All Forum Posts by: Rick Albert

In terms of determine rent:

All tenants can generally see is what's available. That means you have to compare your home/units to others in your area. This means looking on Facebook Marketplace, Facebook Groups, Zillow by the room, etc. That's really your limitation.

In terms of added features like the golf simulator, I tend to notice that bonus features keep vacancy low, but not necessarily higher rents. For example I wouldn't pay a premium for it because I'm not an avid golfer. Plus if someone is, they may like the golf course experience.

I would leave the garage as is and charge for covered parking or convert it into another livable unit (Accessory Dwelling Unit). Don't turn it into a golf simulator or movie space. This is a long term rental, not an Airbnb.

I don't know the Joliet market, but at a five second glance when there are homes selling for under $300,000, it gives me the impression that $1,500 a room seems very high. 

I would consider mid term rental to see if you can get a bump up in rent. Higher vacancy rates, but it might make more sense. 

I also know it cost money, but maybe there is a way to add a bathroom. Typically I see house hacks work with one bathroom per 2 bedrooms or so.

If you want to do an added perk, maybe include the train pass as part of the rent. That way you grab the downtown crowd, who may be working professionals.

Selling can make sense (I've sold rentals) and about to sell my current house hack.

Selling makes sense if you know where you are putting the tax free money. HOWEVER, it is important to note that you don't build wealth buy selling, you build wealth by holding. So if you do sell, it needs to go into another investment (real estate, stocks, etc.).

Another option is you rent it for a few years, then sell. You are still within your tax free window but you will hopefully get some appreciation and if not, at least you got loan buy down that was paid by your tenants. Just keep in mind you need to discuss with a CPA about paying back depreciation on your taxes. 

If the numbers don't make sense to sell today, then it sounds like holding it makes more sense. Not really worth selling if you are going to lose money.

Why not just be your own brokerage?

I haven't worked with them but look into Radius Realty. They basically give you full autonomy but provide back end support.

All depends on how it has been maintained. As long as it hasn't been torn down, a full gut remodel still has the 100 year old build tag.

For example, I would buy a 100 year old fully renovated/systems upgraded home over an original 50 year home where all the systems need to be replaced.

It does depend on your goals.

I disagree with @Luka Milicevic, if you can navigate the laws, California is an amazing place to invest. 

I have property here in California and in Nashville. Between the two my appreciation and vacancies have been far better here than there. And I'm in Los Angeles.

The red tape actually keeps vacancies low and rents high. There have been numerous studies proving this.

With that said, it isn't for everyone. Most of my rentals now are out of state by design. 

Sacramento has also been growing like crazy (I lived in Roseville for a few years). More affordable than the bay area and there is still stuff to do.

I guess the question is do you need the cash flow now? If not, cash out refis and then buy more makes more sense. Real Estate only makes sense if you leverage because of the cash on cash return calculations. Otherwise you are better off putting money in the stock market. 

If you do need the cash flow, then yes, you kind of have to save and buy. However, I would do the calculations of the new payments if you did a cash out and see if you make up the difference by purchasing another property.

For example if your payments go up by $100 a month because of the cash out but you are able to use that money and buy a property giving you $200 a month in cash flow, then the cash out was worth it.

So with my house hack, we have the general homeowners policy for the entire property and then a separate landlord's policy for just the ADU. We use Safeco.

Here's what I would do (and in this order):

1. Straight rental or house hack? You put this in the house hack category but just want to confirm. From there set your short term and long term goals.

2. Talk a direct lender. People think this is way down the list but you need to know what you qualify for. Do the full pre-approval, including running your credit.

3. Based on what you qualify for and put money aside for repairs, take a cursory look on Realtor.com, Zillow, where ever. See if what you want even exists.

4. Then talk to a Realtor that has house hacked and/or owns MFU properties (doesn't have to be in your market). Let the Realtor know what you qualify for and what the constraints are (credit, income, or down payment). Just so everyone is clear.

5. Then go property hunting. The Realtor and lender can guide you the rest of the way.

Don't EVER follow the trends for locations. That is based on past data. Basically if a City is considered a "hot" place to invest, you are too late. 

Focus on what you know. You know your market, you know what tenants want and expect, run with it. 

House Hacking is a great way to get started while reducing the risk. Plus if you invest just outside a "desirable" area, then often times you see the appreciation follow as people get priced out.

I don't think you are missing anything. Your numbers are what they are. Most wholesale deals I see don't add up.

The only thing I could think of is maybe your rehab numbers need work. Some investors become their own contractor, so they save on the 10%-30% mark up that contractors do on their subs.