All Forum Posts by: Dan H.

I am a fan of So Cal residence investors investing in So Cal:

- I can still find properties that cash flow even using my cap expense that most people would consider conservative (I claim they are accurate).  They do not flood cash (certainly they do not cash flow like Cleveland) but they are positive.

- There is an intimacy in the area you live that is comfortable.  You should know the rents, vacancy rates, maintenance costs, property values, and any positive/negative events that could affect the market. 

- Prop 13 protection is nice.  My family had a property in Gulf Shores Alabama that the prop tax increase was incredible but the rental price had barely moved.  A good investment became so-so and after 2 hurricanes was a poor investment.  We no longer own that property.

- So Cal continues to have increased property values.  It will always be a nice place to live with a finite amount of homes.  In San Diego there is very little room for further construction.  The property values could fall but due to supply and demand I expect them to always rebound.

My market is mostly Escondido with a single SFH in San Diego that has not been vacant in about 10 years (so I have not needed to find a tenant recently for that unit)

We only have 10 units but we do exactly what you did (Postlets and Craigslist).  Postlets posts on quite a few sites but by my responses most responses come from only a few of the sites Postlets posts to.  We have not had a unit empty more than a week after having it ready and we set the rent at market rate (for the last 3 new tenants we were barely able to have unit ready by the move in date (actually for one of them we had to postpone move in date by 3 days to have the unit ready)).

I get a lot more responses from the Postlets various sites than I do from Craigslist.  I have not actually done any analysis about which site actually produced the tenant.

Note 10 years ago Craigslist was by far our number one response.  Posting in the various news papers was almost wasted effort (UT, Reader, PennySaver, etc.).  My view is Postlets, for my area (Escondido), has surpassed Craigslist for tenants.

I see you state you are from Escondido. That is our (H3 Properties) area of expertise on multi-family (duplex through quad) BRRR residences.

I believe we are better at estimating the price on those multi-family homes than any realtor I have yet to encounter.  Why?  Because we have personally seen everyone that was not priced too high for the market range, kept track of what they sold for, and mentally know about how long they took to sell.  In addition, we own quite a few properties and do regular rental analysis.  I have yet to encounter an Escondido realtor that has seen more than a few of the multi family properties.  I have heard from realtors significantly off rental prices (usually they are significantly lower than market which is good to let them continue to have their ignorance).

You do not indicate where you are looking to invest or what type of REI you intend (BRRR, Flip, whole sale, etc.). However if you are considering a mulit-family (duplex through quad) in Escondido for BRRR I would be willing to tell you what I think of the price point.

Also if you are considering in our area of expertise (Escondido multiplexes) do not use list price to obtain price reference (not even as a starting point).  There is a huge difference between the listing price for these properties and the selling price.

Final recommendation: Read up on capital expenses before placing any offer.  So far on our units, cap expense is much higher than maintenance and vacancies together.  Southern Cal has high labor cost; cap expense here will be higher than almost anywhere else.  If self managed maybe use 5% each for maintenance and vacancy (total for both 10%), and $250 to $300 per unit per month (maybe 15%) for cap expense.  This would imply to have any positive cash flow you need rent to be at least 25% above Mortgage including escrow.  Also if not self managed there is the management fee but I also increase both the maintenance and vacancy percentage (no one manages your money more carefully than you but it takes time to manage properties).

Good luck

I would like to attend unfortunately I have a conflict.  Maybe the next such event will fit into my schedule.  

Do not concern yourself about her $30 application fee.  Once credit/criminal check run there may be good reason to deny candidate as I do believe there is good chance she lied about who is planning on living in the unit.  

If she passes the credit/criminal check this would be worse case but you can reiterate the occupancy rules and consequences of having some one not on lease occupy unit (eviction).  Hopefully she either walks away or follows the occupancy rules but if not you need to enforce the rules.  

Good luck. 

There are quite a few San Diego REI meetup groups on Meetup.com. Would the goal of this meetup be to meet the various people in San Diego from Bigger Pockets? I am just trying to determine what would make this Meetup unique to the half dozen or so San Diego REI Meetup groups and their associated Meetups.

I definitely do not have time for a meetup until next year.  Holidays are always busy but I also had a long time tenant move out so the unit needs a lot of little stuff (lots of little stuff is cheaper than big stuff (rehab) but takes a lot of time).  So the last couple of weeks have had my "spare" time spent on property management tasks related to finding a good tenant and getting the unit ready to rent.  We only gave ourselves to Dec 4 to have it ready and we happen to have got a likely tenant for Dec 4 (so no slack time - we must finish to plan and so far my handyman has been sick 1.5 days).  Hopefully by tomorrow the potential tenant will have passed our screening.  So other items (decorating, cleaning, researching next vacation, etc.) have been pushed until after the unit is rented.

it is my belief that most turnkey properties under estimate capital expenses. I believe in low cost markets capital expenses will exceed $200/month (in a today's dollars) on any SFR. I use $400/month is So Cal for SFR cap expense ($300 on multi units which in my case are both smaller and share certain items (such as roofs, foundations, plumbing, etc) reducing costs).

So make sure you are going to get a top property management company and make sure that the capital expenses used in your cash flow calculations are conservative.  There are quite a few forums/blogs dedicated to capital expenses and property management. 

If you can get both a top property management company and the cash flow you desire with conservative cap expense estimates then you may do great with turnkey. 

You will, of course, not be able to obtain the instant equity that can come with doing your own rehab. Also in general the property owner will be more diligent property manager than a property management company but the inexperienced diligent property manager may still make mistakes (such as not thoroughly screening tenants) as part of the learning process. 

So I believe turnkey can work but like every large investment you need to do your research to verify it is likely to be a good investment (research capital expenses, the property management firm, vacancy rates, local economy, ... - everything). 

Congrats on the purchase.   It will take many years for you to get Cap expense numbers because some of the items will have lifespans in excess of 30 years (windows, roof, tile work, etc).  I have been doing this 13 years and have yet to do a roof, water heater (I have a tanked water heater that is 25 years old and has not started to leak), or furnace (but I did obsolete one wall furnace with a split HVAC).

In the absence of numbers I believe that the numbers I put forth above are the best available for San Diego.  By duplex I am assuming you have attached units.  For a 2/1.5, 800' I would use $300 Cap expense.  if your units are larger then raise the estimate a little and if smaller lower it a little.  You are probably 5 to 7 years from having your first cap expenditure if the rehab was done well.  If you have carpet flooring that has a good chance to be your first cap expense.  Hopefully you have banked enough cap expense when the carpet is to be replaced to pay for the carpeting and have some reserves built up for larger items like roof, furnace, water heater, structural, etc.

BTW when I rehab I have been removing carpet for longer lasting floor options.  It is more of an investment up front but it likely will balance out and it is nice to replace the flooring less often (saves time).

BTW2: I recently had a severe slab leak on a unit rehabbed 1.5 years ago.  The place of the water manifold was in the worse place on earth (no way to get to it without ripping out a tiled bath/shower unit) resulting in a complete cold water plumbing replacement (Rerunning all new cold water lines was cheaper than ripping out the shower or jack hammering the foundation to repair).  I chose to do the hot water at the same time - not covered by insurance.  The leak affected 2 units.  Because the damage was so significant I made a claim with the insurance and they are covering significantly more of the cost than I had expected (the total cost will likely exceed $10K but it appears insurance is covering over 50%).  I previously had a more normal type of slab leak on a different unit with more normal costs to fix (I think it was ~$3k total cost including water loss) and had not declared it against the insurance (but now wonder if I should have).  So some cap expenses may be able to be claimed against insurance to defray some of the costs.  If this was not so extensive I would not even have looked into insurance coverage for old plumbing leaking as I never knew that plumbing that had lived its life could be covered by insurance (or at least the damage and repair could be covered by insurance). 

First I am not a lawyer, so realize that this is definitely not coming from an expert in this area of property law.

I agree with the other posts.  If you received nothing for granting the use of this parking space then it can be revoked at any time but likely the most amicable way to do this is by explaining that your tenants have a need/desire for the parking space and therefore you want to allow your tenants to use the space.  Do it nice but realize the neighbor may be  disappointed as you did tell him in writing that he could use the space.  He would not have requested the space if he did not desire it.  So try to keep things amiable but you do have the right to change your mind if you received nothing for the use of the parking spot.

If you received something for the use of the parking space you are in a different situation.  You could try to "purchase" the parking spot back or get lawyers involved.  From your description it does not sound like this is the situation.

@Rafael Alcaraz I am a small investor mostly in Escondido which is quite far from San ysidro but still San Diego county. My family is a long time REI in San Diego county (since the 70s).

Not that I have been good at doing this but I suggest you look at local meetups (meetup.com) for real estate meetups that could be of interest to you.  

Also read quite a bit about your areas of interest on this site but realize there are significant market differences in San Diego county than many other areas.  Also not everyone that post is an expert or successful. 

Some advice:

• Do not forget capital expenses when determining cash flow.   Search for cap expense and you will find some good info but in San Diego costs are higher. 
• Property management takes some time.  
• Do not get discouraged if my first advice makes it difficult to find a cash flow property. Be patient and do not give up. They pop on MLS occasionally but most are found off MLS and this can take some effort.

Also I recommend a blog entry title something like you cannot make money on a pig.  I desire you read this blog before you decide on investing in San Ysidro (I do not know if that is your intent).  There is a San Diego region forum.  In that forum I posted my Cap expense estimate numbers and they add up to a lot per unit.  They may not be perfectly accurate but my family has been doing rentals a long time and typically things cost more here.   Also sun wreaks certain wear.   Good luck