All Forum Posts by: Becca F.

@Brice Perry

I did a cash out refi of a California rental property around Thanksgiving, conventional 30 year fixed, 6.5% (0.27% points). It was initially 6.75% but the lender had to adjust it so the monthly payment was a little lower, since my DTI ratio was getting up there, at 50% and they had to get it under 50%. I cashed out about 25% of the equity. They let me count the rental income even though the lease only started a few weeks before I applied for the loan. I worked with a mortgage broker. I talked to 5 lenders and received loan estimates from all of them - some of them were really terrible, one tried to charge me $23,000 worth of points to get the rate down to 5.625% on an investment property. I'm taking some of the money to finish renovations (landscaping) and the rest to put down on a future rental.

@Garrett Ayers

I did a refinance on a paid off California property to do renovations and have some extra cash left for a downpayment on a future rental. I'm not a big fan of HELOCs but I can see how some people like them, can draw money as needed. 

I'm not sure what your goals are but I'm buying out-of-state, mostly looking at SFH or duplexes (very few of these) in the Midwest and Tennessee. Florida Panhandle area is a possibility. The Midwest price points are much lower out-of-state and I can cash flow immediately. I'm looking at SFH from $120,000 to $230,000 (this being on the high side) that are ready to move in. I could buy 2 to 3 houses for the same price as buying one SFH out in the Central Valley with negative cash flow for now (vs. the Bay Area where I am).

If I go with a turnkey company, a tenant would be in place. If I buy something that needs work, I could find something for under $100,000. The one thing about California is historically it's appreciated a lot over the years so there are some investors still buying here. I have a SFH in Indiana. It went up significantly in value, about 70% from 2013 to 2019/2020 but percentage wise I think that's still lower than a Bay Area property in 6 to 7 years time. I'm trying to find that balance of cash flow and appreciation. Good luck!

@Clinton Bolton

I'm a beginning investor (3 properties) and reached that analysis paralysis stage of where should I buy and what (turnkey or a property that needs work). I attended one of Kris' free webinars and even got on a call with one of his reps. It's exactly how you described. The course/mentorship programs range from $18,000 to $35,000. They push heavily that buying with properties through them get you a 25% Return On Investment and on some of their properties they can get 34% ROI and that most people get 9 to 12% ROI investing on their own. The guy said to hold onto a rental for 3 to 5 years then if the ROI decreases they sell it and find a new market. This is when you split the profits 50/50 with Kris. That did not sit well with me at all, I'm putting 100% of my money into the purchase and I thought with rentals you hold onto a property longer than 3 to 5 years.

And I would also get access to their team of financial experts on how to build additional income streams such as franchising. The rep also pushed that anyone in the program would be invited to Kris' personal residence in Utah and talk to him in person in a real estate meet up. Very gimmicky. I told him $18,000 is a lot of money then he brings up the $10,000 mentorship program where I could buy one property with them. After listening to him talk for close to 45 minutes, I finally said that if I have an extra $18,000 to $35,000 wouldn't I just invest that in my own property and get all of the rental income and if I sold the property 100% of the proceeds, not 50% of it. 

As the others have commented, I would look into a U.S. real estate syndication. Good luck.

@Clinton Bolton

I'm a beginning investor (3 properties) and reached that analysis paralysis stage of where should I buy and what (turnkey or a property that needs work). I attended one of Kris' free webinars and even got on a call with one of his reps. It's exactly how you described. The course/mentorship programs range from $18,000 to $35,000. They push heavily that buying with properties through them get you a 25% Return On Investment and on some of their properties they can get 34% ROI and that most people get 9 to 12% ROI investing on their own. The guy said to hold onto a rental for 3 to 5 years then if the ROI decreases they sell it and find a new market. This is when you split the profits 50/50 with Kris. That did not sit well with me at all, I'm putting 100% of my money into the purchase and I thought with rentals you hold onto a property longer than 3 to 5 years.

And I would also get access to their team of financial experts on how to build additional income streams such as franchising. The rep also pushed that anyone in the program would be invited to Kris' personal residence in Utah and talk to him in person in a real estate meet up. Very gimmicky. I told him $18,000 is a lot of money then he brings up the $10,000 mentorship program where I could buy one property with them. After listening to him talk for close to 45 minutes, I finally said that if I have an extra $18,000 to $35,000 wouldn't I just invest that in my own property and get all of the rental income and if I sold the property 100% of the proceeds, not 50% of it. 

As the others have commented, I would look into a U.S. real estate syndication. Good luck.

@Briana Martin

I'm in the Bay Area. I think the Midwest is great for investing. The appreciation is slower than California but the price points are easier to get started in. I started out by renting out my Indiana SFH when I moved to California. I bought the house for just under $140,000 in 2013 (house was built in 2005). No renovations needed but I did put in a new HVAC and water heater about 2 years before I moved. It appraised at $247,000 in 2021 when I did a cash out refinance. To compare, a Bay Area house appreciated much more in 8 years especially with crazy sellers market. My cash flow is reduced since my property taxes increased (the county figured out I was renting it out and not living in it) but I'm keeping the house since I can't buy a house in a nice suburb surrounded by larger more expensive homes with a good school district for $140,000 anywhere in the Midwest now. I think it's important to look at other metrics besides immediate cash flow, which is a bit tough with higher prices and interest rates nationwide. Property management fees are usually 10% in Indiana (what I pay my PM) - I would not self manage an out of state rental.

I'm also looking at turnkey or buying a property that needs work. I just did a renovation here in California so the thought of doing another renovation out of state isn't appealing to me but a realtor told me that I would get the equity if I did a BRRRR instead of buying turnkey, where the turnkey company earns the equity. I've talked to a turnkey company that has rentals in Ohio and Michigan - she said the Detroit area (outside of downtown) is coming back but I probably wouldn't buy there. I'm taking my time to run the numbers - the strong contenders are Ohio (Cincinnati, Cleveland, Columbus), Indianapolis (I know the area well since I lived in that area), and Memphis. Sorry for the rambling but that was my 2 cents. Feel free to DM me.

@Edwin Lopez

I bought a condo as a primary residence with the intention of living in it for about 4 to 5 years then renting it out. It was in a good location for commuters, close to shops and restaurants and great walk score. This was going to be my method of acquiring more property in California. I just sold less it than 6 months ago. The HOA fee went up 3 times in the 2.5 years I lived there on top of special assessment to repair an old elevator (not replace it with a new elevator which probably would have cost more). I went to most of the HOA board meetings. There were constant complaints about how our HOA dues were going up and where the money was going along with security concerns with mail and package theft. I think residents were stealing other residents' packages or allowing their thief friends in the building.

I'm taking the little proceeds I got from the sale (almost like did a really bad flip that lasted 2 years since I did renovate the kitchen) and buying SFH or duplex in the Midwest for a future rental. I also feel that SFHs hold their value the most - I had realtors, wholesalers and investors calling/texting me constantly over the past 3 years asking to buy my SFHs in the Midwest and in California. No one had offers lined up asking to buy my condo. Good luck with your next purchase! And Happy New Year!

@Brandon Carlson

I'm looking in Ohio (Cincinnati, Cleveland) and Indiana. I know the Indianapolis metro area pretty well - I have a SFH rental there. I've heard good things about Kansas City, Missouri and the turnkey company I talked with said the Detroit area (outside downtown) is coming back. I'm not sure if I'd buy in Detroit. Memphis is also possibility.

The multiple replies within a thread was giving me a headache lol

Lots of great comments here. I like buy and hold but I did see a flip done by a realtor recently here in the Bay Area. He bought it for $600,000, rehabbed it and sold it for $789,000 with multiple offers in September, which was great for him since most sellers aren't getting multiple offers (there are a few exceptions) with the inflated prices of the past 3 years. 

I did a renovation in California recently where I was on site at least once a week, but I got a tenant in, trying to get roommates in to get full market rent. I'm looking at buying turnkey in the Midwest (Ohio and Indiana) or Memphis for $120,000 to $200,000. Michigan is a possibility but I'm apprehensive about the Detroit area (outside of downtown) which is supposedly coming back, at least that's what the turnkey company told me. I know that I would get the equity if I did a BRRRR for under $100,000 but renovation is a pain and trying to do one out of state doesn't sound appealing to me at all. I know the Indianapolis area well since I used to live there so if I did a BRRRR it would mostly like there - I have a property manager, roofing company, painters, etc. I'm in the analysis paralysis stage with turnkey vs. BRRRR.

@Brandon Carlson Did your client buy the condo strictly as an investment property or primary residence and house hacking (i.e. roommate to pay rent)? I just sold a condo in the Bay Area less than 6 months ago. I'm not a fan of condos because of the ever increasing HOA fees and special assessments, which the owner has no control over - my lender even pointed this out when I was selling it and said that buying SFH or multi-family are better investments. I don't know about the LA area but the HOA fees in the Bay Area are high, $400 to $700 a month is common.

I decided to cut my losses and will buy more in the Midwest. I have a SFH there and my property manager does most of the work. There are some markets I could get a turnkey SFH with $30,000 to $35,000 (20% down). If I buy something that needs work, it would less than $100,000 but I would need to pay for rehab but I benefit from the forced appreciation once the renovation is done.

@David S.

Thanks for all the information. That's what I was told about trying to rent out room by room or the downstairs unit (if I were to put in a kitchenette it would function as a studio apartment) with the house being considered a multi-unit. I'm not sure how other landlords rent out their homes as a SFH vs. a multi-unit since so many people have in-law units.

I'll talk to a few property managers and find an experienced PM.