All Forum Posts by: Jesse Hinaman

@Anthony Adanandus @Account Closed gives some great advice. To paraphrase, real estate is not something you can jump into overnight and get rich quick. It's a chess match that takes years of strategizing, making many small moves that develop and snowball after many years of right (and sometimes wrong) choices.

If you can't prequalify now, plan for the future. Establish your credit. Get a steady job in a career that aligns with your passions and goals. Save what you can, and you will be in a great position in 2 years.

Just like everything in life, we are continuously learning and developing, with each passing year. Like any long term investment, our time and effort compounds with age. Its taken me almost 9 years from the date I purchased my first property to get to a point where I feel I have found my stride. Even so, I have so much more to learn, and new phases and opportunities to embark on.

Keep the positive attitude, never give up, and you will get to your first destination. The best part is, once you get there, the train is ready to take off to the next milestone.

@Jack Murray it's definitely a tougher market for distressed acquisitions. Requires swiftness, creativity, and a good agent that can help seperate your offer from the multitude of others (if finding on market deals).

You definitely have a better chance breaking into the higher end flip market (distressed purchase $400k+).

@Derek Daun

As a rental, you would only need a Fire Policy, and the tenant is responsible to get renters insurance for their personal property.

Is that what your insurance company is concerned about? Or mostly potential structure damage?

I'll have to glance through the standard CAR Lease agreement I use, but I would think it's implicit that you are not responsible for any of the tenants personal property. Never hurts to re-iterate with an addendum, though.

@Debra R. , @Hugh Ayles is right. in consideration of resale, you want to install a professional heating/cooling system. For a multi ductless system, you will most likely pay twice as much as a traditional central HVAC system.

Have you considered adding decorative soffits to your ceilings that the ductwork could run through? Like mentioned earlier, you really only need 12" of cavity space to run some flex duct. Sounds like you are tearing out the old ceiling and rebuilding, anyways? Why not add space for the ductwork within your new vaulted ceiling?

@Derek Fitzpatrick forgot to tag you.

Hey Derek,

I think you are forgetting a few key things that offset the loss. First off, the principal paydown. I don't know what your payment is, but I would guess each months mortgage payment is contributing at least $300-$400/month in principal payoff. That equates to anywhere from $3,600-$4,800/yr.

Also, the tax benefit is substantial. Even with a six figure W-2'd salary, my rentals have helped to keep my effective tax rate at 5% over the last few years. After writing off all your expenses and depreciation, you will have a nice "paper" loss. For example, if you bought the house for $300,000, deduct the land value (we'll say 20%) = Structure value of $240,000 / 27.5 yrs (the IRS allowed length of depreciation on residential property) = $8,727 in depreciation write-off + your calculated rent income loss after all expenses (including travel back to Sunny California to check up on the place ;) ) = about $10,000 tax deduction. If you're taxed at 35% between Fed & State, this equates to $3,500 cash back in your pocket.

So would you really be looking at a $1,200-$2,000 annual loss...NO, and the appreciation is your bonus for being patient (at a $300k value and with a low inflation equivalent appreciation of 3% that's another $9,000 the first year).

To be honest, I have never heard a California investor say they regretted turning their first primary into a rental. On the contrary, they are always kicking themselves for selling and not holding onto it as a rental.

It really comes down to whether or not you need that $100k in equity, now, but good things come to those who wait.

I really had a good experience with ProSchools. They should have online study crash courses.

Good luck and let me know how it goes.

@Joe Bertolino

Exactly. Plenty of deals to be found in CA

Turnkey investing is no different than putting your money into a mutual fund. Little effort, little research, and hands off.

True real estate investor finds value add opportunities in any market.

@Justin Ericsson

$1900 for $500k!? You are obviously making up numbers to help falsely state your case. I spent $260k ($236k purchase + $30k in rehab) and get $3k/month in rent, in Sacamento. In addition, in one year, the house appreciated from $236k to $330k (good portion to value add sweat equity which you will never find with turn key properties).

It sounds like you are grossly underestimating the rehab costs. Old Victorian triplex with I'm guessing 4 bathrooms, 3 kitchens, 6 bedrooms. You probably need to add another 40% to that $80k estimate.