All Forum Posts by: Darius Ogloza

@Dana A. I would consider Pinellas, Sarasota and Charlotte counties for a start if you have any interest in Florida's west coast.  Palm Harbor, any of the Beach towns in Pinellas (e.g. St pete's beach, Clearwater, etc), Siesta Key and the shore line down to Boca Grande (including Boca Grande).  The area between Boca Grande and Sarasota is developing like mad.   

@Nicholas Chan Are you sure that the CA property has in fact appreciated to a point that you will experience appreciable capital gain on sale?  Your initial closing costs and sales closing costs + the portion of $100K you put into the property that qualifies as capital expenditures should be deducted against any gain on sale.   

@Carlos Ptriawan is right.  

It sounds like the California SFR is a drag on your cash flow right now that's being generated by the apartment in Washington as a STR (if I am reading your post correctly). I would seriously consider selling the SFR to deleverage at a time like this. Between your side hustle and your STR, it sounds like you will be able to wait this tough period out.

I am fond of Petaluma.  Great little city.  Rents a little low still but development there is quite nice.

If you intend to buy a city condo, now is the time.

I invest only in Sonoma and Marin Counties, SF city and Davis/Yolo County - Peninsula/South Bay is foreign territory to me, sadly.  

@Shulem Deen

I am going to start with the most obvious point: if it were easy to analyze likely ARV and rehab costs, everyone would be doing it! Right?

Like with anyone other business venture, there is a learning curve involved. I have been doing this kind of work off and on for more than 10 years and still "miss" now and then. The only sound advice I can give you is to study your target market like it were your full time job. Get on your computer and analyze every sale and try figure out why similar seeming properties fetched different prices. Attend all of the open houses you can in the area. Why are they selling where they are? Location? Quality of rehab/materials? Access? Etc. In this way, you will come to develop a knack for estimating ARV's.

As to rehab costs, the learning curve is quite long.  You can however get a sense of the cost of materials by scanning various websites for building materials, appliances and finish items.  How much does a 2x4 cost per linear foot?  LVL?  A decent vanity with quartz top? As to labor, you can consult local folks as to hourly rates - framers, finish carpenters, electricians, plumbers, drywallers, insulation companies.  Once you have a sense for the cost of materials and labor, you are essentially there.     

You also need to look into the local cost of professionals - architect/designer, engineer if you intend to engage in larger projects.  Also, you should get a sense of the cost of permitting in your area.  Every municipality pretty much has a website you can study to learn costs.  Or talk to the folks behind the counter.  

Buy a property, preferably one that could use some improvement, in the best area you can afford.  You have a better chance of making money long term if you buy a fixer in Sausalito than a palace in, for example, Manteca.  

We use a hybrid financing model as our investments require outlays in the range of $1.5 to $3 million.  We use hard money to finance and close the purchase of the property but self-fund the repairs which gives us greater stability/control over the timing of the repair process.  If we were doing smaller deals, we would use cash.

To add a footnote to @Randall Alan's posts, in real estate investing, there is always the matter of capital expenditures or cap ex, for short.  You may be able to avoid these costs for the first few years you invest by purchasing wisely and inspecting your purchases with a fine tooth comb; however, over time you will have to incur costs to maintain  your inventory - roofs develop leaks, furnaces and hot water heaters fail, angry or malevolent tenants destroy windows, floors and doors, galvanized plumbing fails, etc.  It is not inconceivable that your first five years' of "profits" from a rental house can be reduced effectively to zero by one aged out roof.  There is also the issue of evolving legislation around lead paint and other hazards.  Out of area landlords are ripe pickings for much needed cash by elected officials in distressed cities and towns.