doing out of state to start? Hell yeah. Having been there myself I can attest to this. I got through it just by pushing through. I think Cincinnati or Pittsburgh would be good markets. Remember while the market is important you also need a good team. If you can’t find a good team in those markets it won’t matter what the data says.
    2Reply
  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    8y
    Originally posted by @Nate Baum:

    Hello BP community!

    I was unable to find a good 1-800 number for analysis paralysis, so I figured this would be a great place to start. Thank you for building such an amazing place with a treasure trove of information, podcasts, fascinating books by David Greene, Brandon Turner, Anson Young and data... data.... data.... o man, there we go again.

    My wife and I are new to the world of real estate investing. For the last 7 months, we have been getting ready to get off the sidelines and invest for our future. We moved to Mountain View, CA from Charlotte, NC about a year ago, I am a financial analyst and she is an analyst in the field supply chain management. We were both unemployed before the move, living off of savings and are truly blessed to have amazing jobs in the Bay Area while saving close to 70% of our income. 

    Our goal is to invest out of state in one or two Duplex/Tri/Quad "Mom and Pop" houses, get a solid cash flow of around 10-15% and get rich slowly. We built crazy models with censuses, Zillow, labor statistics, crime rate data and have little to show for it other than wasted time. We did Identify Cincinnati & Pittsburg as a possibility along with the usual suspects (Austin, Denver, Phoenix...) 

    This out of state is a little nerve wrecking and I am wondering if there are others out there that had the same reservations/fears before they invested far far away from home.

    How did you determine the best location to peruse?  

    Is now a good time to get in or does it make more sense to wait?

    What was the "Aha!" moment that pushed you over the edge to take that first step?

    What do you wish you knew back then that would have helped things go more smoothly?

    Is there an active community in the Bay Area with meet-ups?

    Thanks,

    Nate

     Hi Nate, 

    Investing is challenging but the first thing to consider is the team: lender, agent, property manager, attorney etc... Build a local team that is familiar not only with the area but also with the type of property you are purchasing - location, unit count/mix, rents etc...These folks will be your boots on the ground. If you can come to the city to visit that helps but often, as a majority of properties are "curb offers only", buyers will come out for inspections after the offer is made and then go home and complete the rest of deal form there. It's critical as an out of state investor to build a team that you trust to advise you. Good luck with everything!

    [email protected]786-494-6766
    Section 8 Launch52 Reviews
    WebsiteView Page
    1Reply
  • Larry Fried
    Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
    8y
    Originally posted by @Nate Baum:

    Thanks, @Larry Fried ! Love the Do Good Investing mission! 

    After your first experience with the Turnkey company did you start doing deals on your own?
    How did you find which city to target and then contact a TK in that local?

    The goal is to learn as much as possible for the first few purchases and gain the practical know-how to build wealth. I actually have the time to spend on finding deals and am worried that turnkey could slow that process of success and even lesson filled failure. 

    Thanks,

    Nate

     Not right away.  Started looking for turnkey in other markets, later got into flips and BRRRRs, and syndications (as passive investor) as well.  I like the most passive stuff best.

    1Reply
  • Nate Baum
    OP
    CA · Member since 2017 · 18 posts · 4 votes
    8y

    Thanks, @Caleb Heimsoth! 

    Haha, I appreciate that. Do you invest in NC or all across the country? We almost purchased a house in Charlotte and the market was crazy high. Have you been able to find good deals in the research triangle area?

    Thanks for the reaffirmation on the team part, I am still trying to figure out the best place to focus on. I would hate to waste someones time and switch cities with the potential of burning a bridge.

    Nate

    0Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    8y

    @Nate Baum I haven’t bought anything locally and really don’t plan to for a while.  It’s so overpriced.  Typical deal is basically the .7-.8 percent type rule.  

    I’m not tied to this area and I may end up moving again down the road (I moved twice last year), so I really don’t want to be buying in all these different markets.  

    If I ended up staying here I would eventually buy a primary as I do enjoy it here just want to stay longer before I do that.

    1Reply
  • Nate Baum
    OP
    CA · Member since 2017 · 18 posts · 4 votes
    8y

    Thanks, @Robert Ellis ! when you say "Curb Offers Only" is that because some places are inhabited by current tenants? Or something else?

    I see you are an agent, so on the flip side, do you have advice new investors as they build a team. Like things to avoid doing that would push you away from working with them? Does that question make sense?

    Lastly, have you recently compared investments in Columbus to Cincinnati? I see a lot of affordable multi-families in Cincinnati and slightly less in Columbus. Should I open my search to include Columbus? 

    Best, 

    Nate 

    0Reply
  • Art Mimnaugh
    San Ramon, CA · Member since 2017 · 78 posts · 97 votes
    8y

    @Nate Baum happy to grab a coffee as share some experience as a fellow Bay Area investor if interested.   Have used @Robert Ellis on a number of deals and have been happy with him as a key part of our team there.

    The key thing I have found with working with a team is clearly state your requirements and be willing to pull trigger and follow through when You find them assuming the number work.   The biggest thing to chase away good people on your team is not to make decisions or never be willing to pull trigger.   First deal is normally not the best financial deal but it is almost certainly the deal you learn the most on.

    1Reply
  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    8y
    Originally posted by @Art Mimnaugh:

    @Nate Baum happy to grab a coffee as share some experience as a fellow Bay Area investor if interested.   Have used @Robert Ellis on a number of deals and have been happy with him as a key part of our team there.

    The key thing I have found with working with a team is clearly state your requirements and be willing to pull trigger and follow through when You find them assuming the number work.   The biggest thing to chase away good people on your team is not to make decisions or never be willing to pull trigger.   First deal is normally not the best financial deal but it is almost certainly the deal you learn the most on.

     Art - you're a rock star! 

    [email protected]786-494-6766
    Section 8 Launch52 Reviews
    WebsiteView Page
    0Reply
  • Nate Baum
    OP
    CA · Member since 2017 · 18 posts · 4 votes
    8y

    Thank you for the advice @Art Mimnaugh ! I will PM you directly.

    0Reply
  • Nate Baum
    OP
    CA · Member since 2017 · 18 posts · 4 votes
    8y

    Thanks again @Larry Fried , do you mind sharing tips on finding a good turnkey company? From my research, I have heard some good and bad things. Do you happen to have a recommendation? 

    0Reply
  • Larry Fried
    Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
    8y
    Originally posted by @Nate Baum:

    Thanks again @Larry Fried , do you mind sharing tips on finding a good turnkey company? From my research, I have heard some good and bad things. Do you happen to have a recommendation? 

    Nate, feel free to PM me and we will talk there.

    1Reply
  • Account Closed
    Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
    8y
    Originally posted by @Nate Baum:

    Hello BP community!

    I was unable to find a good 1-800 number for analysis paralysis, so I figured this would be a great place to start. Thank you for building such an amazing place with a treasure trove of information, podcasts, fascinating books by David Greene, Brandon Turner, Anson Young and data... data.... data.... o man, there we go again.

    My wife and I are new to the world of real estate investing. For the last 7 months, we have been getting ready to get off the sidelines and invest for our future. We moved to Mountain View, CA from Charlotte, NC about a year ago, I am a financial analyst and she is an analyst in the field supply chain management. We were both unemployed before the move, living off of savings and are truly blessed to have amazing jobs in the Bay Area while saving close to 70% of our income. 

    Wow. How do you manage to live in Mountain View and save 70% of your income unless your income is $1M?!!

    0Reply
  • Nate Baum
    OP
    CA · Member since 2017 · 18 posts · 4 votes
    8y

    @Account Closed dual income, no kids (DINKs) for now :)

    0Reply
  • Johnson H.Pro Member
    Investor · San Francisco, CA · Member since 2010 · 910 posts · 889 votes
    8y

    Hi Nate, welcome to BP. When I first started investing in 2010, I was also a keyboard warrior looking at a few cities before selecting Phoenix. From there I flew out there three times, found the right agent to work with beforehand and we drove from one end to the metro to the other looking at properties I found online. Every trip my search parameters narrowed and I started to figure out which areas and types of houses I liked and wanted to invest in. After the third trip I had two offers accepted and I closed on two properties in the same month. After that I was able to make offers regularly and comfortably. 

    For me to get comfortable with investing out of state, I had to see the area, street and property with my own eyes before buying something so expensive. Would you buy a used car without seeing it in person and test driving it? I couldn't! How do you really know an area is a B vs C area? I would see with my own eyes kids playing in the street, guys loitering at the 4plex next door, or hear a loud dog barking at a neighbors house. The internet can't tell you that. Driving around I could tell right away if the vibe of the area was right for me or not.

    Also, leverage is a double edge sword. It's great if you buy a $100k house, put 20% down and the market goes up 10% you made 50% more money on your down. However on the flip side, if you have a bad tenant and found out the location is not as great as you thought and wanted to sell at the same price you bought it for, with seller commissions, closing costs and rehab to sell, it could easily be 10% of the purchase price meaning you just lost half your money. I am a big believer in "making money when you buy" so make sure you buy right so that you have the peace of mind to sleep well at night.

    I just sold my last rental in Phoenix last month. What was my biggest regret now looking back eight years ago? I should have never left the Bay Area and invested in my own back yard. Come by my meetup tomorrow night in Milpitas if you would like to chat more. Good luck with your investing!

    3Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    8y
    Originally posted by @Nate Baum:

    Hello BP community!

    I was unable to find a good 1-800 number for analysis paralysis, so I figured this would be a great place to start. Thank you for building such an amazing place with a treasure trove of information, podcasts, fascinating books by David Greene, Brandon Turner, Anson Young and data... data.... data.... o man, there we go again.

    My wife and I are new to the world of real estate investing. For the last 7 months, we have been getting ready to get off the sidelines and invest for our future. We moved to Mountain View, CA from Charlotte, NC about a year ago, I am a financial analyst and she is an analyst in the field supply chain management. We were both unemployed before the move, living off of savings and are truly blessed to have amazing jobs in the Bay Area while saving close to 70% of our income. 

    Our goal is to invest out of state in one or two Duplex/Tri/Quad "Mom and Pop" houses, get a solid cash flow of around 10-15% and get rich slowly. We built crazy models with censuses, Zillow, labor statistics, crime rate data and have little to show for it other than wasted time. We did Identify Cincinnati & Pittsburg as a possibility along with the usual suspects (Austin, Denver, Phoenix...) 

    This out of state is a little nerve wrecking and I am wondering if there are others out there that had the same reservations/fears before they invested far far away from home.

    How did you determine the best location to peruse?  

    Is now a good time to get in or does it make more sense to wait?

    What was the "Aha!" moment that pushed you over the edge to take that first step?

    What do you wish you knew back then that would have helped things go more smoothly?

    Is there an active community in the Bay Area with meet-ups?

    Thanks,

    Nate

    Note that there is no specific answer to the best location. If it was the best everyone would invest there. Prices would change & it'd no longer be the best. As for aha moment, I don't think you'll get one of those either. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

    • Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
    • Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
    • Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
    • Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
    • Make sure your property manager is a licensed real estate brokerage.
    • Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.
    1Reply
  • Mike V.
    Rental Property Investor · Campbell, CA · Member since 2017 · 419 posts · 499 votes
    8y

    @Nate Baum, I found my niche market in Hawaii with STRs and that’s where my properties are. I’ve done very well, am closing on my next one Monday. The wife and I will be on a plane for a last minute getaway to enjoy the place Tuesday for a week before my first guests arrive.. can’t complain visiting Hawaii regularly with it all being a write off. 

    If you’re interested in Hawaii send me a PM and we can chat.  Otherwise i’ll defer to these other guys who know other markets much better than I. 

    1Reply
  • Nate Baum
    OP
    CA · Member since 2017 · 18 posts · 4 votes
    8y

    @Johnson H. , thank you so much for sharing your personal Journey and experience. 
    What was the thought process that lead you to Pheonix? In hindsight it's a great move, but did you have some theories that panned out? I am going to Fresno this weekend to see what the market down there looks like. Are there any tips or things you look for? Do you go into local restaurants and ask about the area?

    I am really sorry my wife and I missed the meetup, thank you so much for the kind invite. We already had other plans that night but I would love to meet you next time and go more in depth about my questions above.

    0Reply
  • Nate Baum
    OP
    CA · Member since 2017 · 18 posts · 4 votes
    8y

    @James Wise , thank you so much for responding to my post, I am overwhelmed by how supportive this community is.

    Its sounds a lot like the "buy on the rumor, sell on the news" stock picking tip. I guess if the perfect market depends on too many factors to be easy to find and it probably varies on sophistication and risk tolerance. 

    Thank you for the tips! We were a signature away from buying an SFR for ourselves in Charlotte and it fell through since the seller refused to address foundation issues in the structural engineer's report. So I am familiar with a lot of the steps. I did want to follow-up on a few points you made if you don't mind.

    You mentioned that I should make sure my PM is a licensed real estate broker. I have not heard that before. Do you mind elaborating why?

    We were considering a Multi-family but they are usually in C/C+ areas. Do you steer clear of those or do you just look for the rare ones that are in the B class area?

    Thanks again King James! 

    0Reply
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