All Forum Posts by: Joey Budka

For California investors looking to invest out of state, I always recommend the Central Valley as an alternative because the fact is, the grass isn't always greener on the other side. I know from experience, having done dozens of deals out of state- buy and hold, flip, hard money, lease option, etc. The numbers look great on paper, but this idea of passive income as an out of state landlord is flawed. Vacancy problems are an issue repairs can be an issue property management can be an issue... It all adds up. I always recommend starting with investments in Sac, Bakersfield and Fresno. Price point is much more realistic compared to the greater Bay Area where you are located. Management can be a headache but if you have a solid property manager and check on the properties every now and then you should be fine. Returns out there in the central valley are similar to that of out-of-state markets you probably are potentially looking at investing in. There ain't no place like California ;)

Melvin Yuen may be able to help you out.

I'm going to echo the advice from Jeff. If the realtor is a solid real estate professional, they should be able to sell to retail buyers as well. Ask if they will do this and if so schedule a listing presentation to see what their marketing plan is all about. Then again, depending on how much the resell value is (I.E. <100k), the realtor may actually make more money from wholesaling so it might work against their business model to list and sell to retail buyer pools. If this is the case, incentivize the realtor by working in a bonus structure commission into the listing agreement.

There are deals to be had in any market. I'd recommend getting to know the market like the back of your hand: average rents for various unit mixes, neighborhoods, demographics, sales trends, etc. If you connect with a solid broker, he/she will be able to educate you on the market too. Get your financing lined up, then go start making offers! 

Just an FYI... Investing out of state looks great on paper. But those tantalizing return on investment figures you crunch on your excel spreadsheet don't paint the whole picture. You can make money out of state, but I would recommend really honing in on a trustworthy team to be your eyes and ears on the ground. Management and repairs can destroy your returns, and this can add up quickly. I formerly invested out of state. Having bought and sold dozens of investment properties out of state- in numerous states- I believe a  balanced portfolio is the best way to go. Have some holdings here, and some out there ;)

I'm in. Bringing some colleagues as well. See you guys in the 15th!

It is a No-No. Never buy retail priced investments.

Funny, I was pitching family dollar NNN deals last week, and didn't see this coming! To echo your concerns Jon, triple net investments can certainly fall apart quickly in the event the tenant vacates. However, real estate investment fundamentals still apply: location, location, location. So, if your NNN investment is located on a highly trafficked retail corridor, with low unemployment, growing demographics, and low crime, there are likely to be many potential replacement tenants willing to lease up the vacancy. Most dollar store NNN deals are located in rural suburban areas where releasing could definitely be an issue. That's why I'm extremely cautious about pitching dollar store deals. That said, the ones I was pitching to investors were located in major metro areas in California. Not in Nowhereville, USA ;)

@Account Closed I used to invest all over Pittsburgh: Natrona Heights, Penn Hills, North Braddock, Turtle Creek, Monroeville. Pretty much every township and suburb. 

With in-fill locations like the San Francisco Bay Area, apartment deal flow on the open market is minimal due to such high demand for the asset class. Most retail investors see deals hit the market only after they've been "shopped" to "pocket buyers," which at that point, indicates the deal is mediocre or not great at all. The way it works in apartment brokerage is that when a deal comes available, a broker's closest clients, or "pocket buyers," come to the table with aggressive offers, minimal contingencies and all cash/private funding. Pocket buyers generally are professional investors with deep pockets, or should I say Bigger Pockets? Lol anyway, most good apartment deals in the Bay Area don't ever see the light of day. The same concept applies through most fundamentally sound apartment markets. Because of the nature of relationships with brokers, I use the word political to describe this dynamic. I use the word game because it really is a game for this aristocratic class of active ultra high net worth commercial real estate investors who collect apartments like children collect Pokemon cards. The higher your net worth, the more you're winning the game, make sense?

I believe California has the strongest and fundamentally sound apartment market. I've invested in dozens of rentals out-of-state in Pittsburgh, Cleveland, Baltimore, Rochester and overall, my experience with multi family in California is a much better investment. Here's my reasoning: -Although cap rates on the open market are comparatively and seemingly inferior to that of out of state deals, the appreciation and general perceived safety of California apartments far outweighs higher cap rates of multifamily elsewhere. -vacancy is never an issue. -Maintenance and operating costs are minimal, comparatively speaking. -Job growth is eternal. -apartment properties are relatively new builds (1960s+) It's a marginal play in terms of cash flow in Cali. So basically, locking in a low interest rates, with immediate pro forma upside is the way to go. Occasionally you get the 10% cap off market deal in an infill location, but those are few and far between... Unless you play the political pocket buyer game with proactive brokers ;)