All Forum Posts by: Tim Coulter

Thanks @Justin R., this feedback is very helpful. Looking forward to meeting!

Thanks @Brian Bradley! I will check out the book on estimating rental costs and am starting to build my network now. Looking forward to the day when I can accurately assess value and costs.

@Anthony Ciulla, thanks for the post! This property shows a 7500 sq/ft lot but in the description of the post it says the lot is only 5,748 sq/ft. Either way, it's still a large lot space for San Diego!

I've been interested in using ADUs here in San Diego; not sure why I didn't think about adding to the lot. I believe I have access to private money (through family), but I need more experience and/or be partnered with someone with a good track record before I even approach them about something like this. Thanks for helping me think differently about this property! 

Did you build an ADU (or multiple ADUs) on the RM-2-4 property you live on?

@Ibn Abney Thank you! I really appreciate it. 

2) Reserve is a big one that I didn't think about. Looks like I'd definitely need to save more $$$ before attempting something like this, or have a less complicated project and do a "live-in rehab".

3) Yes, my closing costs are definitely too low; thanks for pointing that out.

4) Regarding rehab, I need to start walking through properties with someone who can share their experience. I have no idea how much things would costs right now (labor or materials). I do like the idea of itemizing it to help me gain a better understanding.

5) I included 10% management fees to determine whether this would still be a good investment when I moved out down the road.

Thanks again for your comments!

@Jim Lopez, I am in the same boat as you; I want to invest OOS for cash flow. I live in San Diego but previously lived in Rochester and still travel back to ROC quarterly because my employer is headquartered there. Rochester is one of the top cities I am considering investing in. I would love to connect with you. 

@Antoine Martel, if your offer is not exclusive to Jim, I would also love to chat with you and hear how you have built your OOS success. 

@Martin Grizzanti, we recently connected through BP and I will be in Rochester this upcoming week. Would love to grab a coffee with you on Wednesday or Thursday and hear your story. Hopefully it is too cold.... I can't believe how quickly I've gone soft since moving to SD last June :)

Those here that are in Rochester, NY: I will be flying back to Rochester for work on Sunday (3/11) and flying back to San Diego on Friday (3/16). I MAY have some time in the evenings on 3/11 and 3/13 - 3/15 if you wanted to connect for coffee. Not sure of my schedule yet.

I am going to preface this with I am a completely new investor (0 deals under my belt, but will buy at least one property in 2018). I would like to do some variation of a house hack in San Diego (ADU/SFH-MFH conversion/small MFH rehab).

Browsing Real Estate Websites

https://www.zillow.com/savedhomes/for_sale/17084059_zpid/1_pnd/33.17664,-116.814881,32.687353,-117.553025_rect/10_zm/1_rs/1_fr/

I was looking at Zillow last Friday and found this listing (it is now pending sale), and thought "maybe this single story 5/3 could be split into 2-3 units?" I saw the property was zoned RM-2-5 and the lot is large enough to accommodate 3 units, so I got excited. I wanted to walk through it thinking I would pay a contractor for his time to explain what he sees and recommends, but haven't yet met a good contractor with this type of expertise. It's a foreclosure and the listing price seems to be ~the remaining debt balance, but I imagine the bank would be willing to take less since it has been posted for so long. Is this a correct assumption? 

If you came across this listing and it wasn't yet pending sale, what would go through your mind? Would you pass on it immediately; if so why? If you would view the property, what caught your eye?

*Please recognize this is all hypothetical, as one walk through of the property could wreck the entire opportunity. I'm going through this exercise to understand what I must tweak in my mental analysis to qualify or disqualify properties as I see them on the MLS.*

Rehab Costs (pulling numbers out of thin air)

I have no idea what rehab costs would be for this property and would need an experienced investor/contractor to help me understand. That said, these numbers came to mind and I wanted to understand if these were even in the right ballpark. I thought maybe offer $325k-$350k (think they'd take $300k?) rehab at $100-$125k, all in for $450k + closing costs. I'm looking to house hack so assuming everything panned out, I would move into one of the "units" that we created and once the rehab is complete, rent out the other units (In total have a 2/1 + 2/1 +1/1).

Funding

Cash savings set aside for Real Estate ($8,800) + What I could loan myself from my retirement account ($12,428) = Total personal investment of $21,228.

My first thought was that I would have to use an FHA loan due to low down payment, and probably a standard 203(k) to help cover the rehab costs. Using FHA, especially 203k, would probably not be something a bank would want to consider on a foreclosed property, am I right?

A Conventional Rehab Mortgage would require 5% down, which means I'd need more money. I could stretch and put in enough money to meet the 5% down requirement. Not sure if this would make me more attractive to the seller (bank) at all.

Numbers

I've been playing around with the BP Rental calculator, assuming $450k purchase price and $0 rehab (since I need the rehab wrapped into the mortgage), and this doesn't cash flow under my assumptions. That said, our housing expenses would drop from $1850 in rent to paying less than $1200/month as long as I lived in it. I put some rent slightly lower than market rates (assuming 2/1, 2/1, 1/1), because I figured there would be less open space (living/dining area) inside each unit. I put capex and repairs a lower percentage since I would have just rehabbed it. I have no idea if my cost inputs are accurate - would love some feedback on how to come to more reliable and accurate numbers when analyzing a deal like this. @Brandon Turner, those webinars help me understand how to use the calculators, but I still gotta learn to input accurate numbers! :)

BP Rental Calculator

Ok, that was long. Please tear apart my process: let me know what is stupid, but also tell me why. How can I improve? What didn't I think of that I should have considered? The more feedback the better; I'm just looking to learn fast so I can make my first purchase and get the ball rolling. Thanks!

@Kevin Fox, I know you work with investors here in San Diego. @Justin R., I know you have done single-family to multi-family conversions in this market. Thoughts?

 Colin, we're so happy we moved. I still work for a company located in Rochester and send my colleagues beach pictures when they get a foot of snow. It always illicits a good response ;)

Good to see another Upstater.

@Robert Decraene, I'm not sure yet, but likely a neighborhood within the city proper of San Diego. I believe there are plenty of deals to be found, but maybe not as many found on the MLS. I'm sure there are also deals that can be found with value-add focus and using creativity. As for outside of the city, potentially Lemon Grove or National City? My wife and I don't want to live in North County at this point in our lives and since we plan to house hack, we probably won't make our first investments there.

I rent in North Park currently. I probably won't invest in North Park because I'd be getting in "too late". That said, just the other day I met an investor who purchased a nice home in North Park to house hack. He is in the midst of building an attached ADU for short-term rentals and walked me through the property--he's making it work in North Park.

I have not yet connected with REI clubs, but have heard good things about The Outback Group. So far, I am mainly connecting with people through Bigger Pockets and meeting new people in-person while I am out and about.

Thank you @Jo-Ann Lapin, I would love to get connected! I will PM you.