All Forum Posts by: Scott J.

The numbers look great.

My own personal preference is never to invest in a place I don't feel comfortable. This is ESPECIALLY true if you're going to manage it yourself.

Would Smart Move (the tenant screening service recommended by BP) have caught this person before they were tenants?

That's like saying you want a higher mortgage interest rate to deduct more interest. If you want to buy a bigger house, go for it. But it's still a liability. Don't trick yourself into thinking you'll be saving money.

To answer your question, your higher property tax will not offset your higher mortgage payment.

This guy should be living rent-free in prison. Long-term lease.

Hello all. I know laws vary from state to state, but I would really appreciate your insight on this.

Is it okay for a rental application to ask the potential tenant if they have been involved in any lawsuits? I have language asking for that information on mine, and I got to wondering if I'm even able to request that information.

Great responses, thank you.

A little background:

I've lived in CA my whole life and bought my first property about 2 years ago. It's a two separate structures on one lot (1300 & 600 sqft) and was around $500k. It's a historic home (property taxes reduced by 60%) and in a great downtown area in Orange County. I currently live in one and rent the other, but if I were to rent both out, I would barely make positive cash flow.

I will be buying a 3 or 4-plex in about a year in the $500-600k range. Out of the best deals I can find (top 10%), cash flow is typically only $200-500 positive per month. We are buy & hold investors.

My point:

I always read about deals in other states, such as Texas, where investors are buying $150k properties and having $400 monthly cash flow. My question is, why invest in CA? I know you have the higher likelihood of appreciation. But is it worth it?

Funny you bring up this issue. I work for a major publicly owned utility company in CA and just helped with a report on this topic. We were more focused on HVAC units in commercial buildings, but our analysis showed it was significantly cheaper to have scheduled inspections done by a certified contractor than to fix as problems arise. (I can scrounge up the exact cost comparison if anyone is interested.)

Think of it like a car. It's a lot cheaper to fix little things as you go along then to wait until it doesn't work and buy new.

First of all, congrats on your new venture Joe.

I may be missing something. But if you're looking to sell it quick and you're purchasing it for a price near its comps, where would the profit come from?

Don't forget about all of the expenses with buying and selling real estate (commissions, inspections, fees, etc...).

There is also a third option, which is what I did. Buy a 2-4 unit property and live in one and rent the rest. I bought two houses on one lot and live in one.

It's been a great way to start off because you can keep an eye on the tenants as you learn the ropes. You also get the benefit of home ownership AND having a rental property.