All Forum Posts by: Aaron Mazzrillo

Did you convert a closet into a bathroom? That toilet is pretty far into that doorway...

 Holy $(#&*$(*%!!! You're intending to pay this dude $250K!!!! I literally put my face in my hands and shook my head before I typed this second sentence. And now I have to do it again...

 Great story. Would love to read all the fine print. I'm sure the "someone you know" wasn't a regular Joe with a 9-5 job schlepping his way through life hustling to get his first deal and 10 years later owns 1000 units. Hey, maybe he was a regular Joe. So, name another person that did it...

I can name more than 5 people with an 8 figure net worth all who bought their first investment houses in California in 2009. All are still buying today and none of them are running around like chicken little screaming "2018 is going to be the next crash!!"

Call Anchor Loans. 

Shane Lex

Anchor Loans

If you're broke and scared and like to make business decisions based on your emotions and fears then you should certainly look to out of state junk, because that is not investing. That's parking money. Nothing will make you feel good about the direction of your finances than dealing with a tenant who is interested in renting a house that retails for $80K right? Maybe you can get together and do some clothes shopping at Kmart then go out for steak sandwiches at McDonald's? Well, if they're renting an $80K house their budget is probably closer to hotdogs at the gas station. Mmmm!

BUT, If you have access to capital, financial staying power and know how to manipulate financing, CA is the place to be. Buy a few, sell some off and keep one every now and then. I'll take a $25K, $35K, $40K+ retail flip check over the pathetic excuse for cash flow you'll get out of that impoverished $80K out of state shanty. Collect a few of those checks and pump them into one nice local rental. Do that a few times and suddenly you're sitting on a million in equity and a couple thousand a month in real cash flow. Then do it for 15+ years and see where you end up. Or you can go get that crappy, non-appreciating house and enjoy your $100/door. 

I went out to eat the other night at Stone Creek Bistro up near Lake Arrowhead. The bill was $130. Dealing with that out of state house for a month wouldn't even cover my dinner tab. Why would you want to deal with something for 30 days that won't even buy you one nice dinner once a month?

All this talk of downturns and crashes is based on people with short term investing experience who think what happened 10 years ago is a normal market and somehow only applied to California. If that global meltdown didn't affect their market,most likely it's because their real estate prices never go up by more than pocket change every year anyway. Seriously though, even if you see 10% appreciation on your $80,000 house, what do you do with $8,000? That's not even worth cashing out. 

A once in a lifetime opportunity happens once in a lifetime and you won't see those prices in this state again unless something so out of the ordinary happens it will certainly affect prices every where else as well.

Only difference between $100,000 and $1,000,000 is one zero. Don't be scared by a zero.

Why the weird interest rate? Your payment will be $1,694.27/month. That should give you a pretty decent return on your $45K down. I don't understand how all 3 properties can be rented and half of them are HUD. Seems like there are some basic math challenges.

Because you're getting seller financing, I'd be more concerned with why you are getting it as a new investor. Are you doing property inspections with a licensed inspector? There may be some surprises you have not been told about. I recently closed a seller financed transaction with very similar numbers to your deal; 3 properties, $275K price, $45K down, but I got the seller to take $1,000/month with no interest. The properties are in need of repairs, but they are rented and once the repairs are done, I should be able to raise the rents closer to what your seller claims he is getting. 

Also, I'm not sure why you state it is obvious he does not play when it comes to business. We don't know this clown and you probably don't either. The one thing I have learned is that sellers are story tellers. If he's offering the seller financing, there is a reason and you should dig to uncover what that reason is or you may be getting taken for a ride. 

When you sit down at the card table, if you can't figure out who the patsy is, get up and walk away.

 Arrogance is making exaggerated claims about one's own importance or abilities. I've done neither. My comments are based on facts. You made a ridiculous claim that CA real estate is poised to drop 50%. And that is a statement based on nothing. Absolutely zero data. You literally just reached your arm up your rear, sliding it by your head, and dragged it out. And for what purpose? To make it sound risky to invest in housing in the 6th largest economy in the world? The only other state that even makes the top 10 is Texas, where I also own real estate. Unfortunately, their property taxes are so expensive I'm getting out of that market and moving the money back here where we have Prop 13, which keeps our property taxes absurdly low. Which in turn fuels the outrageously high prices.

I got zero interest seller financing on the deal. I thought about selling them to another investor and carrying back the paper on a wrap charging interest only with a hefty prepay penalty. If I sold the properties for what I paid for them and asked for $50K down, then carried the balance at 10% interest only, I'd get a very nice income stream while getting 100% amortization on the underlying seller carry back. 

Most likely I'll just fix them up and raise their rents.

 If someone lives here in California and is thinking of buying out east based solely on price or bubble fears, compared to Southern California, all real estate in the Midwest is D class assets. You'll work a lot harder turning your $20K into 7 figures out there than you will here. 

And 7 figures isn't anything to brag about. Well, maybe where houses sell for 5 figures it is. That's ghetto rich. A million dollar net worth puts you in the middle class at best. How many typical rentals do you have to buy and manage to get to $1m? Ten? Fifteen? I can do it right in my backyard with 2-3  typical, crappy, 1950 stucco boxes.

A wise real estate investor once told me (paraphrasing), "Make offers on cheap houses, buy cheap houses. Make offers on expensive houses, buy expensive houses." Work hard or work smart.

And if you think California real estate will ever be worth half of what it is today based on a one time event during a global depression that saw entire countries go bankrupt, you're view of history is very limited. Even if our real estate did drop 50%, it would still be worth 25% more than the crap between the Rockies and the Appalachians. Also, rents wouldn't suddenly drop 50% so it would make even more sense to stay and play locally. But of course, if all our real estate goes down, so does everyone else's because the California economy is the coal that fuels this entire country.

I just bought a few houses off a guy who rented only to illegal aliens. The bedroom in one house had no windows. As in, there are openings where windows were at one time, but now they are just holes covered with whatever the guy could find. The sewer line is clogged so he gave them an electric snake and let them deal with it themselves. All the lights in 2 of the houses have no covers so there are naked bulbs hanging from the ceiling. Lots of cockroaches, broken outlets, etc. One house had no medicine cabinet or mirror in the bathroom. Just a hole in the wall where the cabinet frame is. Another has no tile around the shower valves. It is a hole above the tub and the old galvanized pipes are sticking out. I could go on and on. 

I guess he figured if they were illegal aliens they wouldn't complain, and I guess he was/is right because they definitely weren't happy, but they weren't complaining.