All Forum Posts by: Lee Ripma

Also Twentynine Palms and Yucca Valley in the mountains near Palm Springs and Joshua Tree Natl Park.

Rialto is having a major renaissance. The City of east LA does not have rent control but is close to DTLA.

I would only work with licensed GCs. Beware of handymen doing a rehab! I’m still working out my lending, can be tough to find banks that will lend on LTV not LTC after a value-add rehab.

@Kyle Burkhardt

1) Kansas City is a big area so it's all about finding your sub-market. In my opinion, this takes a lot of research and time in KC. 

2) You need people you trust, which in my opinion you get by building relationships in the market you want to invest in. You have to devote a lot of time to build these relationships and there will be trial and error. 

What is your goal in buying real estate either in LA or elsewhere? Have you considered a lower-priced market that you could drive to?

I would recommend what I did, buy a small MF that is value add. I did a complete renovation and learned a ton. I’m glad I started with a MF. I now have a track record of MF and that gives me cred with commercial lenders. I’m glad I didn’t do any SFH. There is a case to be made for a lot of different avenues, and in the end it might not really matter if your first deal is a SFH or a MFH. Some of it may be determined by the market that you’re in and what’s popular with renters or just available as inventory. I like the value add MF because now I’ve got a small portfolio and I just know so much. I’d rather hold the mistakes I made then sell them off in a flip. I get a lot of value out of Michael Blanks podcast. When I was trying to decide I just thought back to what most investors say, which is often: I wish I started earlier and went bigger sooner. Michael blank talks about how he flipped houses so that he could get cred as a MF investor. But really it didn’t help him at all. So if you eventually want to do something jump in. That’s my two cents and I hope you got some value from it!

Ron Trinh It was tough getting started in Kansas City but now I know and like the market. It takes having a deal and some trial and error to get a local team that you trust. I think to be successful at out of state investing you have to really know your market and go there. It takes a lot of time and effort. In San Diego I choose to live in Ocean Beach and Mission Hills. I don’t like commuting and I won’t settle on location to buy. In those neighborhoods I found prices too high 5 years ago and now. I use my money to travel instead of saving it for a massive down payment followed by a massive mortgage payment. Travel, not commuting more that 10 minutes, and staying near the cost for the moderate weather are worth not owning in San Diego to me. I also just don’t want to be tied to a home that I can’t rent, I want flexibility. Everyone has different goals and mine are achieved by renting in San Diego. There are those that criticize this and say I’m missing out on appreciation. But I don’t care because I’m achieving MY goals! Others have different goals and want to buy, awesome, go for it!

Hi Ron, Congratulations on your wedding! I used to debate this as well. Then I stared looking at the cost of homes in San Diego where I wanted to live. I realized a few things: 1) I was unable to buy what I wanted in the location I wanted to live. 2) if I were to settle a little on location and get something a little smaller than what I wanted I would not be able to rent it and cash flow in at least the first 5 years. 3) I could rent in these locations for less than the amount of “throw away money” per month. Throw away money is a term that I think I made up but I define in as anything that’s not going to principal paydown: property taxes, interest, maintenance that doesn’t increase the home value. So I rent and I buy cash flowing MF property in Kansas City. Many will tell you that you have to buy in San Diego (insert other high priced market here) or you’ll never be able to get into the market. They will also say you’re missing appreciation. They say it will cash flow but it will take 5-7 years. Maybe they are right but I’m also not putting down a huge down payment and my throw away money is less. To me, if I can’t move out of a house and rent it out without losing money, I don’t want it. People buy houses for emotional reasons and those reasons are valid, I don’t want to move my kids school, I want to know no one can kick me out, I want to build equity, I want to cash in on appreciation. So if you’re looking for less money out of your pocket each month, rent. If you’re looking for any of these other things, maybe buy. I couldn’t be happier renting. I like to think it makes me a good landlord and I love a fixed amount of throw away money going out the door every month! That fixed amount is certainly not true of my rentals, some cost is always coming up! And my tenants are happily paying their fixed amount monthly.

Loan Depot does conventional loans with 5% down and no PMI. The interest is a bit higher but only by about .75% per month. There are likely other direct lenders (rather than brokers) that allow this. It’s only for owner occupants.

@Adam Sherritt

I'm working on putting a system in place to do something very similar to what you're talking about. I'm working on refining my system now but the basic idea came from Kevin Bupp's mobile home park investing podcast episode number 7. Take a listen to his system for building a mobile home park database. 

In southern California, each municipality does have maps with the zoning for each parcel. In San Diego there is a layer called SanGIS that you can download but you need GIS to view it. Each municipality will have a GIS system with this info it but you need a list of all the municipalities you're working in. Then you can go through and get the GIS info for that municipality. You can think about working with a GIS analyst to help you, they are usually around 85/hour. Note that they could pull in zoning maps which will show you where apartments could be located to help you refine your search as well. Maybe work it your system for one zip code in San Diego, then expand to other areas. Almost all apartments over 35 will be owned by an LLC or corporation. So you can lookup the registered agent for the LLC/Corp and contact them. You can also find other owners using TLO (in the podcast episode).

Another option is to figure out all your zip codes and download all the apartments that are in those zip codes off of something like Agentpro247. 

Perhaps Costar will do a lot of this for you. I like to build up a system from scratch so that I understand it. For my market in MO I contacted the County and drew on a map that area I wanted records for and what info I wanted for each record. They gave me a price to get all the info in GIS. Now I'll pull it all into GIS and filter it. Pay someone to do some on the ground research. Then do a direct mail campaign and call/email registered agents to all the properties I want. 

I hope that helps!

Lee

@Sam M.

I did this while working a full time job. Although there were two weeks when I took vacation to work on it and I worked a lot of nights and weekends to make it happen. I always tell myself that the first one is the hardest, and I think it's true (although we'll see). Now I have a team in KC that I trust and a lot of local contacts for the market. 

I like @Mike D'Arrigo analysis of the greater markets. Once you find some suitable greater markets then I think you've got to drill down into the sub markets. There are areas in KC that would never buy in and there are areas I think are awesome. So identifying your sub market is really important. As they say, all real estate is local, even down to the block. So really being on the street and knowing the exact area where you are investing in is important. 

Lee