All Forum Posts by: Osazee Edebiri

Osazee Edebiri has started 15 posts and replied 315 times.

Quote from @Account Closed:

Just bought my first rental property (1 bedroom condo) in the Walnut Creek, California area (SF Bay Area).

I bought it all cash so I don't have any holding costs other than HOA, and property taxes.

At this point, I'm not sure the best way to make money from it.

Long term rental (LTR) - Either 6 month or 1 year lease. Steady cash flow, but concerned with California laws around someone not wanting to move out when I ask them to.

Medium term rental (MTR) - Furnish the apartment with some light furniture and start marketing it to hospitals (travel nurses) and corporate stays. Concern here is the apartment may have a high vacancy rate and I would not make as much steady money as renting it long-term. It could stay empty for long periods of time.

Short term rental (STR) - Put it on AirBNB and furnish it with light furniture. Same concerns as above around vacancy rate, and having to build my AirBNB business (have never done AirBNB before). Also, I'm not sure if the condo HOA allows AirBNB, or if they'd care. My plan is to only rent to people with high quality AirBNB profiles with many reviews.

Combination of Medium term rental (MTR) and Short term rental (STR) - Primarily use it for traveling nurses and corporate stays, and put it on AirBNB when it is empty.

Which one would you choose? Would just renting it long-term with a lease be better?

Hi Khail,

Congratz on purchasing your first investment property all cash in the Bay, may people cannot do that, so it is of worthy note.

People already said many things around developing your Strategy in advance of the purchase, so I am curious did you use a realtor to purchase this property and one that was investor friendly? Because they should have helped your formulate a Strategy prior to your purchase.

With that being said you purchased all cash, therefore if you feel the need to sell, just do so when your value is up.

As far as the strategy you chose, your concerns all seem to be around a person squatting in your home indefinitely without paying rent, rather than how much money you will actually make. So what I would do from that standpoint, is take the time to vet a high quality long-term tenant who will only move should you need them to (sale of the home or owner occupy) and one that you can continue to increase their rent reasonable each year.

If you rent long-term you are exposing yourself to less risk because you will deal with less tenancy.

Here are some tips for vetting potential tenants:

Require a rental application: Have all potential tenants fill out a rental application that includes personal and employment information, references, and a consent to run a background check and credit report.
Check their credit report: A credit report can give you insight into a tenant's financial history, including their payment history, outstanding debts, and credit score.
Run a background check: A background check can reveal any criminal history or past evictions, which may be red flags.
Verify income: Make sure to ask for proof of income to ensure the tenant has the financial means to pay rent.
Contact references: Reach out to previous landlords, employers, and personal references to get a sense of the tenant's reliability and character.
Conduct an in-person interview: Meeting the tenant in person can give you a sense of their personality and demeanor, which can be important factors in being a good tenant.
Trust your instincts: If something seems off or you have a bad feeling about a potential tenant, it may be best to pass and keep looking.

By taking these steps and thoroughly vetting potential tenants, you can increase the chances of finding a quality tenant who will be a good fit for your rental property.

Good luck and keep us posted on what you decided to do!

0 Votes

@Blake Kirby

I read this post out and you have some work to do. It sounds like you already bought the property, so you need to work with what you have, but before you do any other actions you need to do more research. Some of the statements you are making are risky roads for a landlord in California.

I have done cash for keys in the past and I understand it well. I did them at a time where cites didn't have set limits for the minimum you have to offer. I operate in the Bay, but when I was looking at purchasing in LA, I read up on the minimums and actually LA was probably one of the first cities to have a minimum amount you have to pay tenants on tenant by out. Without looking it up, I would say its around $10K per unit. Then if you have people in what they call protected classes it is higher. Examples: Senior citizens, children, disabilities. You will need to go to the city website and look up the amounts.

You will have a challenge paying these tenants to move if all 7 units are family and related. They will discuss terms together and if they even decide to accept the idea of moving, giving we past a market when people were paying $25,000 a unit to buy people out because the appreciation was so good, they may expect high numbers from you.

If you are not prepared to shell out a lot of money for the buy out process, then you will have to go with the rent increase method. LA has maximums on how much you can increase the rent each year so look that up. You will need to know when their rent was last increased, increase each unit as soon as you can, for the max amount. If they stop paying rent that maybe in your favor, then read up on how to properly do evictions and work with a specific eviction attorney that does only elections in LA.

Lease terms will not matter, you cannot evict them just because their lease has expired. You will need to look up the current "just cause" ways to evict tenants and try to have documentation to support your case for those. But I will say the easiest method of eviction is non payment of rent.

Also, I would avoid putting more money into the property for any kind of renovations until you either get all the tenants our or their rents go up because you will waste the money and not make a return on it. It is very unlikely you will get a capital expenditure "substantial renovations" rent increase approved post pandemic. Therefore, only put money into safety hazard repairs, so the tenants cannot say you are a slumlord.

So another method might be, if you exhaust the options above you can speak to the tenants and see if they will sign a new lease paying market rent, for you to renovate their units. If you do this method make sure they sign agreements in advance of any upgrades and I would get an additional deposit from them, so that you know they are serious about it.

Remember these people living in your property are human and have emotions just like you and I. Play to that. Come in as someone looking to help them solve problems they may have or improve their quality of life. The way the conversation goes will make or break you, seriously. You do not have to give them everything they want, but they should feel heard and should feel like you genuinely care.

Good luck and keep us updated in how it is going.

2 Votes

Quote from @Oded Liphshitz:

Hi All,

I'm a bit new to the area but have a lot of experience as a RE investor in Ohio. Planning to move to the bay, I'm trying to learn more about investments that make sense around the bay. The parameters I'm looking at are:

Safety: A relatively safe neighborhood where I can trust getting rent and having my renovation project completed.

Cash-flow: A sustainable investment where there's a healthy balance between houses-prices, taxes, and rental income.

Budget: A good entry-level of about 500k tops for house values (I've seen quite a lot of those in Oakland).

I'm looking to start on the right foot, can anyone point me in the right direction and also maybe give concrete investment examples?

Many thanks,

Oded.

Howdy Oded,

I help a lot of people in the Oakland area. As @Bryce Gubler said, that price point will be challenging. $700,000 is probably more doable, but it really depends on your investment strategy. If you want something in the $500 range that is in a decent neighborhood, you will want to go a bit more East Bay of Oakland.

0 Votes

Oakland, California

Quote from @Chris Mason:

Offered through many different lenders, nothing exclusive here.

Live this week.

It's a 2nd mortgage for up to 20% of the sales price. 80/20, partying like it's 1999.

No payments on the 2nd, no interest rate. If they invest 20%, they get 20% of any upside appreciation when you sell or refinance, to fund the program. So if you buy a $1m house and take $200k of assistance for the down payment (because now that's a thing, ha), and it sells in the future for $1.1m, you will have to pay back $220k -- the $200k you borrowed, plus 20% of the $100k of appreciation. You don't have to take the full 20% of assistance, and if you take less, the shared appreciation is less.

The income limits are very generous. $282k in Alameda / Oakland, $211k in San Diego, $223k in Sonoma, $202k in Sacramento... and they hate Hollywood, because in Los Angeles borrower income is capped at $180k.

The reason it edges into real estate investing territory is that it only has your standard 12 month occupancy promise. Most DPAs make you pay them off (sell/refi) the moment you move out, this one does not, just that standard first 12 months that you must personally owner occupy. After that, you can rent, STR it, whatever you want. SFR/condo only. First time homebuyers only, among other things.

Rate on the 1st mortgage has been pre-negotiated by CalHFA to be perfectly average (today a tad below, but just a teeny tiny bit) -- which is actually really good, most DPA have vastly higher than average rates (to fund the program, but this program is funded by the shared appreciation).

Income limits: https://www.calhfa.ca.gov/home...

Who can offer: I'm guessing just about every loan officer in California will have this in their tool box within about 2.541 seconds, so work with whom you like. :) It's not going to be the best option for everyone, but if someone is eligible and didn't request a side-by-side with 'vanilla' financing, they'd be doing themselves a disservice.

Yeah, insane is right Chris, I already have two clients using this.

The other advantage is they were already qualified to purchase a home, but with low down payments. With this program instead of doing an FHA 3.5% or 5% down they can do a conventional 20% down.

This means stronger offer, higher purchase price and they don’t have to pay PMI, therefore lower monthly payments.

1 Vote

Quote from @Tatiana Viviano:

Not saying this is sage advice but I heard of some landlords in similar situations handling in an interesting way. ALl paperwork is put through properly for evictions and remodel. After notifying and providing a container and services to help to store belongings and a short term stay facility, They send contractor familiar with such houses and crew at this point to start the remodel.

They kindly help remove belongings to the container. Electric and water off and slowly safely start "demolition" (removing sinks and toilets fixtures) running as much noisy equipment as possible. Apparently this is a technique most addicts and squatters will leave for and it works a good percentage of the time. Most squatters do not file formal complaints with the department of housing nor would it work because everything was done properly.

This would be in a last ditch effort situation like yours. The key is to find a demolition company familiar. They can do everything in a safe manner and by the book. Smart and legal if done properly. This is in New Jersey, not the most landlord friendly state.

This is California. Taking a tenant's belongings out their unit can you into trouble.

1 Vote

Modesto/Merced, California

Quote from @Tomas Nuno:

I appreciate the response @Osazee Edebiri,

That would be great to hear your story and how you got started with house hacking. Several investors tell me it's a great way to start but I haven't connected with anybody that has personally house hacked. Let me know if you're willing to hop on a call or text, I look forward to connecting with you!

Definitely, sent you a message to connect.

0 Votes

Oakland, California

Quote from @Shanai Rogers:

oh wowwww this I didnt know! Well let me say LTR since nurses stay a min of 30 days and that is my target market, but I will def do some digging. I appreciate you!!

Hi Shanai,

I am also here in the Bay. You are thinking MTR - Midterm rental for nurses, which is more than 30 days.

I have friends that have done arbitrage in the past and it concept it should work the same if you get a rental in an area where you have high demand for nurses. It's fairly similar if you are the owner setting up for a midterm rental or if you are a long term renter setting up for a midterm rental.

The challenge I have always had with arbitrage is you don't get any of the benefits of owning the property and how long does it take you to save up to purchase your own property if that is the goal. Otherwise I do think it is a good way for people to get started in investing.

I would say wether you are in or OOS, the MTR numbers have to work for you, so location of the unit is extremely important.

Good Luck and good job getting one in SF that works.

0 Votes

Quote from @UV Singh:

Greetings BiggerPockets Mates!

I really value the BiggerPockets community and the human wisdom and partnerships available here. I am a first time investor with a decent amount of cash to put down for my first investment property. I am fortunate to be able to invest a decent pot of my life savings (+1mm) cash in investment real estate.

I am a W2 employee and would like to partner up with a strong local team where ever I end up investing (Mortgage Broker, Title Co, General Contractor, Property Manager). My plan is to deploy capital now if there are deals worthy of jumping into, taking 1-2 years to stabalize and make the property run efficiently, and then give up my W2 job to do a whole lot more of the same.

I am located in the Bay Area and of course multi-family is insanely expensive here. Would you advise that I look else where for my first deal or 2 - possibly else where in California (Sacramento, Los Angeles, San Diego) or Texas (Dallas, San Antonio, Austin) or Florida (Orlando, Miami)?

With gratitude,
UV Singh

Bay Area, CA

Hey UV,

Welcome to BP. I am here in San Jose as well. I would say that most people go out of stay because they lack capital to invest here in the Bay. Since you have capital and are looking to do this over 1 to 2 years you can build a portfolio here in the Bay. High income earners here can scale their portfolios which will grow greatly over time. If you go that route, you would just need to determine what investment strategy you wish to do. IE, Long-term vs Short-term, etc.

We can discuss this more, let me know.

0 Votes

Oakland, California

Quote from @Tomas Nuno:

Hey all, I am a new investor looking to house hack a property in the Oakland/San Leandro. I have reached out to a couple real estate agents so far but if you know an agent/lender that is familiar with house hacking that would be greatly appreciated.

I have run into some early obstacles with the lenders I have talked with so far because my job is not a W2 job. I play professional basketball out of the country and don't receive pay stubs or any tax documents. I am determined to start investing now and am looking for creative ways for financing while still using the FHA loan and taking advantage of the low down payment. Would love to connect with anybody that may have some insight or seen a situation like mine.

Thank you in advance for reading my post and I look forward to hearing from you all.

Hey Tomas,

Real cool that you play ball out of the country, but obviously it gives you a unique situation that honestly sounds like a good starting out investment story to solve.

People have already spoke to the potential way to get lending. I can help you with the actually House Hacking side. I house hack in San Jose and have helped numerous people hack in Oakland. I would be happy to help you out.

1 Vote

Oakland, California

Quote from @Brian Kim:

Hi there! I'm looking to hop out of the corporate rat race after having been laid off twice in the last year. I am currently in California and am looking to get into real estate investing and would love your thoughts and advice.

Some background:
I am in my late twenties and have no real estate background. I have been reading, listening to podcasts, and have chatted with a few individuals already in the game.

Capital:
Option 1: Work alone and start with $50-100k in capital
Option 2: Work with two partners (already an option) and start with $200-250k in capital

Initial Strategy:
Option 1: Look within california for a deal and flip the first couple of homes to build more capital
Option 2: Look outside of california and start small

Both options will be targeting SFH or Condos/Townhomes.

Some questions I have:

1. What's the best way to get funding to get started? (Given I currently don't have an employer I'm assuming this will affect my ability to get traditional funding)
2. Thoughts on staying within california as my initial market or looking outside of california given properties are more affordable
3. Is the best way to network just going to Meetups or finding investors through bigger pockets?
4. Any other thoughts and advice are welcome!

Looking forward to hearing and connecting with you all. Thanks!

Hi there Brian!

It's great that you're looking to get into real estate investing, and it sounds like you've done some solid research so far. Here are some thoughts and advice to consider:

If you're unable to secure traditional funding due to your employment situation, there are still other options available such as private lenders, hard money loans, or crowdfunding platforms.

Both options have their pros and cons. Staying within California can provide a more familiar market with potentially higher returns, but it may also be more competitive and expensive. Looking outside of California may offer more affordable properties, but it also presents new challenges such as unfamiliar markets and potentially lower returns. Consider your personal preferences and risk tolerance when making this decision.
Networking can be an effective way to meet potential investors and partners. Meetups and online communities like BiggerPockets are great places to start, but don't underestimate the power of word of mouth and personal connections. Let your friends and family know about your interests and goals - you never know who they might know.
If you decide to begin within California it may be better to get a temporary work position so you can purchase a House Hack. It will tipically be the lowest outlay of cash vs. your cost to secure a loan. Think owner occupied loan vs a pure investment loan. If start with that route you can then choose work on flipping or OOS investments from there.
It's important to approach real estate investing with a long-term mindset and to be patient. Take the time to build a strong foundation of knowledge and relationships, and don't rush into any deals without thorough due diligence. Consider working with a mentor or joining a real estate investment group to gain more insights and support. Good luck!

0 Votes

San Diego, California

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All Forum Posts by: Osazee Edebiri

Osazee Edebiri has started 15 posts and replied 315 times.

Post: Just bought my first rental property - Should I do STR/MTR/LTR?

Post: How to evict good tenant?

Post: Investment Locations and financial examples in Oakland-Hayward

Post: California "Dream for All" shared appreciation down payment assistance is insane.

Post: Any advice from a California Landlord that's recently undergone an eviction?

Post: Looking to house hack a property in Oakland to Hayward area

Post: Profit Margin clarification?

Post: Local or out-of-state for first time (multi-family) investor

Post: Looking to house hack a property in Oakland to Hayward area

Post: Thoughts & Input on Getting my Feet Wet