All Forum Posts by: Dan H.

@Michael Halow I think your website looks great.  I did see one Typo type error on the FAQ (search for Los Angeles).

You are definitely hitting the ground running. 

So website looks great but 1) Do you have the capital to purchase?  2) do you have the teams to rehab?  3) Do you have a sufficient buyers list? 

Basically finding the deal is important but knowing what to do with the deal and being able to do it is also important.

BTW I did not see a spot on the website for potential buyers.  Maybe I missed it.

Good luck

I typically use my handyman or laborer for and landscape restoration but I am not that pleased with my current handyman (I used to have a great handyman but now he has units in my market so is a friendly competitor).

I keep wanting to find a new handyman but I keep putting it off (there are infinite things I would prefer to do).

The laborer requires more over site than the handyman is supposed to require but works good for items like laying an entire yard with sod (lots of labor involved).

So I do not have a recommendation for a landscaper.

 The more networking and the longer you look for/ purchase RE the more likely off market deals will find you.  I live in a hot (very hot) market but I have had 3 off market properties come to me in the last week.  Each in my area and each meeting the RE I seek.  Only thing to resolve is do the numbers work and how many do I desire to take on at once.  I have never purchased more than one at a time and think we only have time to deal with one at a time.  

@Kevin Phu 

I agree with @Don Konipol that 3% annual return is measly for this level of risk even if he has 1st lien and could foreclose.   If he accepts such terms it would basically a partial gift as he could do far better return with less risk.  

I also agree with Don's comments about borrowing from friends and/or family but am realistic enough that for most people this is their best opportunity to get a start.  So basically if you borrow from friends and/or family the loss of the money can be worse than losing your own money.   I would reserve such an option for emergency situations only.  

Good luck

@Samuel Rogers I agree with your sentiment but even then you can have bad experience.  

I got quotes for installing tile in a house.  We went with the second highest quote because they seemed more competent than the lower quotes.  

Long story short the tile mortar started failing immediately causing the caulk to break.   The installer would replace the tiles as they popped free and indicated that they had problems with the installer and let him go.   Soon I was out of my spare tiles that was supposed to handle any broken tiles over the next 20+ years.   Were they reputable?  Probably.  Did they install correctly?  Not a chance.  Did they do something to make it right?   Not really.  They really needed to purchase new tile and re-install.  As it was within 5 years many tiles had cracked.   Grout was cracking all over and I had zero spare tiles.  

Recently we hired a GC. He did a good job on the work he complete but took on some work that he got too busy to finish.  He refunded our money but we had expended time and effort hiring him and explaining what we wanted.  The work still is not complete.  

I have been happy with jobs by cheap handymen and disappointed by jobs by expensive professional looking contractors.  Price is not the best indicator of their work quality.   However if they look unprofessional or unorganized than regardless of the price of the job you are not real likely to get great quality work.  

Best is to get recommendations from satisfied customers that you trust (people you know).  

I have been to a 5 or 6 of these and find them both interesting and a good networking opportunity.  My son has a cross country tournament at that time but if the calendar was open I would try to attend (I find them to have been worth the time) .

Thank you for your service to the country.

I am not a mortgage specialist but getting the best rate and possibly highest LTV will occur when owner occupied. So the suggestion is to refinance it when you still have it as your residence.

For my rental properties it is not easy to get LTV above 70% via conventional refinance loans (I have not gotten one in recent times). At the 70% LTV you will not be able to pull any money out of the RE. If the property appraises at $400K even 80% LTV would not allow any money extracted (Your current loan is at 81% LTV state if RE is valued at $400K).

So you need an LTV above 80% for any extract of money. The VA loan has some good advantages but a big one is the high LTV but this also can constrain refinancing into a conventional loan (i.e. you need enough equity that you can get a conventional loan).

Good luck

@Justin R. Our STR has never been on AirBnB as many units in Mission Beach use local property management. The property management takes care of most items related to tenant turn over including laundry and cleaning as well as any nuisance complaints (noisy tenants (both our tenants and neighboring tenants), wifi down, shower is dripping, etc.). We handle some repairs and much of the yard maintenance (small low maintenance yard).

I do not know what sort or if any permit was applied for as 2000 was a long time ago but we could easily show records that it has been an STR for many years (maybe we can show STR back to 2000 but regardless we can show it for at least 5 years).

Even prior to AirBnB, Mission Beach was virtually all rentals with the nicer properties being STR. Our property was initially borderline as to STR versus LTR but demand rose and now it is rented virtually all year (in the off season the rate is much lower than high season). It is rented so often that I have not gotten a weekend at either unit in a few years (my 14 year old was not sure that he would be able to determine which was our unit to show a friend - he was able to but it indicates how long it has been since we got to use the units ourselves - mostly a good thing that it is rented all the time). We had one Sunday not rented in a unit this summer (only weekend day not rented) but our calendar was full that day so we could not take advantage of it.

I think it would not be hard to enforce the new regulations especially if fines were levied to offenders to pay for enforcement.  The STRs have to be listed somewhere (vacasa for ours, AirBnb, etc.).  It would be easy to find STRs and not too hard to determine owner occupied. 

I think someone in my family may have a new primary residence if it comes to this as 90 days STR would get us through the summer high season on both units. Then LTR one unit for the rest of year and LTR other unit just enough that we can qualify it as a primary residence. Less than ideal but we could make it work.

Hopefully the new regulations do not occur or there is a grandfather clause for STRs that have been long term STRs.  Even if there is a grandfather clause for long term STRs I question property devaluation.  We will be keeping our property regardless of any potential devaluation (The property could lose ~2/3 of value before it is worth less than we paid) so maybe it will present a buying opportunity (get some beach units at lower than current market). 

Thanks for the info.

By multi family do you mean 5+ units? Have you looked at actual sold properties for your multi family starting price? I consider myself an expert on an area very close to your listed location (very close to Vista). I know what duplex to quad sell at (possibly every single one in my market). Your starting price would be way above average sold price for duplex to quad (certainly way above the start at price). If you are talking 5+ units your price still seems a little high as the stated starting at price (at least for 5 units). FHA I am fairly certain cannot be used for 5+ units so I assume you are intending duplex to quad.

What I find for duplex to quad is comps using the current MLS listing is useless. Many duplex to quad units will never sell near the price depicted on the MLS. They make no sense at that price for investors. Duplex to quad are mostly purchased by investors.

I am evaluating 2 properties (both duplexes) in my area of expertise and therefore today pulled comps (cannot get much more current than that).  I would be able to email you the comps pulled (sold properties near my subject properties) if you message me your email and indicate that you would like to see the comps I pulled.  Of course I will need to redact my subject properties (both are off market properties) as well as identifying info (This offer is only extended to the OP because I only have so much time that I cannot do this on a regular basis - contact a realtor if you want this done for you and you are not the OP). 

As for what is better to invest in SFR or multiplex there are cases that could be made for each that there are many posts dedicated to. In general, supply and exit is easier on SFR. Multiplex scale easier and typically have better cash flow (excluding some off market SFR because there are so many SFR it is easier to find better/more off market deals). I have a single SFR and it is my worst performing property but it is also my ex-home and therefore was not purchased to be a good rental (which may be a bigger reason for it being my worst performing property than the fact it is SFR). So you likely need to do your own research to determine whether SFR or multiplex is the correct choice for you (I could make a case either way but for me I chose duplex to quad and expect to shortly move into the 5+ unit properties).

You likely know this but FHA requires owner occupancy so you would be house hacking a multiplex. Just making sure you realize you will need to live in one of the units. I think house hacking is a good approach when young and starting out.

Good luck

@Kelton Bajo For conventional financing you can typically have 10 SFR to quad properties. So if each property is a quad you can have 40 units conventionally financed.

As for the $150K equity you do realize that typically on refinance investment property you can typically only get 70% LTV. This implies that you will not be able to extract the full $150K equity through a typical refinance. ELOC are difficult to find on investment properties and probably will not desire to go above 70% LTV so likely will not be able to help.

I understand Texas to have high property taxes.  In general states with income tax (CA) should avoid doing RE investing in states with high property tax even though I know of some San Diego RE investors that appear to have done very good investing in Texas (@Cody L.).

Your cash flow on the Texas properties do not appear to have cap expense or vacancy factored in (and possibly not insurance or maintenance).  Cap expense is higher than most investors want to believe.  If I used my San Diego cap expense estimate numbers that Texas Property does not cash flow (or barely cash flows).  Do you expect the property to appreciate?  There are locales in Texas that have appreciated significantly in the last few years.

The cash flow on the property looks at best lean.  That is OK if you have confidence of appreciation or can add value in some way (sweat equity, etc.).  Only you can answer the question if you think you can do better but I would want to do better.

Good luck