All Forum Posts by: J. Martin

@Kyle Zaylor , I live and invest in Richmond and would be interested in meeting up with other local investors. There is a meetup in SF at Rogue Brewer on 11/18 @ 6:30PM. I think quite a few p;eople are coming from around the Bay also. I've also talked to a couple other interested people in Berkeley. Maybe we can get n "influencer" on BP to get the word out and schedule a meetup. I'm pretty busy and traveling during Nov/Dec, but I think the start of the year would be perfect..

Tag my name if you get something together! Thanks Kyle

A 34% cap rate is OUT OF THIS WORLD! Look over your calculations again, do a thorough inspection of the building/foundation, or something! Talk to local CRE brokers or get a local multi-family report from CBRE or "market research". Or loopnet.com if you can find something. Look at market GRM and cap rates for multifamily. Have an experienced broker/investor/someone go over your numbers. I've seen estimates from 35-45% of gross rents in expenses for MF as a rough estimate, depending on circumstances. On the high side in low-rent areas. May differ in your area.

If you can find buildings that truly return all of the purchase price in 3 years of profit (non-compounded!), you will be a millionaire in no time from the inflow of capital to your doorstep!

I think it's a good idea to switch the management company either way, regardless of whether or not they knew. What are the odds that you would have selected the current company if you were to perform a diligent search and find a great manager? Regarding offenders, in SF Bay Area, there are strong tenant protections. Make sure you understand the local tenant laws thoroughly before you take any action. And maybe bring it up to the broker/seller when you're negotiating the final details and try to get some concession.. good luck if you end up going through all due diligence and end up getting it! But understand what the risks and numbers are before you jump in...

For $150/ft in rehab, I would think it would have to have very high-end finishes.. travertine, custom amazing cabinets, some viking appliances etc.

But I've also heard people that do their own work say "there was $200K in rehab performed". Meaning that, as others said, if you paid full-blown sucker retail to expensive contractors, that's what it could have theoretically cost. For them, it was a lot of time invested, and some risk with the flip, that they wanted to be compensated for. Their out of pocket was much less. But no matter what money, sweat, or tears went into it, it's worth what it's worth to the highest bidder, whether the seller makes $20K or $200K. I like you're approach on the estimates though.. Maybe just low margins for him on this one..? Or $100k of the "rehab" is to compensate him and his rehab crew for their time in and his risk..

2 more things forgot to tell you:

1) turn on notification for phrases like "San Francisco", "East Bay" etc so you can get notified about posts in our area.

2) low low termite report for that square footage!! was that yours or their report?!? lol maybe they repaired everything before inspection was done. I've seen dozens and dozens of buildings and reports. the real issue is usually not termites, but wood rot.. near downspouts, corners of buildings, joints & trim, roof transitions/trim, window trim, inside bathrooms and around tubs.. It sounds like someone kept this in very good condition (or make sure you have all your inspections done well!) don't be afraid to spend time on a ladder poking everything that has increased moisture deterioration risk. Good luck and godspeed!

@Sam Magi Re: is 5% cash on cash good for Concord?

All depends on how you calculate it! If you end up netting a solid 5% after-tax annual cash flow return year-in and year-out, with some principal paydown, and upside in price.. while maintaining your building well and growing reserves you may need.. That would be stellar for Concord! If 5% are gross rents to purchase price (aka 20X GRM), watch out!!! Somewhere in between.. I think you'll be OK as long as you get good tenants. btw, what is the GRM at purchase and after your proposed rent increases, if you don't mind sharing? ROE & cap rates are always a bit variable, but GRM is straight forward, even if lacking in sophistication. (Purchase price + Any Repairs) / Annual rents

I think there's a lot of upside over there in rents and price. Close to Walnut Creek (although a bit of a commute to SF!). I have some co-workers with good income buying personal residences in the area. Good luck on your close and on your investment! Let me know if you have any questions. I agree, it's nice to talk to people in the area (although there is an amazing depth of knowledge on here from all over the country!)

Hi @Sam Magi ! And welcome to BP.

I live in my owner-occupied 4plex in Richmond, not too far from your locale. After you get everything rented out (to good tenants!! so key!! and do your research first!!), you should find the landlording fairly easy. Are you going to live on-site? Concord's nice. Can you get any cash flow out there?

My best advice to someone new is to get a good team of people you can trust, especially a trustworthy, reliable handyman. It will make your life SO much easier and you can learn alot in the process. Especially important if you're buying more. I'd hook you up with mine, but I don't think he's going to want to drive out to Concord too often..! Another piece of advice since you're in contract on your first fourplex. It's not unusual to see $50K+ on Section1 of the termite report for an older building (although Concord tends to be newer than Oakland or other areas). Keep that in mind when you're looking at prices, and don't let it scare you off. The water's warm! Jump in! Lots of good advice on this site. Read the beginner's guide, and good luck on your investing!

FYI, there's a meetup of BP member in SF at Rogue Brewery on 11/18 @ 6:30PM. Come out and say hi!

I almost forgot, there's a BP SF meetup at Rogue Brewery in SF on 11/18 @ 6:30PM. Come out and chat with the local BP crew! (which I am just getting to know).

Hi @Alexander Dajani ! I'm a fellow bay area investor and always happy to share my experiences with others. The Bay is a unique beast, and you'll find quickly that a lot of the cash flow rules/ratios you see on Bigger Pockets (BP) are nearly impossible to achieve. Just fyi! You are not crazy when you see the prices out there!

There are some cash flow opportunities in places like Richmond, Pittsburgh/Bay Point, and some of the commute cities around the Bay. They're at more reasonable price points also if your pockets aren't quite as deep as the SF market is expensive! SF and prime areas of Oakland/Berkeley/Walnut Creek have very high prices to rent, and very low cap rates (aka cash yields), in general. Take a look at asking prices and rents on redfin.com. I'm still buying cash flowing properties out in Richmond, and always interested in talking to local investors and exploring potential partnerships. I have purchased, rehabbed, leased up, and manage 6 apartments and houses in Richmond.

Good luck on your goal, and don't be afraid to reach out if you need some advice!

@Agha Abbas The comments regarding low cash flow & ESPECIALLY rent control and tenant's rights in SF are spot on. Same with Oakland and Berkeley. Richmond, where I invest, does not. It is very difficult to realize full appreciation with long-term tenants in SF, which causes ratios like the 20X+ Gross Rent Multiplier I saw the other day on a 4-unit building in the up-and-coming Mission. Cap rates below 4%. And that's the seller's estimates! (A condo unit has even higher pricing, but may not be subject to rent control if it's new enough. And might be $1,000/ft in a nice neighborhood!) Look at individual deals to get more specific examples.

There are still cash flow properties in Richmond, 20mi north of SF, which has a metro station which takes 35min to SF downtown, 15 to Berkeley, and 20 to Oakland. It will never have the luster of SF, but remains a % proxy on the nicer areas because people that get priced out of the prime areas spill over into the secondary and tertiary markets where they can still commute reasonably to work. I'm still buying here. I say this because it sounds a little more consistent with the price points/cash flow you might be more experienced with, while getting the geographical diversification and exposure to one of the largest, innovative coastal metro areas in the US (as some other BP members have noted). Let me know if you have any questions, or if you're interested on talking about a potential deal out here. Saw this post when searching through SF posts, so hope I'm not too far behind you..!

Good luck in your investments either way Agha!

With all this talk about prior deals and where to find deals, why not start here? To @Karen Margrave 's idea, can we make a forum or something for people who are not just interested in learning, but also are actively looking to match their skills and capital to make more and/or better deals? Maybe by geography? Do you know Karen ? If it's not there, I'm in with getting it started!

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Thanks to the pros/moderators for all the great advice, and looking forward to exploring some more relationships BP members as I begin building that trust..