All Forum Posts by: Matt K.

This might come off a generic or too broad, but I'd love to see something that shows your value proposition for an existing home. I feel like people hear architects and think new construction.

A lot of those same people probably feel a remodel is simply done through a GC...

1 Vote

Oakland, California

Figure out your budget, that'll narrow your search to something that fits.

1 Vote

San Francisco, California

Quote from @Patrick Thomas Dickinson:

@Becca F. I’m cashflowing about 250$ and expect more cashflow year on year with rent increases. I’m leaning towards keeping it like you said

What expenses you accounting for in your cash flow estimate?

0 Votes

Oakland, California

Quote from @Patrick Thomas Dickinson:

@Matt K.

If you walked alway with 200k in liquid money to use as a downpayment what would you buy in Kansas City, what could I buy that generates 6500 to 7500 in rents that doesn’t require large amounts of Lending keeping in mind that rates are at 6 to 7 percent interest rates.

Would you buy a apartment complex or just put a bunch of little down payments on multiple properties?

5332 Cedar StRoeland Park, KS 66205

listed right now at 210, Airbnb it'd do 2-3k mo

4631 W 59th TerFairway, KS 66205

Listed at 260, Airbnb it'd do 22-3500 mo

11604 E 55th StRaytown, MO 64133

listed at 130, could do well likely on Airbnb 2k or so... Or rent probably around 1100

600k, 20% down, 5% for closing, 50k cash for reserves.. finance the furniture, no interest credit card for the misc stuff to get Airbnb up and running....

Treat this as proof of concept, not anything specific being a deal...

1 Vote

Oakland, California

Quote from @Carlos Ptriawan:

Quote from @Matt K.:

Quote from @Patrick Thomas Dickinson:

@Carlos Ptriawan

I like what you said here it’s kind of what I was thinking already, i feel like holding my home in Brentwood will pay off better in the long run, cash flow is great but I have to look at the bigger ( aka cash flow that goes up year on year from rent increases as well as probably long term appreciation) California just seems to be a good long term investment if you look at historical performance

It will pay off more money because you invested more money. My KC investments make less money but have higher rate of return percentage wise.

At the end of the day , what really matters is the absolute dollar value via cash flow or appreciation :-) You could simulate investment via indirect investment too, if you want steady cash flow, invest in notes. If you want appreciation, invest in MF syndication.

Of course percentage wise Midwest is higher because the baseline is low. It's basic math.
That's why I keep saying comparing Bay Area to midwest is meaningless :-) When we talk about investment we shall use terminology like IRR/XIRR. I can also say that my investment of $20,000 12 years ago now is becoming more than $600,000 , much larger than investing in Google stocks. It's possible because of the leverage, low interest rate, and economic boom.

Regarding cash flow I can give number. I can still cash flows from MF in Antioch, just 30 minutes from Walnut Crek. Why ? because the cap rate is 8% and it's still in bay area. The absolute cash flow is $1,500. This cashflow is much higer than any midwest CF. I sell it however few months later for $100k profits with very min flipping.

Also, In midwest typical appreciation is like this :
Alabama 2015-2016 70-80k sfr now around $110-$120k
Indiana/Wisconsin from $80-100k to $130-150k.

The basic logic of investing for appreciation remains the same, from algorithm perspective is straightforward:

You invest SF at the most expensive place that you could afford to buy (Cupertino,Atherton,Palo Alto).

If you want cash flow for forever:
You invest at MF that doesn't experience much appreciation (some cities in Ohio, Indiana,Detroit,Flint Michigan,etc).

12 years ago, you could still get leftover deals from the crash...and you had less competition because of people not being able to qualify for lending/still nervous about the prices still going down.

Plus it never has to be cash flow OR appreciation there's ways to balance the two. But COVID and people fomoing into properties throws a monkey wrench into forecasting future appreciation. Remote work has boosted areas that typically were flat and lowered areas that were typically strong.

With that said, I'm curious to see what happens in the office/retail space....that could get interesting with everyone focusing on housing as investments, potential recession, and potential for remote work to remain common place.

0 Votes

Oakland, California

Quote from @Patrick Thomas Dickinson:

@Matt K.

I hear you Matt, if you have more money in your obviously going to make more. The thing that scares me is that Kansas City as well as other areas in the Midwest are clearly not a California, Californias like one of the biggest economies in the world with several high paying jobs.

Just to clarify your opinion is that I should sell, and roll that money into a cash flowing property out of state. ????? Id be curious to see what appreciation was like in all these Midwest areas prior to covid. Good jobs , good weather , tech , really do drive real estate and I think California leads the pack in many of those areas .

I'm not anti CA, it has it's place but to me that place is the primary home....and then a rental if needed for limited amount of time so you can maximize tax free/deferral....

^^^this reduces the risk of bad tenant, gives you more flexibility to take advantage of equity, and can be a potential bost to a retirement (from appreciation) later in life.

If it was me, I'd redploy the money into something that performs better. That could be something purchased outright (not really a fan of that) or something with lower LTV spread across multiple properties and with in that a mix of properties.

In terms of timing, I'd wait till I came across a deal in the current market or for the market to soften and find something where someone NEEDS to sale vs wants to. You're not a time line like a 1031, there's no reason to buy something just to buy something.

But before I did any of that I'd find the actual value of my property today from an agent. Go over the projected range it'd sell for, calculate my estimated cash I'd walk away with. Then set a firm number that I wouldn't take a penny less for..... anything above would just be a "bonus".

Then I'd talk to a CPA about what my tax situation would be if I sold in 1 year, 5 years, 10 years... For sale price, I'd use conservative appreciation prices as if "worse case" scenarios.

Then you can tweak/adjust your loan balance and get a pretty good idea of where you'd stand and how much apppreation you need to hit a specific number.

700k in property gets you x amount of rent per year and y amount of anticipated apperception per year. Brentwood would be one set up values, Stockton another, KC another etc etc. Researching the economic situation of a market is easy and there's tons of data to do so, but time consuming.

If I was to guess off top of my head here..your property probably gets 2.5-3k mo in rent. Appreciation would probably be 5% year or so averaged out.

KC you could probably get 6.5-7.5k mo and similar appreciation... The extra rent would make up the higher loan interest and operating cost for multiple properties...

This a lot of words to simply say, clearly define the goal and potential time line.. understand the costs...then come up with something that provides you the most value (not just money or stats).

0 Votes

Oakland, California

Quote from @Patrick Thomas Dickinson:

@Carlos Ptriawan

It will pay off more money because you invested more money. My KC investments make less money but have higher rate of return percentage wise.

But crunch the numbers, you stand to save a significant amount because of the 121...with hardly any strings attached. 1031 can be tough because not only do you have to actually find the replacement you have to time it with finding a buyer as well. Or take the hit on Capital gains tax and depreciation recapture... Which if held for long time could eat into the appreciation significantly.

All this is meaningless though with out understanding your specific goals/exit plans

0 Votes

Oakland, California

Quote from @Carlos Ptriawan:

Quote from @Matt K.:

Quote from @Carlos Ptriawan:

They're very different outside a spreadsheet...the other areas are more deseriable and would have less risk of decline and more potential of higher appreciation.

But again, arguing a market vs a specific property is kind of pointless. The simple point is OP has a good chunk of equity that he can either let sit and cash out later or redploy to something else. His property/market isn't a unicorn and singnifcantly outperforming anything, the returns could easily be matched or beat in plenty of other areas.

Or let it sit...

And if you (or anyone else) wants a market report from CCAR (local MLS) happy to email it you ... As an alternate data source to Zillow.

I keep saying that, it's an opinion , the data says Brentwood and Walnut Creek is not much different in term of trendlines from past historical performance and even Brentwood is slightly better :)

I have MLS data as well. What the OP asked is very normal to everyone in CA. The thing is inventory is extremely low in Bay Area, so if you still have a job in Bay Area or are willing to pass the house to family, don't sell. If you plan to move to KC, then buy in KC. If you really want to buy OOS, just take refi/HELOC and buy in KC,Alabama,costarica, indiana or whatever that could yield cashflow.

Creating cash flow is an easy game. You don't even need to have rental properties.

I had rental properties in bay area and CF market as well in midwest, in real performance, you can't compare. The biggest mistake someone will do is selling bay area and buy multiple OOS in midwest for cashflow. If you don't sell your CA then it's acceptable. To buy OOS you only need $35k-$75k for the dp.

The trend for Brentwood is skewed because of the new construction propping up the average value/sold price. Exclude that and you get more accurate picture, walnut creek doesn't have the same new construction (more condos vs homes)....

Money is made on the buy, my primary house (not far from Brentwood) saw 15% appreciation over 9 years from when the previous owner bought and sold to me. If I was to sell today, I'd see 40+% and I've only had it a few years, but that's already started to stagnate and might drop some...

My KC house is like 70+% if I was to sell...but being as I'd have to 1031 it makes it far more of a hassle then just keeping it.

The above percentages though are kind of meaningless because dollars invested in KC and CA for me aren't close to equal...

OP is probably seeing around 25% appreciation (just a guess based off loan amount and his sale price)... That wouldn't be hard to reproduce or beat.... And there has to be some consideration to the fact he could do it now tax free vs later when it's a 1031 and he has to replace it defer the taxes.

One option could be sale it, hunt for a aggressive deal and improve his position...if no deal came then it's realistic he could get back into a similar deal to what he has now.

If he keeps it, he's not able to borrow much against the current equity because most HELOCs going to need 20-25% buffer...and the property is unlikely to go up 20-25% in the foreseeable future, rather it's more likely it'll dip (likely already has) and then appreciate slowly...

Inventory ticking up, days on market ticking up, but as you know good houses will likely always be in demand.

0 Votes

Oakland, California

Quote from @Lynne Hart:

Slow but steady growth is the trend, but I guess you can choose to view it as you please!

It's been the opposite though, it's been a decline and other Midwest cities have sense the growth.

The decline has slowed though, that's positive...and if you go into the actual neighborhoods there's even more positive signs of improvement (as I'm sure you're more familiar with them I am)

I loosely browse this site for info on STL, but don't track it as much as other places...

https://nextstl.com/

0 Votes

Oakland, California

Quote from @Lynne Hart:

Quote from @Matt K.:

Quote from @Carlos Ptriawan:

Quote from @Patrick Thomas Dickinson:

d worth about 700K, loan payoff is 455k should sell fairly quickly i would think, with rates being higher (probably above 6 % for investment property) and my rate in brentwood being 3.38 Im thinking its better to hold and rent. The property currently cashflows about 300$ a month.

>>
Brentwood would be a 1 mil property 5-6 years from now as it's the only "good neighborhood yet affordable" in North/East bay area.

Unless you will move to KC no need to buy in KC. A good comparison to KC around Bay Area is Stockton, the current 2022 price is $450k from $120k in 2013; hypothetically you could still get cash flow and appreciation in NorCal if you invest at the same time.

Brentwood doesn't see the crazy appreciation as other places because it's main value proposition is being affordable...Walnut Creek, Pleasant Hill, Concord, and parts of Martinez would be more likely to hold their value as they're more desirable then Brentwood... especially with people moving from the South bay.

Here is a random example from Brentwood
922 Oxford Ln Brentwood, CA 94513
Sold for 225k in 2010
401 in 2017 (+~90%) And was listed for 650 July of this year, still not sold and reduced down to 625 (+~30%) ... Any bets on what it'll actually sell for?

Compared to this random example from WC 1582 Siskiyou DrWalnut Creek, CA 94598 it gets absolutely crushed on a similar time frame.

Also,

Stockton isn't like KC at all aside from prices, they're worlds different. KC and the suburbs have pretty diverse employment with mix of emerging tech, corp headquarters, government, and lot of logistical jobs.

Stockton would be more similar to Saint Louis where people are leaving for something else....

Saint Louis is actually seeing tons of incoming tech, medical, and investments. While certainly people leave, I would consider it similar to the way you described KC. Yet values are still affordable even though they are up over 20% in the last year.

STL is struggling to attract/keep residents, there's some cool/big ideas and projects/investments but overall it's a long long long term play.

Just like Stockton if they can find a way to keep people from leaving and then start attracting new people it'd be a huge win, but it'll be slow and ton of external factors will impact it.

0 Votes

Oakland, California

All Forum Posts by: Matt K.

Matt K. has started 11 posts and replied 3834 times.

Post: Ask an Architect - What are your FAQs us?? What do we even do!

Post: California Or Out of State????

Post: To Sell or Rent my house San Francisco Bay Area

Post: To Sell or Rent my house San Francisco Bay Area

Post: To Sell or Rent my house San Francisco Bay Area

Post: To Sell or Rent my house San Francisco Bay Area

Post: To Sell or Rent my house San Francisco Bay Area

Post: To Sell or Rent my house San Francisco Bay Area

Post: To Sell or Rent my house San Francisco Bay Area

Post: To Sell or Rent my house San Francisco Bay Area