Rental Property Investor · San Francisco, CA · Member since 2013 · 141 posts · 93 votes
Hi guys,
I've been messaging with a couple of local aspiring investors, and we thought it would be fun to do a casual meet up for drinks/dinner and real estate conversation, of course! Monday, 10/14 at 6:30ish, probably around Financial District. I'll update later with a location. I hope some established investors can join us and share their wisdom, but if not, all of us beginners will get to compare notes on our journey into REI!
I took a look at your investment goals. Looks like you and @Johnson H. are drinking the same kool-aid on the Texas market.. No one in here likes the Bay?!?
jk Looking forward to hearing about the Texas story and meeting everyone. See you then!
@Amit M. There's cash flow up here in Richmond, and a lot of the Bay Area's negative perception (what they heard) allows a less competitive market for RE investors (shh don't tell anyone I told you). I live at my 4plex near Richmond Bart Station. Its far better than the 'stories' I had heard (but not nob hill by any means!!) Having said this, I think the most important thing with rentals in this type of neighborhood is you have to have someone you can trust keeping an eye on your properties. I wouldn't want to be a total absentee, out of state landlord, or the situation could deteriorate over time. I love the idea of SF, but when I run the numbers on individual deals, it just ends up being so much capital and carrying it w/o cash flow until everything goes up... Makes it hard for me to accumulate more properties on an ongoing basis (maybe you can show me otherwise!) Send me a message, or come say hi at the meet-up if you're coming!
@Sarah Lam I won't be able to make it either. I have to be in the office for some work till 6 PM and don't think traffic will let me be in the City before 7:30 PM.
Sorry, but me too tired, still have jet lag from trip to the Mediterranean. Next time!
May I also suggest, a location more central to BART, like 16 or 24th street? Lots of cool places to meet there too. Rustic Pizza is right at 24 st BART, for instance. Food for thought (pun intended :)
May I also suggest, a location more central to BART, like 16 or 24th street? Lots of cool places to meet there too. Rustic Pizza is right at 24 st BART, for instance. Food for thought (pun intended :)
I agree. I'll gladly come into the city, when I can take BART, but if it also involves Muni (which I don't quite understand) I usually just avoid going.
This is why I enjoy BP meetups more than any other type of REIA's.
@Sarah Lam - I'd move it closer to BART location. It was a long drive, and at Rogue it's so hard to have just one (Beer)!
@J Martin - You've got some valid points about the 50% rule. But remember it's a filter to the deals that people look at. And it's a general rule of thumb. Obviously in your situation you need a better rule of thumb if you are looking for deals all day long before you actually get down into the actual numbers. What I didn't express to you last night which would be interesting is if we did some sort of survey to see if there is an average Maintenance $/sqft ratio that could be used instead?
@Andy Kaufman - Great to meet you last night. There wasn't enough flow to get around to talking to everyone last night!
@Jessica Yau thanks for being so forthright about your Oakland property. It's great to hear a more evidence to back up California Cash Flow!
@Ralph E. and @Andrew N. - You guys were at the wrong end of the table for me to get a chance to connect with! But I heard some good things about you!
@Bill Bockwoldt It was great to hear about your properties and the success that you are having. I'm glad I wasn't the only one at the table that is fearful of buying properties in California!
Great Meetup! Everyone shared so much and just talked about our experiences. A+
@Sarah Lam I want to thank you again for the invitation to the BP local meetup, it was awesome. To all my new Bay Area investors friends and colleagues I really enjoyed meeting all of you and look forward to all future collaborations.
@Sarah Lam - Thanks again for Organizing this event. Hope to see you next month and hear how your Turn Key search is going.
@Troy Fisher - Hey Troy. Hopefully we get more of a chance to chat next time. I had a great time discussing investments with your partner. I'll keep you two in mind if I find a good rehab deal in the area.
@Andy Kaufman - It was nice talking to you about your co-working space finally and I am eager to hear how far your marketing efforts progress by next month.
@J. Martin - J it was great talking to you about your Richmond Investments. I am definitely interested in the Cash Flow you have been able to find in the Bay Area. I'm really curious what your expense ratio ends up being after a few years of operation.
Ya, thanks again @Sarah Lam for getting everyone organized to come out! I'm always interested in the out of state numbers, but just can't quite get over not knowing someone that is there on the ground.. But a lot of people have been killing it all over the country from out of state! So whatever works! You're so knowledgeable about the market.. the water's warm.. can't wait to hear about your first jump in!
@Andrew N. , it was a pleasure, and I am interested in seeing how it plays out over time. @Troy Fisher , I think you have a great idea about poking around to see what people are using for maintenance per foot. In my mind, this is much more closely associated with maintenance expense, along with construction type/materials, age, deferred maintenance at purchase, and last but not least, THE TENANTS! Of course, utility metering, local factors such as tax rates, vacancy rates will all play a part in the total expenses beyond maintenance. I do sort of indirectly use a simplified ratio analysis when prospecting - mostly on the GRM.
Regarding expenses on my properties, luckily (IMHO) for me, I bought almost everything I have when it was vacant, so I went to town on everything with my handyman so I wouldn't have to deal with it later.. And they're about 30 years old, compared to 100+ in SF, Oakland etc. So having modern electric/plumbing helps a lot. (although it's not a new building of course..) Plus no air-conditioning units or boilers/HVAC to maintain. Mild weather. No freeze. Roofs in good condition except for on one of the SFR's. This has kept my expenses/repairs very low in the beginning - although they will go up on average over time - but they throw off enough cash flow to build big reserve cushions.. and some for me :)
$7K in gross rents and <$4K/mo in PITI @ ~ 10% average downpayment (In the Bay mind you!) So taxes and insurance are taken care of there.. The coin-op laundry pays most of the common utilities on 4plex. SFRs pay their own except garbage. One SFR has handyman tenant (not my handyman), and agreed in lease he takes care of all regular/minor repairs. I PM all my properties, with some help from handyman. Saves a lot. Having said all that, if I just wanted to get my principal paydown as returns, I would have to spend $3K/mo on minor items/expenses and long-term reserves to get to 0 cash flow. Only 3 structures, ~5K sq ft, in good condition. I don't quite see $36K in expenses/yr after PITI.. But we'll see what it plays out to over the next decade.. In low-priced areas, you might have to have 10-15 SFR's and 10-15K+ sq ft to maintain, with more weather-related repairs/heating/cooling.. So I'm sure the expense ratio is a little different.. How much? No clue..
@Jessica Yau , we should all do musical chairs next time so everyone can mingle a little more! I'd love to talk to you about your Oakland property sometime. I was putting in a lot of offers in Oakland before I came up to Richmond, but was having difficulty when I was going for fourplexes with an FHA and not enough excess downpayment at the time to make up any gap in the appraisal.. It was rough.. But this was in 2012 when the market was hothothot there. Oh wait, it still is!!! And not a big fan of rent control, as a longer-term buy/rehab/rent investor!
@Bill Bockwoldt , same deal! I didn't get to talk to you much.. but hopefully at our next meetup in SF, or out in the East Bay!
@Ralph E. , it sounds like you have the experience behind you! Good luck on the next phase!
@Andy Kaufman , it was nice talking to you too, and we're going to get a regular East Bay Meetup going!!
If I missed anyone, I'm sorry! And looking forward to seeing you all and others at an upcoming East Bay meetup too!
@J. Martin I agree with you on the expenses sentiment. For me they are almost an afterthought. I have spent on average $300-400/year on my 4 units. All renovated in last few years, high end tenants, high rents per unit, low tenant turnover. Maintenance is very minor. At some point it'll go up a bit with appliances, roofs, but even then it's will be a small percentage of total rents.
I'll be in acquisition mode early next year. Given a bit of thought to E. Bay, if I can't swing SF anymore. Oakland is interesting, but given how variable it is, I think you need to be "all in" (live there, know your areas street by street) and not just casually dabble there.
Although I haven't been to city of alameda in 20 years (!) this 7 units caught my eyes. Location seems solid, and I like the renovate/rent upside on it. It already got snapped up real fast though. Any comments on this deal: http://www.redfin.com/CA/Alameda/2215-San-Jose-Ave-94501/home/1567022?utm_source=myredfin&utm_medium=email&utm_campaign=instant_listings_update&utm_content=address
Plan to meet up with all you folks next month! Cheers.
@Bill Bockwoldt @Sarah Lam @J Martin @Amit M. @Johnson H.
Hi guys. Sorry I missed it. Sounds like a lot of good discussion was going on. Beers and Real Estate, it doesn't get much better than that!
I went to a couple of SJ Rei meetings recently. They were pretty good. Market update last night shows local market cooling off sharply from spring and summer. Be careful if buying to flip quickly.