All Forum Posts by: Loc R.

So I've been mulling over a couple of things:

1. Earthquake insurance

My initial thoughts are is that it's an unnecessary (perhaps) and expensive (definitely) item. Should an earthquake hit that is big enough to level my house, I would imagine that most houses would be leveled. And in that scenario, the agency wouldn't be able to handle my claim/pay me out, as they would probably go under - even if it is a state agency. In addition, have you seen how they're written? The deductibles are sky-high.

So, instead of an insurance policy, I have then looked at:

2. Earthquake retrofitting

Once again, not sure if it will make a big enough difference to justify the cost. If it makes any difference, my house is at the bottom of a hillside (it butts up to the bottom of it), and my garage is street level, with the living spaces sitting on top of the garage (and crawl space).

Any thoughts would be appreciated.

Michelle,

Every investor has their own guidelines, which is a culmination of their experience/knowledge of their own market, and their preference.

If 4% is an acceptable number to you within your market, then go ahead and buy it.

I know for my immediate area (Pasadena, CA) cap rates for "retail" MFRs is 3% (high-end buildings) to 8% ("C" type buildings). The play around here is wealth preservation. Most investors would laugh or shake their heads at those numbers, but that is the reality of my market. If I want higher numbers in So Cal, I have to venture out south or east.

Other investors use other metrics, including Cash-on-Cash (CoC) and rent/purchase price ratio (the "2% rule" around here).

If I sell a property on a wrap, since the underlying loan is in my name, do I still get that interest deduction (on the underlying interest)?

As far as I know, marijuana is not allowed outside, medicinal or not.

As to whether or not it's allowed inside, I think the laws/bills that allow for people to carry it/use it inside for medicinal purposes will give the users legal ammo to use against landlords.

Jon Kirkpatrick I just pulled those numbers to show that, given a certain income stream ("cash flow"), I can make offers depending on what the seller wants and I want.

I explained what happens in a default in post #5.

John,

First off - welcome to BP! You'll find this is a wonderful resource to learn the real world details of REI.

Second - to answer your question, I would start by reading anything that Joel Owens has written/replied to. His knowledge of commercial real estate is very sound and he thinks like an investor.

After that, you should be able to start searching in your particular market for a commercial RE broker/agent to find your types of properties.

Happy Birthday J...I have always enjoyed your posts, as it's always nice to read/learn from a successful investor.

And to answer the question about the "ownership" of a partial, here's how it works.

In the above example, if I buy the 53 payments of $606.64, the "face" value of that partial note is $27,019.51. If the payor defaults, I'm still in "front of the line" and would be "made whole" to the tune of $27,019.51 first before the rest of the money from FC goes to the "original" note holder.

$25k is plenty to get started with in buying notes. If you want to buy a note secured by an SFR, you'll most likely have to offer a partial purchase.

Example: $100,000 note over 10 years (120 months) at 8% interest would represent a $1213.28 a month payment. Let's say you found a seller that only wanted to raise $25,000 from the (partial) sale of the note. You could buy the next 23 payments for $25,000, which would represent a 12% yield to you, or you could buy 53 payments of "half" the payment stream ($606.64) for $25,000, also a 12% yield.

You could also partner with someone to buy a note together (your $25,000 plus their $25,000 to buy a $50,000 note).

There are a lot of ways to put together a deal, it just comes down to finding them, making sure they're good deals, and securing them.

@Matt J. I would ask some of your local escrow companies if they are doing AITDs/wraps on non-assumable mortgages in your state/county and whether the underlying lenders are calling those non-assumable mortgages due...