All Forum Posts by: Lee Ripma

@Andrew Johnson

I tend to agree with Andrew Johnson. You can make a lot of places work for RE investing. If you want cash-flow then you could go to the mid-west. I live in CA and invest in Kansas City and I really love Kansas City now. I actually would move there. Sounds like you already like Charollette so maybe stick with that for now. Go there, see if you can find sub-markets that will work for your strategy. I think you can make it work in a lot of markets but I agree that the barriers are tough in high-priced markets like NYC, LA, SFO, and San Diego. I don't invest in CA because buying property is simply too expensive and I understand cash-flow markets. There are those on here who say you should get started in your backyard, but I like your approach of choosing a new backyard! I actually think a lot of these high priced cities will see an exodus as remote work becomes more possible and folks tire of the high prices. When I think about markets to invest in I always think about jobs and population growth. Good luck and keep us posted! 

One use of the money would be driving for dollars and then doing a direct mail and/or door knocking campaign to find wholesale or fix and flip deals. If you can find good enough deals you'll be able to use hard money or private money to fund the fix and flips entirely. If that's not what you're after you could use it to market your services as a realtor. Then for every deal you'll be able to either sell retail, wholesale, or fix and flip!

Just now finishing renovations on one in Kansas City and will be leasing in a few weeks. Bought as a buy and hold, just did major renovation, gross rents $3,475. I'd probably be willing to sell it for the 1% rule assuming no agent fees.

@John P. and @Levi T.

I followed up with my partner on this and no, you can't recover damages with renters insurance. The function is to protect you from liability caused by them. For example, a friend of your tenant trips on an electrical cord that is in the rental and gets a head injury. An attorney recovering damages would have to go to the renters insurance policy first. Same with a dog bite. If your renter burned the place down then their renters insurance would pay for the deductible. So I misunderstood the function of the renters insurance when I thought it could cover damages to the unit. 

@David West

I'll chime in here, even though I don't invest in San Diego, only out of state. 

Since you'll owner occupy you could try a lower down payment conventional loan. I know that loan depot has an owner occupant 5% down loan without PMI but the interest rate is a little higher.

To overcome some DTI issues you can find a willing friend who will sign a lease with you for your current residence. You can then count 75% of that lease amount towards your monthly income. In high priced markets like ours I've heard realtors suggest this, warning it's technically it's cheating, but you are going to rent it out.

There are also 10% down vacation home loans that also don't have PMI but have higher closing costs, might work. I was thinking about doing one for a place in Mammoth Lakes.

I know others may disagree with this approach, but I rent in San Diego and invest in rental properties out of state. It's a bit hard being remote but I'm getting good systems setup now. The nice thing about doing investments out of state is that they are always setup as investments. Just my approach to the high prices in SD! 

Hi @Beau Ibex Graham ,

Sounds like you're getting good returns but you want to leverage and do your own deals. Also sounds like you want MF that you can do value-add to either now or in the future. I've surmised this because you said you want the 20% back. My hunch is there are a lot of markets and submarkets that this will work in. In my opinion, you've got to find a market that has cash flow and a stock of MF properties there that will work for you. For example, you're saying 2-4 units but some markets just don't have those. In my opinion, all you need is to find one market, and focus on it. 

I invest in MF in Kansas City. This is exactly how I chose it: 

1. google top cash flow areas or consult something like this:

https://s3.amazonaws.com/cashflowsavvy/Cashflow+Sa...

2. Think about if I know and trust anyone in those markets, no I don't. 

3. Think about the markets that I can easily fly to from SoCal or have been to and think are cool. 

4. Kansas City jumps out right away, I went there in college and thought it was cool, my partner in the deal is a Chiefs fan. Okay, great, let's try it. 

5. Research KC a ton, try to figure out submarkets from afar, start looking for deals on MLS and loopnet.

6. Go to KC, meet with people, make offers on deals that in hindsight were terrible. 

7. Drive all over KC, look at a tons deals that are terrible, look at a ton of areas I wouldn't invest in, walk over, go all over, drink tons of coffee, download all deals of MLS and map them. Feel like all I've done for 3 days is drive around and stay up all night.

8. Finally, find an area that I like and get a deal there (duplex and fourplex). 

9. Get PM company I think I can trust, get contractor I think I can trust. Kick out tenants and start rehabs. 

10. After several months have to fire both PM and contractor, end up taking over the projects, fly to KC 6 times in the last 6 months. Spend tons of time on the projects, but learn a ton! 

Now have trusted people in my KC market. I now know what I want in a deal and know the costs of rehabs. I now understand so much more than I ever did before about the KC market. 

Here is my take home from this: It's a ton of work, at least at first. It takes a lot of tries before you find someone you can trust. It's hard to invest from far away. Things don't go as well when you're not there. You think that people will make good decisions when you're not there to oversee them, they don't! 

That is exactly how I chose my market and my experience after doing so! 

I'm really no expert on this but tenants have crazy rights in LA and can hire attorneys and drag out the process for many months. I would personally have the owner deliver the place vacant and pay the 30k, my understanding is that tenant relocation usually costs more that that. However, since you're going to owner-occupy the place you do have the ability to kick out the tenants but you really need to be careful and hire an attorney who specializes in this. It doesn't seem to mater if they have a lease or not, they have rights to keep occupying the place and paying the same rent. Just be really careful in your tenant dealings in LA!

It depends on the area but cap rates are fairly compressed in KC right now. For desirable areas you're looking at valuations based on a 6-7.5 cap. Even a larger C class property I was looking at in Belton was listed around a 7 cap. The thing that kills me on a lot of those LoopNet deals is that they are trying to sell them on an 8 cap based on proforma numbers (after upgrades!). That won't allow you to capture the upside. I live in LA and invest in KC. I'm just finishing up a 6 unit project and am also searching for a small apartment (6-20 units).

I went to KC and drove around until I found an area I liked, now I invest there! I bought a duplex and a fouplex and am looking to buy more after I finish my rehabs on those. I relied on a PM and a contractor and I ended up having to go out there and fire them both. So now I'm doing my own PM with local partners and have a contractor I trust. However, it has been a ton of work! I look for an area and a market that I understand, not schools or crime stats. If you don't want to do all the work on learning the markets then I think it's hard to be successful. But I'm really no expert, I only just started!

There are so many areas in KC! I've seen a lot of TK activity by the new Cerner Campus and in the Ruskin heights area. I just wouldn't buy SFH in those areas bc I think the appreciation potential is low. I was really going for high level strategy with my comment rather than specific areas. But those are two TK areas that I really don't like.