All Forum Posts by: John M.

@Jerome Hawkins  Hmm, good question since I don't have any properties in NorCal..... I ended up going out of state to Nevada since my strategy is buy and hold rentals with a good combination of cash flow and appreciation potential, and I thought California was too high priced vs the amount of debt I was willing to take on.  I tend to be conservative with my use of debt so it just worked out better for me.

You had mentioned you wanted to start with flips... have you looked around in the Bay Area for possible areas to target based on your budget?  It's pretty pricey over in your area so that could limit your options to some degree.

Welcome @Jerome Hawkins from a fellow Northern Californian!

If you list this type of a scheme on the MLS then you are going to have to go through a broker and sign a listing agreement, are you not? I can't imagine any legit broker is going to want to risk their license and possible jail time helping to facilitate fraud.

If I were you I would forget about this and look for legit ways to make money, like you apparently were smart enough to do when you bought the condos in the first place.

@Allyson Edwards I had a rental sit on the market for 2.5 months before it was rented even though rentals in my area usually are gone in a week or two.  However I knew going in it was over priced because I wanted to test the market to see what I could get for it.  After two price reductions I finally got it rented, but it is still rented for about 20% above comps in the market.   Basically I knew I could get above market rents, I just didn't know how much so I started like 35% higher than the comps (which is waaay overpriced) and factored in price reductions every 3 weeks or so if it wasn't rented.  

My situation might be a little different than yours though, because I knew my property had unique features that people would pay up for, for example in additional to newly gut remodel with new everything, prime location and enclosed garage (most comps are further away and have no garage). And the mortgage and expenses are low so I could afford to have it sit on the market if necessary while I played with the price a little. 

I don't know your market so I can't say what you should do but price is one of the biggest factors of why a place rents quickly vs why it sits.  There's nothing wrong with your place that I can see, but you'll only be able to rent it for what someone is willing to pay.   Your best option might be to keep reducing the price until it's finally rented so at least you'll know what you can get.  If you are losing money though, you might have to consider whether this is really something you want to keep long term?  

You usually won't have access to the HOA or CC&R docs unless you have an accepted offer and the seller's agent should provide them as part of seller disclosures. However, your agent can ask the seller's agent if there are any rules about rentals prior to making an offer - sometimes they will know sometimes they won't. Also, if you find a condo you like and your agent can tell you who the management company is sometimes the management company will keep copies of the HOA docs on their website and you can download them and read them prior to making an offer. If there's rental restrictions or anything you don't like then you won't be wasting time writing offers only to cancel them after reading the HOA docs.

The types of things you want to look for are obviously what kind of restrictions or rules on rentals, any lawsuits pending, and if there are minutes to the board meetings see if there's anything mentioned about upcoming major repairs or unbudgeted expenses that would mean an assessment or increase in your HOA fees. Also HOA fees will sometimes increase $20 or $25 a month for no other reason than "inflation" or so they'll say. There's not much you can do about that unfortunately.

 Is there such thing as a "rent bubble"?  Is there any historical precedent for such a thing?

@Henry Murray I hear Indy is pretty hot right now, although I don't know anything about the market myself.  And yes I have found that in just about any of the hot markets at the moment they seem to cash flow well on paper, but maybe are tending towards the sketchier parts of town.  Which could be ok if like you said it's an up and coming neighborhood.  But it's so hard to tell from a distance and I am one of those people that doesn't like to depend on agents or anyone to do my due diligence for me, so I end up pretty much focusing on markets that I know myself which are the neighboring states like Nevada, Arizona and to a lesser extent Utah or Idaho.  I really like the region known as the Intermountain west.

As for Las Vegas, I have a townhouse near the Strip in what I would call a C neighborhood but it's zoned in a multi-use overlay district with high demand so I get good quality tenants and higher rents.  I also have a townhouse in Henderson which is either an A- or B+ because it's newer and in a nice gated community, but since Henderson includes areas like McDonald Ranch and Anthem which sell well into the millions, an A to me likely isn't an A relative to multi-million dollar estates, lol.

It's funny I actually tried to buy in 2010 which was in the depths of the recession but I kept getting beat out by cash buyers, so I took a break and next thing I knew it was around 2016 and that's when I decided I better start buying before it's too late.  So I bought 2 since then.  I am not in a hurry though I know some people want to buy 20 doors in a year or something but I like save enough down so that I am "deep in the money" on both cash flow and equity.  That way if the market tanks at any point I will sleep like a baby and the cash register will still be ringing.

I think I mentioned before Las Vegas may not look as good on paper for returns as some of those other areas, but I don't look at just the return I look at the entire picture which includes the property itself, the location, the potential tenant base, the management, the city economics (demographics, growth, taxes, COL, etc), and even the city itself would I live there, the distance from me, etc.  Lots to consider!

@Steven Coppola I am a renter and I actually prefer renting.  I am probably in the minority but I like Grant Cardone's philosophy "rent where you live, own what you can rent out".   So I own rental properties and I rent where I live.

There are several reasons why I do this, but mainly I prefer the flexibility to just up and move when I want, change jobs, move to a new city, etc.   I know all the debates of throwing money away on rent vs owning but for someone like me who doesn't want to be locked into anything it makes more sense for me to rent.

Personally I think in the future people will require more flexibility in their lives with things like gig economies, rapidly changing technology and the nature of work, etc, so this could even be a growing trend over time.   Either way, renting is not going away in fact I think the demand could increase greatly in the future if I am correct.

@Manuel Toledo Welcome and thank you for your service.

I agree with you 100%.

This is one of the reasons for out of state investing that I think there's a huge value and a competitive edge to having personal first hand knowledge of the market, i.e. maybe you grew up there, or spent a summer there or visited there on vacation.  Just being there once in person to get a vibe of the area is an instinctive thing you just can't get online.

I personally would rather buy out of state in a market I know but maybe doesn't have a top return, versus going into a market I am totally unfamiliar with but has the 1% or 2% rule, or whatever rule people follow.  It's too risky for my taste.