All Forum Posts by: Gloria Mirza

 Well your statement is kind of right.  Any property will do well if you buy at the right price, right time and right location, it's when you do something at the wrong time.  Home prices in a high cash flow area are usually dependent on a specific business like manufacturing, coal, or oil.  When the local economy collapses, think Detroit in the beginning of the financial crisis, it can get really ugly.  With high appreciation properties, it can take you 10 years or more to get back to the price you paid and you will be cash flow negative during those 10 years.  Basically what I'm saying is both situations are ugly when you get in them.  

As a side note in San Jose prices are well about the pre-market boom prices in 2008 because tech workers earnings have gone up enought ot raise home prices to new levels.  While in Stockton and Sacramento, another high appreciation market, prices are still well bellow 2008 levels because they haven't seen the same growth in income.  

I tend to look at real estate investing the same way as I look at investing in stocks.  If a proeprty is in an area that is increasing in value then your cash flow will not be as high.  The reason is because more investors are buying homes there expecting prices to go up.  A lot of people will tell you that past performance is not an indicator of future, but it is still something that has to be factored in.  You will pay more (in terms of dollars earned by the company per share i.e. PE) for a stock like Google that is expected to keep growing earnings than you would for a stock like IBM that is pretty steady in its earnings.   The same holds for a house, relative to rent (i.e. earnings) you will pay more for a house that is expected to appreciate in the future than you would for one that is not.  

A lot of people say appreciation is a bonus, but I disagree, I think it is another factor that needs to be considered when purchasing a house.  

The pros of a high cash flow property are that it will immediately cash flow and will reduce your debt to income ratio.  If you can come up with money for more properties through either cash out refi or savings then you can keep buying homes.  A lot of people work hard in finding cash flow positive properties below market value, buy those homes, then do a cash out refi to buy more properties.  You can repeat this process to buy multiple properties.

With high appreciation properties you are not going to be cash flow positive at first, but eventually appreciation of the house value will allow you to do a cash out refi and buy more homes.  Also the house appreciation usually goes hand in hand with rent appreciation.  

If I had high cash flow properties in my area I would build a portfolio on that.  In my case, I have high appreciation properties because that is what is in my area and it's cheaper to buy high appreciation properties because I don't have to incur any travel expenses or pay a property management company to manage them since it is near by.  

Setting up an LLC for each property would limit your liability to that property if one of the tenants sued you. E.g. if a tenant living in house A sues and you own properties A, B, and C, the tenant could possibly sue you and all three properties would be listed as your assets. If you lose a large lawsuit you would lose all three homes. If it's free in your state I would setup 3 LLCs. In California it cost $800 per llc. Another option is to get umbrella insurance which would cover your liability in the event of a lawsuit up to the insured amount.

As far as waiting period there is no waiting period between loans.  In fact you could do two loans at the same time provided they are both with the same lender and close on the same day.  The only caveat is that if you don't have two years of tax returns for a property, they only count 75% of your rental income as actual income.  This is of course assuming a conventional loan.

The sign most likely had his name and number on it. As such, you were doing him a service by allowing him to advertise on your property. Serious buyers look on MLS and don't wait for a sign to tell them a home is for sale. I think you should tell him that his advertising material is his responsibility.

I just did a purchase with conventional loan and the house didn't have the water on.  Can you ask the appraiser to assume the worst and discount the plumbing as though it doesn't work at all?

When buying without an agent, you can write an addendum to the contract stating that the listing agent agrees to only accept half the commission (basically what they would get if the buyer had an agent).  This will increase the amount the seller keeps and make your offer look stronger.  I did this before getting my real estate license and didn't have any issues.  The agent is required to show all offers to the seller, so if you feel something fishy is going on make sure to ask the listing agent to have the seller sign the contract whether they accept or reject the offer.  This way you are assured that the seller saw your offer.  If the listing agent refuses to have seller sign, you can report him/her to your local real estate board.

My brother in law just bought a property that needs major rehab work (plumbing, electrical, kitchen cabinets...).  He used cash to buy the property.  If I purchase it from him with cash after he has only held it for 1 week, rehab the house then get a cash out refi, will there be any problems/objections by the lender?  I plan on purchasing it from him for roughly the same as what he paid for it.

What if I have him rehab the property, then buy it directly from him using a conventional loan?  Would that cause problems?  Are there rules against buying a property from family using a conventional loan?

@Lee S. I'm a broker and I use my license for investing and am familiar with investing in California.  I sent you a connect request, lets talk.

 No, the properties I have been looking at in Sac and Stockton are either 2.5% or 3%.

 Actually, I can do the delayed financing and get a cash out refi immediately.  The only catch is that you can't finance more than your initial purchase price, regardless of appraised value.  If I wait 6 mo, I can cash out more than the initial purchase price, but that's no an issue with this property.