All Forum Posts by: Rick Albert

Generally speaking, yes.

There is an argument to be made that you develop wealth faster in more expensive markets. Let's look at the four ways you make money in real estate:

1. Cash Flow: Although not likely to cash flow, a 3% increase on $3K/month is better than 3% increase on $1K rental out of state. Your cash flow will likely increase faster.

2. Appreciation: Same logic as above. These higher priced markets are generally actually looking to appreciate better than a lot of other markets. This is partly due to low inventory and no additional land to build to keep up with demand. Because of this, you can leverage the property to buy more. For example I used a HELOC on my first house hack to buy the second house hack. I then used a HELOC on my second house hack and sold my first one and bought multifamily out of state.

3. Loan Buy Down: Bigger loan, bigger buy down, thus increase the cash perspective of equity in the property.

4. Tax Write Offs: There are certain tax benefit to house hacking because you blend benefits of primary residence with rental income. Talk to your CPA.

I'm building my out of state portfolio. I would not have been able to get there without buying in Los Angeles first. Although it will change, but I have 9 doors (including my primary) and I haven't put a down payment out of my own pocket since 2015. For the one that I used some of my funds, I doubled that cash through the BRRRR.

Submit an offer you feel is fair and equitable. I agree that you both should benefit by not having agents involved and I would even go so far as to go even lower since you are taking on more risk by not going through a traditional sale. This is especially true if you don't have a lot of experience in real estate purchases. 

Offer the 80% of asking price. Worst thing the seller can say is no.

There are a few ways to handle this (all of which if you have true concerns speak with an attorney):

1. You could have everyone apply and spend the money. You are avoiding discrimination because everyone is being treated fairly.

2. You could do two rounds. The first round is setting expectations and reviewing all documentation, calling landlord references, etc.. Once that is completed, then run the credit for those that meet the first round of criteria.

You can double check but I have not heard you have to prioritize a Section 8 tenant, you just can't reject them because of source of income.

Real Estate is one of the fastest wealth generating tools available. It is because you are guaranteed to make money in at least 2 out of 4 ways:

1. Cash Flow

2. Appreciation

3. Loan Buy Down

4. Tax Benefits

My guess is if it doesn't cash flow, you will make money the other three ways that you wouldn't otherwise be able to if you rented. At the very least factor in loan buy down into your cash flow calculations because later on you can leverage the equity in either selling or financing. That's how I was able to expand my portfolio from my two house hacks in Los Angeles.

Hey Antonio,

It depends on what type of real estate investing do you do? Buy and hold? Flipping? House Hacking?

Some tools I use:

MBS Highway has an interesting appreciation predictor that so far as some accuracy to it. This is something you pay for.

Zillow: For rentals, it shows how many days on market, contacts, and even applications. This gives you some insight into demand in a certain market and helps with pricing.

HowMoneyWalks.com: Tracks IRS data on where people are moving to and from. I'm not sure how up to date it is but gives you some idea.

Facebook Groups: I will join rental Facebook groups in various markets to see what people are looking for in a rental and who typically is looking. I've even asked about neighborhoods before and people are willing to provide feedback.

Realtors: If you have a decent investor friendly Realtor, they will tell you honest feedback on an area because they know it is a long term relationship.

Property Managers: Same reason as the above. I learned when I invested out of state that many PMs wouldn't manage some properties I was interested in pursuing. I found out later it was because the area had so much crime that they didn't want anything to do with it.

 Mine is a detached garage conversion. It has a mini split and separate electrical panel. I made the entire unit electric so I didn't have to split gas. Only thing is shared is water. What I mean by privacy and I don't see my tenants and they don't see me. There are no windows that pier into each others units. It is basically like a neighbor.

I have family in South Jordan. 

That area has some great house hacking options. Their house is a 3 bed/2 bath upstairs and a daylight basement with it's own walk out. The downstairs has 2 bed, 1 bath, and a bonus room. There are two kitchens as well. If you wanted to, you could just close off the stairs access and call it a day.

I have an under 400 square foot ADU on my property and my wife and I lived there for two years before renting it out.

The most important things are the following:

1. Privacy

2. Private yard space

3. Washer/Dryer

Those stood out the most when I was showing it. I got multiple applications in.

First of all, my condolences. It's tough losing a parent, no matter the circumstance.

This can be a challenging one.

Have they been paying and following the rules of the lease?

If the property is in the City of Los Angeles, check out Zimas.LaCity.org to make sure it isn't subject to RSO (Rent Stabilization Ordinance aka Rent Control). 

This will likely be a cash for keys situation.



This will likely be a cash for keys situation.

This will likely be a cash for keys situation.

Because they have been there for over ten years, that is one qualifier for relocation fees at a set price. If they are considered a protected class known as a "Qualified Tenant," then that's another set of relocation fees required.

Your attorney will be able to provide the best guidance. 

The rules for tenant evictions are very different here than in other parts of the country. 

I would go slightly below market rents. You could argue the savings are in the vacancy and rehab costs.

For example instead of $1,800 maybe it is $1,700. It may seem like a big jump, but show them that you are still below market rents. They will see that they are better off staying put then moving on.

If they decide to move on, then fine, if the gap is that large you should make up the difference fairly fast.