All Forum Posts by: J. Martin

No problem.

One other reason I like having the website is because it's a bridge between the initial contact (in my case business cards, in yours a bandit sign?) and the phone call, which is a more pro-active decision. If someone's curious, they can check out the site, and that's where you drop the real value proposition. It's easy for them, quick sell, whatever value you best provide. In my case, allowing people to have a direct ongoing exposure to real estate and cash flow on a passive basis without having to understand the intricacies of the industry. I recommend it relative to the cost/effort IMHO. Good luck on the business and the site!

@Amit M. There's cash flow up here in Richmond, and a lot of the Bay Area's negative perception (what they heard) allows a less competitive market for RE investors (shh don't tell anyone I told you). I live at my 4plex near Richmond Bart Station. Its far better than the 'stories' I had heard (but not nob hill by any means!!) Having said this, I think the most important thing with rentals in this type of neighborhood is you have to have someone you can trust keeping an eye on your properties. I wouldn't want to be a total absentee, out of state landlord, or the situation could deteriorate over time. I love the idea of SF, but when I run the numbers on individual deals, it just ends up being so much capital and carrying it w/o cash flow until everything goes up... Makes it hard for me to accumulate more properties on an ongoing basis (maybe you can show me otherwise!) Send me a message, or come say hi at the meet-up if you're coming!

Good deals @Aaron Mazzrillo ! If the days of buying property 50% below "market" are still around, keep at it!

@Zac P. If I understand correctly, you want to borrower money from these outside parties w/o giving up equity, which is a little different than Aaron's strategy. Is that right?

One thing you may find challenging is to locate the investors willing to extend 20-yr fixed rate money to you. (I assume you want a fixed interest rate, which is why you're seeking 20 year maturity.) The reason the residential underwriting guidelines for long-term loans are the way they are, is because that's what's needed for the bank to securitize it and sell it because not many folks want to hold onto 20+ year fixed rate assets. (Or maybe try offering an equity buy-in or kicker to sweeten the 20-yr lock-up.) But if you have the demand for it, congrats to you!

One option you may consider is to buy a property for cash, then get a home equity loan or line of credit. I believe I've seen 10-15 or 20 yr fixed rate terms for HE loan. And 10yr interest/only variable w/ option to term-out for 10 years at then-current fixed rate for HELOC. Rates can be competitive, especially if low LTV on a home owned outright.

Getting very-long-term fixed rate money is a HUGE advantage IMO, especially if you think rates will move higher and/or are wary of long-term inflation potential. For anyone focused on interest rate risk, look at the "economic" value of a long-term fixed-rate liability on your balance sheet when you're funding investments in ten years with the remainder of your 20-yr maturity liabilities. That's why I bought a 4plex with FHA 3.5% down. 96.5% LTV for 30-yr fixed @ 3.25%! Some PMI for a few more years, but well worth it.. It's about as close as you can get to 0% down on income properties w/ long-term, except for VA on SFH if you're a vet. Let me know if you find a good institutional source for long-term money! Good luck!

I agree with most of this, except that you can use the FHA loan to purchase a 2-4 unit property and rent out the other units if you want (completely legal and part of the FHA program). You are supposed to owner-occupy one unit for at least one year. And you can qualify for WAY higher purchase price with the rents from the other units. Probably a 4plex with the numbers you're throwing around. Just another idea that I wasn't aware of at first, but ended up doing on my first property. Start by talking to a loan officer/agent either way. I prefer using a loan broker that can offer ALL types of financing, rather than a bank loan officer who may only tell you about what their company has available, and you may not know what's truly available to you.

Good luck in your adventure. Be sure to do your homework, and check out the beginner guide here on BP if you haven't already.

I'm still buying cash flowing properties in the Bay Area, but if I kept waiting to get the same awesome deal I got 10 months ago, I would have still been sitting on the sidelines instead of buying more 4 months ago. The market is what it is.

To me, where you go from there depends more on your return goals. Are you looking for CF? Perceived appreciation prospects? Or just trying to avoid potential headache tenants in B/C areas that might take up your time? Do you plan on exiting soon and want best marketability when you sell? Or are you going to buy and hold for 20 years until you retire and want more up-front returns?

Many investors say you have to choose between good areas with low/no cash flow & good appreciation prospects or bad areas with cash flow & no appreciation prospects. When I look historically, the B/C neighborhoods do go up dramatically from their bottoms and close the spread between A areas when times are good and/or financing is looser. But not as consistent gains as A/prime areas. For sustainability of continued investments, , and my desire to work less in my 9-5, I lean towards B/C neighborhoods with strong cash flow returns and good commute times to employment centers, and make it the nicest property on the block.

You have to come up to the north side of bay to get some good returns @Jay Y. ! I'm buying (and currently living) in Richmond. Good CF. I'd be interested in chatting with you a bit. I've been back and forth considering out of State, but I'll be buying here until the cash flow dries up, then be back on this post thinking about what to do.. lol

I assume this is a condo unit since you mentioned the HOA. You can do it by yourself I think. Leasing it up from vacant takes a bit of time/energy/phone calls. But ongoing management of one condo unit (where you're not responsible for the outside) should be easy peasy. Yes, it is common for condo owners to use the o-site manager. Usually though, you can also give them the specific criteria you would like in a tenant if you think the tenant screening is the only issue.

How often do you really receive calls from the tenant in a typical 12-mo period? How far away are you?

Is there a neighbor/handyman in the building you could pay a few dollars as needed instead of paying for constant property management to do nothing except take the calls you never get?

I've never heard of someone not getting a security deposit!! It is a must!!! The tenant's incentive to get back their $1,000 or whatever can avoid MULTIPLES of that in damage. I would also get rid of the carpet and get some super durable laminate if your HOA allows it. Almost as cheap and will last a lot longer under normal circumstances. I use mysmartmove.com for screening tenants for credit, criminal background.

btw, I manage 6 units and work full-time, but I live on-site at my 4plex, and will shortly be passing all these activities to my trusted handyman. I also have some flexibility with my job if I need to handle something. Find a good team of people you can trust as you grow your empire! Highly recommended..

As stated previously, the purchase process and rehab take SIGNIFICANTLY more time and involvement than the day-to-day management, with lease-up taking some time/effort too.

It will not HURT you. And you can get it done in a few hours!

I hear you. I was hesitating on ordering business cards for a different type of prospecting because I didn't have a website bought/created yet. It just felt like it was too much to do. Then one afternoon a few days ago, I decided I was just going to get it done. I went on godaddy.com. You can buy the domain name for .99 cents for the first year and .99/mo for the personal website builder, which has most of what you should need. And it's easy to make. They even have a RE template. If you already have hosting, there's no more cost. If you need hosting, it's $5/mo.

So in about a half an afternoon, I bought these services, made a website, and created and ordered business cards through VistaPrint (used before, although I'm sure there is cheaper out there..). I have also used GoDaddy in the past, and it's easy for me, but I'm sure there are other good options also. Don't let something so easy delay you or make your marketing less effective! IMHO.. Here's the one I made:

www.jtmreg.com

Good luck!

FHA highly recommended, as long as you can get into contract with it.. That's what I did.

They should count 75% of existiing rents (or appraisal market rents if vacant) toward qualification ratios. Great for qualifying for higher price! Go big if you're limited on capital, because it's real tough to get another one!

Good luck!

Thanks @Sarah Lam ! Looking forward to it.

I took a look at your investment goals. Looks like you and @Johnson H. are drinking the same kool-aid on the Texas market.. No one in here likes the Bay?!?

jk Looking forward to hearing about the Texas story and meeting everyone. See you then!

I did 3.5% down FHA on a quad/4plex. Then 20% down on non-owner occ 2-unit. I think you can do 20% down on quad also. But FHA is the best deal ever if you're going to buy more later! Ask your banker/ loan broker to run each of the loan types/downpayment scenarios and send you the spreadsheet with the PITI calcs so you can see how the leverage changes things and think about what you would do with the extra money you don't put down.

I was about to do 25% down conventional on a 'duplex' non-owner occupied (actually two houses on one lot/parcel) after my FHA purchase. But I took a slightly higher rate to do 20% down instead (I didn't even think it was possible, and asked my loan broker right before we locked our rate, and he said no problem, just higher rate.) I did it through a broker in the SF Bay Area who placed the loan with Land Home Financial Services, out of Illinois or Michigan I believe. I think they're all over the US.

I'm not sure if you're just trying to avoid the PMI, but the 3.5% down on FHA for a rental property (and a big chunk of cheap, 30-yr money) is the best deal out there if you ask me. Put 3.5% down instead of 20% (and ask for a 2-3% sellers credit for closing costs) and save the other 16.5% down for your next deal! I think the FHA rate was cheaper than conventional when I bought also. If you're not going to buy more, or have unlimited capital, no worries then. But I challenge you to go find 30-yr fixed rate financing for equity money anywhere, let alone at those rates (even factoring in the PMI until you get to 80% LTV). I got lucky on my timing, but my 30-yr fixed FHA is at 3.25%. And that downpayment allowed me to do deal #2. You have to be careful with it. But one of my very smart friends once said, "If cash is king, then leverage is god."