All Forum Posts by: Shari Posey

Look at the number of delinquencies. If many of the owners aren't paying #1 it will be hard to get a loan and #2 the owners who are paying will end up paying more to cover the loses.

Look at expenses vs. income. Sometimes there's no money left for reserves. And check what the expenses are? I've seen some really out of wack expenses for salaries of staff, earthquake insurance, etc.

Look at the reserves. I have never seen any HOAs that have enough reserves but you want a fair amount. It really depends on the complex (age, amenities like pools, elevators, gym, condition of building, etc.) I would be prepared to have a few thousand set aside for assessments just in case--like an emergency fund. (One seller of mine had a $20k assessment and it had to be paid in full in 6 months! Everyone was pissed but the dues had been below average for 2 decades so really no one should have been surprised.)

Read the minutes and see what the owners and board members have been talking about. Sometimes they mention assessments months before they vote on them. They also talk about major problems like roof leaks, plumbing, etc. so you can get a feel for what is wrong.

I've never seen a contractor's home that looked good. I mean that! They always have a dozen half-done projects because they are always working on other people's homes to get income. Maybe you are different.

I don't see anything wrong with what you are doing but I'm not sure I'd exactly call it "investing." My husband and I have done this BUT when you exit by selling, you will be in the market again to buy and if it went up enough for you to make a tidy profit on the sale, you'll be paying more for the next house. It ended up as kind of a wash but we enjoyed living in the houses.

If you rent it out and have upgraded it really nice make sure you get a good security deposit. Hardly any tenant will keep it as nice as you do. Also, a pool is a liability for a rental.

I like condos only because the cost of entry is lower so I can own more of them compared to single family homes. For example, in my area, I can buy two condos that rent for $1300 per month compared to one SFR that rents for $1800-2000. Check out the association, like others have said. Also, just because an association has low dues doesn't mean it's better; it could mean you will have a special assessment in the future because they don't have enough money. Look at the HOA financials carefully.

I think it might depend on where you are investing. Where I am, apartments and condos are very common near the beach and downtown, and single family homes are more suburban.

Here are a couple basic questions to finance an owner-occupied 14-unit apartment complex priced at $3m...
What is the min. down payment required?
Is there such a thing as "stated-income" for a commercial loan?
(Seller financing is not an option.)

Joe--I've been looking in Vegas for a couple of months. I love Vegas but no luck. Most times the rents just don't warrant the prices.

Will--I've heard that said on this forum and I've talked to a couple of people but the point of entry $100k+ to be in a pool of investors and they were offering returns less than 10%. "Simply" buying notes at 12% with low to zero risk? So far, it has not seemed that easy to me. I may have blinders on but it seems riskier than buying a property and managing it myself.

That said, I have tried to think of notes as similar to stock. Someone else is running the company but I trust it enough to invest in it. I only invest in blue chip stocks with dividends so it's pretty low risk.

Thanks for all the great info people!

It's not that I'm lazy but I want to find a property, do minor rehab and get a long-term tenant. Maybe I been too lucky on the couple of rentals I already own. Maybe it's typically harder. I know this time around I've already been looking since May and I don't think I've missed anything--I haven't seen anything I wanted for the price it ended up selling for.

I'm going to look into it more and the insight here has been extremely helpful.

Marc Bodinger--southern California is booming! It has been almost all year. I was hoping it would slow during the holidays but it hasn't. I've also been looking at Las Vegas and that is booming too.

@Jon--So are you buying land that has a mobile home on it? I didn't think about that as an option. Must be pretty rural locations.
@Will--I've been looking for long-term rentals. I have a few rentals now and I can pick good tenants (knock on wood). No real problems so far.
I have thought about notes but I don't know much about it, and more importantly, where to find them.

Overall I'm a little burned out by submitting a zillion offers and I'm not willing to pay short sellers under the table, etc. to get my offer accepted. I guess I'm looking for a niche that's not so crowded.

I started to look for SFRs but kept getting outbid, then went to condos thinking they are less popular but I still keep getting outbid. The prices just don't make sense, so I'm looking for other options.

I'm thinking about mobile homes and have started doing some research. I have a mental problem with them but I think I can get over that if the numbers make sense. I'm hoping it won't be so competitive in the MH arena. I want to buy within 4 hours of LA, I've only got $80k to invest with and I want to generate at least $1000/mo cash flow. In my local area, the space fees are really high so I think I'll have to go out to a more rural location.

Any thoughts or advice??