All Forum Posts by: Abhay K.

good to hear of these rare gems in bay area. We looked around in bay area for multi family units and found 2-4% cap (optimistic seller data) and decided to wait. Some agents  had informed us it is better at 1m+, but LOL not true in bay area. So anyone with good knowledge of these areas east oakland, richmond, east palo alto will hit such awesome cap rates. Most other bay area investors are betting on appreciation. so far they have been right (last 40years).

congratulations.

You need to find a deal that returns higher than your steep 9% borrowing rate. 

Better alternative is to qualify for conventional mortgages. Are you able to get conventional of FHA financing? 4-5% rate and 20% or 5% down for FHA.

run all numbers and make sure there is good return on money invested. leverage cuts bothways so be careful in your calculations.

I went the traditional route. Got a local realtor, searched and bid on 10s of homes for 9 months and then we found a short sale on MLS where buyer walked-out so we stepped in and closed in Jan.

I followed a friend's example and bought SFH rental in Stockton after a 9 month search. Since my interest is in cash flow, 6-7% cap rate was my guide. That was the easy part. Just identify your targets and be prepared to evaluate 100 properties before you find 10 you bid on, to get one accepted bid. It is a game of patience and discipline.

Most inland cities are good cash flow targets. Just jump in!

Buy in a good location and it should do well. I bought a SFH in Jan with good cash flow . This year price appreciation was huge 25-30% (basically all my down payment!). I would not count on continued appreciation, but 6% cap rate for SFH and 7-8% for duplex is possible on 25-30 yr. old houses.

Check if your DTI is accurate. Are you including debt of cash flowing properties in your debt ? Most lenders will count 75%of 2yr net cash flow as income (and no debt). Some lenders relax 2y net cash flow rule too (personal recent experience)! Talk to many lenders.

Talk to your mortgage consultant at a local bank in person and ask for getting mortgage approval letter (this is better than prequalification/preapproval. They check credit, w2s rental income data and pass them on to underwriters conditional approval letter that spells out what is needed to close).

welcome to BP. Share your experience here. Hi from fellow county-man.

@Sam,

Welcome from another bay area resident. I am a weekend investor holding a full time job too. I'd recommend listening to BP podcasts, keep keyword alerts, search Forums to get started.

For wholesalers, single best advice is to learn what real estate investors want and learn to calculate cap rates, rehab costs, ARV like they would.

Search for -- 70% rule, 1% rule, ARV, cap rate, double closing in Forums to get started.

Abhay

@Jack Bobeck Yes, I am also wondering if I should just jump in. Do you use foreclosureradar, titlesearch.com or other online tools now ?

I am considering my first foreclosure auction purchase in san joaquin co. California in 100-200k range. After going through excellent compilation of past forum posts here, I have decided to restrict my attention to trustee sale with clear warranty deeds.

Here is my problem.

Title search+lein search cost about $99 per search at some online sites and they require 2-3 day. Can I trust them to be complete?

Many auctions are routinely cancelled or postponed. So even if I choose to evaluate a few of these a week, I could easily spend 1000s before I win a bid.

If you do due diligence yourself,what is the complete list of checks?

1. Title: At County recorders office search for senior deeds without matching reconveyence. Ensures this is first lien, also ensures owner has clear title. Check for any other recorded document for owner.

Where do you do search for liens that are not recorded ?

2. Search for IRS liens, state and local Gov. Liens? By calling IRS/state/city??

3. Search for any HOA lawsuits/liens ??how call hoa ?

4. Search for any mechanic's lien?? How?

Did I miss anything ?

How did you do the lein and title search when you bought your first foreclosure ?