All Forum Posts by: Rob Brown

I own vacation rentals in Mission Beach (San Diego) and broker sales in this market to investors. I've been doing this since 2005. I focus mostly on ocean front, bay front, and sometimes a block or so to the water for year round vacation rentals. 

I've been a real estate investor and broker since I was 19 years old I'm 38 now. Ive always had 95% ++ of my investable assets in real estate... mostly residential real estate, apartments, and shopping centers. I never really had any stocks/bonds or much cash but after living through the 2008 crash in Vegas and San Diego I committed to having a lot more liquidity at all times going forward. I've recently starting maxing out my HSA, solo 401k, and investing on top of that a few grand a month in an intelligent advisor robo account at Schwab. I also keep 12 months of net income from my portfolio + brokerage business in cash in my money market and I don't touch it or consider it usable for deals as a safety net. What do other real estate investors think is the perfect mix of what % of your net worth should be in income producing rental houses and apartments (I don't invest in shopping centers anymore...so the risk of negative cash flow for prolonged periods is lower now with just low LTV rental houses and apartments) versus stocks (I invest in low cost SP500 index funds and bond funds only). I'd love to hear what others think is the ideal asset allocation! My current goal is to get to 30% of my net worth in SP500, the robo advisor account and bonds using tax advantaged accounts although I'm currently not even close that 70/30 I think is ideal after doing this for 2.5 years.

When I buy a short term rental, they use the long term rents to qualify you for the loan, and when you need to do a refi or count income for the purposes of buying a new property on assets in your current portfolio lenders will use the income from your tax return or if it's a new property the long term rental value. JP Morgan can count vacation rental income for qualifying purposes in their private bank for high net worth clients on a new buy or refi before it's on your tax return.  

I don't want to do IO I want it paid off as quickly as possible so I can save up and buy the next one. I'm kind of old school that way. I would pay cash but I need small interest write off so there isn't a taxable income after  depreciation and expenses so I'm doing this 500-550k loan amount to get the appropriate interest write off. I don't know what the market is going to do next year or 3 years from now this far into the cycle...but I know long term rents will go up in IB and they aren't building any more ocean. If I didn't have the exchange I'd prob just stack cash for the next down turn. @Nathan Click

I'm looking at a few 6-15 unit apartment deals in San Diego County. I've talked directly to bankers at Chase, Wells, and somebody experienced at Cushman Wakefield who is a loan broker. All of them say under 750k loan amount the rate can be a bit higher, although this is counterintuitive I'm hearing the same thing over and over. The properties I'm looking at are around 1.5-1.8m and can support a loan amount of 900k approx based on bank underwriting. I want to put 950k-1,050,000 down and have a smaller loan, less risk, and more cash flow. Any ideas on who is the best bank / lender to run this deal type though for a coastal San Diego asset? So far I have around 4-4.2% 10 year loan amortized over 30. I'm also looking at 15 year fully amortized over 15 so it's paid in full in 15. Gross cash flows are around 120k on the 8 unit I like best with NOI at 72k around a 40% expense ratio which seems right for recently remodeled units.

Rob 

I have been using a Solo 401k with Schwab for a few years now since I'm a self employed real estate broker. I've also been looking into self directed real estate investing and trust deed lending in my 401k ..but for now since most of my net worth and active / passive income is all tied to real estate (investment properties, commission income, and my home) I've just been maxing it out and putting it in Vanguard S&P 500 ETF (VOO) for diversification and low cost tax free growth. I have a client though who has flipped houses, and invested in long term hold rentals in his self directed IRA pretty interesting stuff!

I have sold 20+ water front vacation rentals in Mission Beach to my investors, and own and operate properties in Mission Beach myself. Let me know if I can help! I use a great full service management co to handle the STVRs for my investors. 

I would look for multi family in Oceanside, its gone up a lot the last few years ...but its still ripe for appreciation and rent growth and the whole area is in the process of gentrification. 

I work with an experienced vacation rental management co, and call other companies to confirm rates when buying a new prop. I wouldn't buy that far from the beach for a vacation rental, in my market 92109 Pacific Beach and Mission Beach vacation rentals are difficult to make work even more than 3 streets from the ocean front. 

Do you mind sharing how you determine your rental rates: Check other similar props on VRBO AIRBNB, management co, etc

Vacancy Factor: I know june july august 10 weeks of summer peak rents is standard in my market and the other 9 mo I figure 85% occupancy (because that is what I have with good management and keeping an eye on rates) 

I own an ocean front vacation rental in San Diego, a house 5 houses off the beach in San Diego (both of those are in Mission Beach) and I'm buying one on the peninsula in Newport Beach (probably a duplex or triplex) this year.