All Forum Posts by: Becca F.

@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.

Quote from @Brandon Carlson:

Quote from @Harrison Colunga:

I know in Southern California standards $35k is not a lot and wont get me as far as if I were to start out of state. I would start out of state but I have 0 connections and get analysis paralysis while trying to find a solid market. Especially in this economy I am nervous to start. Any suggestions? 

 @Harrison Colunga It's doable. My client opened escrow on a condo in Upland. His cash to close was under $30k. 

@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. 

@Nathan Gesner

My realtor advised me not to rent out to family and pay a company to move all the previous owners belongings out instead of me sorting it out which takes months and is costing me thousands in rent. I wanted to help out a family member and they would help me out, which I thought would benefit the both of us. This arrangement is now biting me because family and friends will take advantage of landlords. After seeing other people's posts about severely undercharging rent and feeling bad about increasing rent, owning a rental property is a business not a charity. I appreciate your advice. Thank you. 

Quote from @Carlos Ptriawan:

Quote from @Becca F.:

@Bruce Woodruff

@Jay Hinrichs

I owned an Oakland property (a condo) and sold it. My Bay Area investor friends tried to convince me to keep it, you know for that California appreciation. It was in a great location near restaurants, shops, public transportation with great walk score. My method of trying to acquire more rental property in the Bay Area was to buy it as a primary residence live in it for a few years then rent it out. After talking to Oakland landlords who had non-paying renters squat in their properties for months on top of the can't discriminate against people with criminal backgrounds law, I decided to cut my losses. 

You should sell it, bay area cap rate is already hitting a ceiling wall anyway. Slow appreciation is only possible in East Bay after 680 and South Bay, where the madness is not that bad. These are the last area where normalcy still exists.

SF is going into Detroit Tech style.

Sorry for your squatter issue, I had a problem also in some of my rehabs, had to call 911 a few times and kick the squatter really LOL

CA have a law that it's fine now for petty crime and shoplifting is the new normal.

A week ago I saw an almost a dead man falling on the floor of panda express and people just ignore LOL it's total insanity.

I sold the condo. It says that in the first sentence in my post. I didn't have a squatter issue - that was with the other landlords I talked to. 

This is my first time self-managing a property.Market rate rent is about $5400 to $6000 a month on 3 bedroom 2 bath SFH in San Francisco. There's another bathroom downstairs (renovated) and large room downstairs (needs new floor but is painted and has new lights) which has a lot of old things from the previous owner. This downstairs unit could possibly get another $1900 to $2000. There's also a good size backyard for S.F. I'm renting out to a family member and charging $1900 a month rent for 1 bedroom. I had planned to rent out the master bedroom with private bathroom for $2000 a month and the other bedroom for $1900. She just happens to be the only tenant along with her boyfriend for now. My intention was to get roommates for the other 2 bedrooms, preferably her friends or someone who's not a random stranger. So they get the whole house for now for $1900 with brand new everything in kitchen, bathrooms, lights, appliances, etc. She is helping me clean out the stuff downstairs. A regular tenant wouldn't be okay with all the excess stuff so this is why I did this arrangement instead of letting the house sit empty earning $0 rent. This whole process has been stressful while working a full time job.

I know I set a bad precedent by allowing late rent and not enforcing late fees trying to be nice to family. I added an addendum with $100 garage use fee once the garage doors and openers were replaced, which she said she couldn't pay. I'm also currently paying for utilities (electric/gas), water, and trash/recycling. The lease also states that the tenant is supposed to reimburse me for the electric/gas and water bills. I haven't received any reimbursement. The lease started on Sept. 1st. I wrote the lease up using a template a landlord friend sent me. 

She has also vaped in the house in front of me when the lease clearly states no smoking or vaping of any product. I asked her to stop vaping in the house and to go outside. Instead of apologizing and stopping the vaping, her defense was "how do you know if tenant is vaping?" We get into an argument and she said she would move out but it's $2800 to $3200 for a 1 bedroom apartment in San Francisco or they go share a 2 bedroom with friends. If she really pushed the issue she could make me pay a relocation fee (this is a thing in the Bay Area if you're making a tenant move out) but she violated the lease terms and trying to take me to court seems unlikely (not impossible). She also claims that I allowed her to use the other bedroom as an office, which I didn't.

My friend advised me to get a property manager immediately and have a new lease stating that they're renting out 1 bedroom, move their belongings out of the other 2 bedrooms and immediately have the utilities switched in the tenant's name, which she would need to call to start but with this rift, I'm not sure this would happen. Hire someone to haul all the stuff away in the downstairs area instead of sorting through the stuff like I have been. Another landlord friend said that SFH in S.F. aren't under rent control and if there are roommates, the current tenant is the Master Tenant and a lease is drawn up with the roommates not with me the landlord. Other tenants pay the Master Tenant rent then I get the entire rent. If it's consider a multi-unit, I could be subject to rent control, if I rent out the downstairs as a separate unit or the other bedrooms (separate leases with each roommate). Is this correct?

I'm going to look like the bad person if I evict a family member. I'm renting at a loss with just $1900 rent since I took out an equity line to pay for the renovations instead of being cash flow positive. Also does anyone have a property manager they use in S.F.? 

Quote from @Wesley W.:

 You are rationalizing.  Here is a lease provision I use that you might consider adding to your lease to demonstrate to prospective applicants that you mean business.  The "lease violation fee" idea I got from @Nathan Gesner, and the smoke remediation fee from Andrew Schultz, of the RentPrep for Landlords podcast.  As always, check with your local attorney to verify validity.

SMOKING: Smoking is prohibited inside your unit or in any interior common areas. This includes marijuana as well as electronic cigarettes (i.e. “vaping”). Smoking leaves soot and deposits, so an additional cleaning/remediation fee of at least $250.00 per room/area will be charged if we determine that smoking/vaping has occurred. You also agree to pay an additional $200.00 lease violation fee each time we determine, at our sole discretion, that smoking has occurred in your rental unit, due as Additional Rent. Payment of this fee by you does not represent a waiver by us for this breach of the Lease. Any cigarette butts from smoking outside by you or your guests must be picked up and properly disposed of.

This is very helpful. I'm having somewhat similar issues as the OP. I'm renting out a SFH to a family member who has vaped in front of me in the property along with late rent so there are 2 lease violations. Instead of apologizing and saying she won't vape in the house, her defense was "how do you know a tenant is vaping anyway?" I'm self managing this property but should have hired a property manager at the beginning and not rented out to a family member.