All Forum Posts by: Lucas Martinez

Originally posted by @Brandon Sturgill:

@Lucas Martinez good points...good discussion. I think SoCal is pretty awesome personally...we visit pretty often...love hanging in Balboa Park...beautiful scene...nothing quite the driving the 1 up the coast...last time there we drove LA to SF on the 1 and immediately starting looking for local RE.

Hope to see the ADU restrictions lighten up soon...that's really the key to starting to bring our housing markets into balance...there really is no such thing as a housing shortage...dwellings exist in every 2-car garage in America...and definitely a win-win if you can build on your own parcel in SoCal.

I think at the end of the day it's the barrier to entry...for most guys starting out with $50k in capital, SoCal is not on the list of places to look.

Oh, and don't forget about Lake Erie ;) 

Totally agree that there’s a high barrier to entry, and I’m really glad the state is aggressively blocking local municipalities from preventing ADUs. It’s gonna create a lot of opportunities for homeowners and renters alike. 

And I’m a big fan of Columbus personally too. In a past life I used to visit the DSW headquarters out there a few times a year. Spent a lot of time in German Village over the years, which is beautiful.

I agree with you that a buyer shouldn’t submit an as-is offer if they expect to ask for credits. They should intend to honor the contract. But that’s all the as-is clause is…an intention. Assuming that no inspections or disclosures are provided by the seller, the buyer could potentially find out all manner of things about the property after submitting the offer. If they discover a huge amount of foundation damage that neither buyer or seller was aware of, or they discover that the home is in desperate need of French drains, you’re saying that the buyer should just honor the contract or walk away? That doesn’t provide for any flexibility for the buyer and seller to work out a deal acceptable to both parties, which at the end of the day is the goal.

My point is that the entire process is a function of the market supply and demand. If the buyer feels like they need a credit in order to make the deal work for them, and the seller decides that their best course of action is to throw out the as-is clause and issue the credit because they’re not sure if they’ll find a better deal back on the open market, what’s wrong with that?

@Brandon Sturgill So in your world everyone in San Diego drives their old Civic to their McMansion that they don't really own anymore and then they sit around at their coffee shops being self-centered a$$holes? Ok got it. Sounds realistic. 

San Diego median HHI is significantly higher than Denver, Austin or Columbus. California generates almost 15% of US GDP and has the most high paying jobs of any state. And yes, our "commie" government has to come up with solutions for creating more affordable housing for the working class, but they are providing opportunities for real estate investors in doing so (new ADU laws, for example). Yes, Denver, Austin and Columbus are all on the upswing. But there will always be more demand than supply in coastal California. They aren't making any more coastline. What does Columbus have that other midwest cities don't? What will create the persistent demand that outlasts the temporary boom?

I'm not ragging on any of those 3 cities...I like them all, and I'm not going to tell anyone they're making a bad investment by going there. But that's exactly what many people on this board say about Coastal California, which is what I take issue with.  

I don’t see how it’s disrespectful…at the end of the day the market dictates the price. A seller can set the price wherever they want, whether or not it’s reasonable. If the seller has multiple offers, or think they can go back on the market and sell it quickly, good for them - they have all the leverage they need to deny any request for credit. If they have no other offers and no other prospects, the buyer has the leverage. I don’t think “respect” comes into it at all. It’s the beauty of the free market. 

I agree with @Dan H., coastal California is some of the best buy & hold real estate in the world...if you can afford it. California gets a lot of hate on these boards, but the returns can be massive when you consider the rapid rate of appreciation. Yes, properties in the Midwest will cash flow better early on. But over the long haul there is no comparison between Columbus and San Diego. 

But for someone early on in their RE investing career, it could make sense to generate income & capital OOS with the eventual intention of coming back into the coastal CA market. If you don't have the cash, it can be a very slow go to build up a portfolio here. 

It's really hard to determine which buyers will ask for credits down the road, so you won't know which offers to "exclude." One way to minimize this is to have pre-listing inspections done and included in the MLS listing. If buyers read the inspection reports before they make their offer, they can't really turn around and say they want credit for something that they should have known about before submitting an offer. It at least gives you maximum leverage in that negotiation.

But at the end of the day, you should definitely work with a realtor. A good one will pay for him/herself by getting you top dollar for your property. 

I mean, realistically speaking "as-is" doesn't really mean anything in terms of the sales contract. I agree with the OP here. If the buyer decides to ask for a credit because they discovered something they had no way of knowing before their due diligence & inspections, the seller needs to decide if it makes more sense for them to find a new buyer (and have to disclose whatever it is that the first buyer discovered up front to any new prospective buyers), or just suck it up and give the credit. In my experience most sellers choose the latter. 

@Jack B.

Why do you say never get a HELOC and only go for a Cash out Refi? Curious what the downside of a HELOC is

@Bruce Woodruff Lake Arrowhead just banned STRs (at least banned them in any property with lake rights). Bummer because it’s an ideal rental market

@David Arsene

I thought the state law says that an ADU can be up to 1200 sft if it has 2+ bedrooms. Does your city have additional restrictions that prevent this?