All Forum Posts by: Joseph P Finkelstein

The brokerage I work for hosts the Long Beach chapter of FIBI (For Investors, By Investors). It hits across the board, and generally there is a meeting once a month with a broad spectrum of topics. 

The simplest/best solution is probably to find a cosigner. Rates are still pretty low conventional, so you'd be leaving some gains on the table if you go hard money/seller financing. 

I would talk to a lending pro in your area and get some info on how cosigning affects the cosigner, so you can bring it to someone and fully inform them. I believe its not as risky as people make it out to be. 

For here, that $50K is definitely utilizing a 3.5% to 5% loan. That's just looking at it from a getting started stand point though. Whatever you do renting the rooms out will be beneficial, but the way you structure balance of down payment and loan is going to depend a lot more on you personally, and how comfortable you are with your finances and personal balance sheet. 

The larger the down payment, the closer you will be to breaking even/cash flowing,  so if you need to put down 10-20% to feel more comfortable with the monthly payments and hold on to the property, then that is probably the best option.

The caveat is that there is a concept called leveraged appreciation. A lot of times, what gives real estate the astronomical returns everyone talks about is the leveraged appreciation piece. 

The extremely oversimplified explanation of leveraged appreciation, is looking at the case of a $100 widget that you theoretically know will go up in value at 10% every year and asking yourself how much of your money vs other peoples money you should use to purchase it? 

If you bought it cash, year 2 you would make $10. $100*(1.1)-$100=$10, so you made 10% on your investment.

If you put 20% down, the math for year 2 would be the same, but of the money you put up, you would now have made $10 to your $20, so a 50% return. In this case we know that you will make $10 year 2, you should in theory put $0 down and make infinite returns.

I know that is a bit of tangent, but its just supposed to illustrate that hypothetically since RE is an appreciating asset, the lower your down payment, the harder your money is working for you. 

The reality is finding the right balance of down payment that utilizes the cash flow and leverage appreciation necessary for you to hit your target goals.

I personally think CA and specifically SoCal is a great place to invest if you look at the right submarkets. I work for a so cal brokerage, so I might be a bit biased, but as I've been working there and talked to other CA investors, there is definitely some strong delayed gratification built in despite the challenge to cashflow. 

I think if you just want to get your foot in the door, low money down house hacking is the way to go. We usually tell clients it still takes about $50k of todays dollars to get started that way. However, kind of piggybacking off of @Bjorn Ahlblad's comment, if you know what your goals are and what your comfortable with financially, it might help shed light on what area is right for you. 

Also, regardless of what market you are trying to get into the best thing you can do is to start building a strong history of income or find a willing cosigner, because you are going to have to qualify for a loan. I'm sure there is a lender on BP that would be happy to show you what steps you need to take to get where you need to be. 

Hey Ahmed, 

Not quite San Diego county, but if Long Beach isn't too far for you, you can definitely network with us. The brokerage I work for hosts a few events a month. 

PM me if you'd like and we can discuss. 

I can't speak for everyone, but the brokerage I work for has a strategic partnership with a property management group in our submarket of CA. Every week he has given us updates that collections have been in the low to mid 90% range, and have overall been pretty good. 

For the most part, tenants want to pay their rent and not fall behind, so despite the intense restrictions things have worked out ok. 

Hey Kaden,

Check out https://www.backporchhomes.com. They are essentially high end single wide homes that can be installed and act as an ADU.

The downside is that they are detached units, so there is a bit of a grey area as to if you can attach it to the land and increase the value/convert it to real estate financing. 

The upside is that you can finance them, and they should throw off about $6k in profit annually.

Marta, when you say apartment complex, I am assuming you are looking at 5+ units. Our brokerage has a lending contact that is our go to guy in the 5+ space. (We work out of CA). 

Would be more than happy to connect you guys. Just message me. 

Hey Tam, 

A strategy we use here in so cal is to look for areas just outside of markets with stricter rent control. For instance, LA (our home market) if you stay in incorporated LA, its very tenant friendly, but the outer markets still work just as well and the only rent control is the state wide rent control. 

When I took my exam, I used Allied Real Estate School's CA test prep. Not only did I find that it prepared me well for the question and test structure, but the prep questions were often more complicated than the actual exam.