All Forum Posts by: Matt K.

Which part of the bay area ?

Unless you have some solid relationships with contractors that's going to be super difficult because the good ones are beyond swamped with work.

Hard money going to want a LOT from you unless you have experience and some are getting more and more conservative about lending in CA for a bunch of reasons.

In the east bay the market is so crazy, to some extent there's almost no point in flipping. You expose your self to so much risk and potential delays you might be better off just listing something and letting it go with minimal work if you could find something off market. Multiple offers, cash, no contingencies is the new normal here.

If you're going to smaller markets outside the bay area you might as well look at something out of state. It's basically the same skill set to be able to handle a flip that's a few hr drive as something that's a few hour flight lol. But be warned Bay area isn't the only crazy market you'll see the same challenges in most areas...just the price will be lower.

Feel to message me if you want more info. I'm in middle of a total gut rehab in KC as we speak haha 

I kind of tried this path years ago, just couldn't get the stars to align with finding a property I'd want to live in as a primary and with in my budget. During that time I also became more and more concerned with the lack protection for a landlord and increased risk/exposure as being a landlord in CA.....so I passed on trying to make it work.

With all that said, not trying to talk you out of it, but at these price points we're facing here have you thought of doing a primary but supplement/offset the rental portion with something out of state? You could very likely get a primary and at least a couple doors out of state that would have a similar effect on reducing your CA living expense with rental income and having the benefit of separating your primary living investment properties. Then you have way more options on properties and exit plans...

Quote from @Austin Cai:

Anyone have good home insurance provider recommendations for the Oakland area? It will be for a multi-unit investment property? Thanks!

 I have a fantastic broker I use out of walnut creek, message me and I can get you his contact info.

I'm working on getting one up and running in Waldo. One thing that caught me a bit by surprise was the cost of actual isnurance for a STR specifically. Quite a bit more but also way diffent then typical insurance.

Quote from @Brandon Bortnick:

Looking for advice/ opinions.  My partner and I bought two teardowns on one large lot in Lincoln heights as a flip a few months ago. We have done a lot of the initial work (new foundation, demo, stabilizing the hillside, minor framing.  Unfortunately he suddenly passed away last week, hence, I needs to sell them.  I was just the money guy, and he was the experienced flipper. 

Any suggestions on other groups or people to reach out to that would be interested in this type of investment? 

 Sorry to hear this, if you haven't found a solution yet I can help out. Message me and I'm confident we could come up with a plan to get this taken care of.

Those areas are all very diffent, narrow down and your search and better define your criteria. You'll want to become an expert and do your own research because there's a ton of "marketing" out there that's not really accurate...

Once you better define what you're looking for really dig into the rents and get a feel for what goes fast and what sits (you'll see it relisted often).

Also know you're up against a ton of competition, find something that sets you apart and maximize your offers off that.

Where's analysis paralysis towards the start of your chart haha 

Quality skilled labor going to be tougher then you think to find unless you've networked and have some refferals....

lot of sharks out there that will take your out of state money and give you nothing but headaches....

this going to be hard right now unless you have some cash to throw around...you're competing with people who have easy access to a LOT of capital. Some are in it to make a good investment, some have no idea what they're doing and will drive the price up, and some just need a house...

Then you're going to have a problem of finding a contractor. The good ones are booked up with more work then they want and the bad ones will just burn you and take your money ... Labor is thought in KC right now as there's so much work you either need volume or higher pay to get quality.

Lastly, building materials are WAY up. Tons of people doing projects from building out entire subdivisions to upgrading the home they've been stuck in for a year. Lumber for example slowed down production during start of covid thinking things would slow down, they didn't . Now prices and lead times are up and it's just lumber.

If you want to be competitive you're going to need a few things:

Access to capital- you're going to need this not only to buy but also finance the project. It'll be hard/expensive to use loans for this with zero history or experience.

Networking- This is split up few diffent ways. But better you can network with those that can find properties and those that are in the trades the better you'll be. BUT if these people are of quality, they'll want to see you can perform...and that probably entails closing a property or pay for a remodel. You might get some slack and they'll take smaller job etc if they slow and it fits but... Trust is a two way street. Both parties need to earn it and you start by showing your capable of paying for a job/house.

You can add lending into this as well as it'll be good to find private lendor but this tends to be more business/relationship based. No one going to lend someone money with no proof they can handle it...or if they do it'll likely require you to have more at stake then they do.

As mentioned above house hack can be fantastic way to get started. The funding easier, you can do some stuff your self and you can offset your hosing cost with that rent. If you buy right the property will appreciate on its own and you'll still get some equity out of it.

If you're looking for a mentor I'd shore up what you're able to provide. There's plenty of dreamers out there looking for help, but they are far away from action. I've found if I approach people with a plan, details on how I'm able excute...but ask a specific question to  challenge I'm facing it's been well received. It shows I'm capable of what I'm trying to do, shows I've done the research and I'm asking for help on a specific thing (that the mentor probably overcame). These mentors aren't going to help because they're bored, they're looking for something of value to them. Maybe you're a pro at (insert some niche skill) find someone who sucks at it and doesn't have a network they can get help with. Then use that as a barter like hey help me overcome (specific problem), I've tried xyz, any recommendations?  Then as convo offer up something like I see you're struggling with (specific thing you're good at) I can help you with that as I'm (insert proff you're good at this).

You need to understand what you're up against...and simply put it is people/groups with a ton of capital to deploy. KC is still cheap for many in coastal areas and it's easy to sell high priced home elsewhere and get literally anything in KC. Everything can cash flow with enough money down, "overpaying" to you still presents a good return to many especially once capital gain defferals are factored in...

The second part of this is at the same time you're against people desperate to make their housing more permanent and or better suite their needs. These buyers are competing against the investor and sometimes the only way to compete against cash offers is to go higher and hope you win.  

what happens is all the "normal" people looking for a starter home get priced out at certain point and go back to renting (which drives up rents). Then you have people who go in on the higher end of their budget for a home that previously would of been towards the lower end...they were already ok with that home then, they're going to be able to afford it now...even if it means "overpaying".

Now you're basically left with a group of people who have money and need a property. The pandemic hasn't effected high earners the same as low earners so if you're strong finically there's a lot of access to loans. Plus if you're upgrading the property you get rid of likely appreciated pretty well too...

I don't say this to discourage you, rather level set and point out having money or access to money doesn't give you an advantage right now. Running numbers in a spreadsheet doesn't set you apart or give you a secret insight into a deal...

You need to focus on something that makes a deal and find a way to apply it to the market. Maybe that's because you understand rents or potential rents better then your competition, maybe you have the time to cold call, maybe you have a better level of understanding/networking in construction and repairs.  Any of these work, but they won't work unless you're an EXPERT in it...and better then the majority of people you're competing against.

Figure out your niche, hone your craft and perfect it...don't try to be good at everything, be great at something.

This is coming from a Coastal person who's invested in KC before the craziness but I've already seen an entirely new level of crazy local that isn't anywhere close to KC yet.