All Forum Posts by: Sebastian Marroquin

@Dairek Lewis Hello- I think you received a lot of great advice here from everyone! I would cautioned you to do a little more research and find out what actual numbers are for each of your #1st #2nd, #3rd and maybe even #4th options. 

This all stems back to finding out what your Goals are? How will your draft a plan with different phases towards these goals? 

What is your purchasing power? (i.e. pre-approval for 1 unit , 2 units, 3 units or 4 units) all dependent on your goals and your path drafted. 

The reason for this is that there are many ways to achieve success in Real Estate: not 'one' path is necessarily the "best" path... it all depends on your time horizon and your risk tolerance.  (a lot to unpack just here actually) :) 

For example: 

1. Buying a Single Family Home + ADU conversion is great: but the down payment alone and closing costs in the OC will be between $25k and $40k depending on purchase price: + the ADU conversion: thats on the "cheap" side if you have the right contacts about $60k (retail is about 80k to $120k all in).

* so already you have exceeded your 50k budget. 

2. For 2 units or 3 or 4 units: 

Lenders will take into account the other units and will take about 80% of the income for the second or more units and use it as your income to qualify you. 

Again in the OC: Pricing will be medium to high : and down payment and closing costs will be closer to your 50k budget: Something to explore. You would have to qualify for a higher loan etc etc : do numbers on rents, debt service, utilities ... the works to make sure you can sustain it. 

3. Buying a single family home or bigger (more units) and renovating it to refinance later: pay attention to the price and renovation budget. Doing it yourself will be the least expensive of course. 

Most of the time - doing this is great and will improve value: but again... do your numbers bc you will likely have to find a home below market for this to make sense. 

Nothing is impossible and if you get good at finding deals it could happen: but getting a fixer with an FHA loan 100k to $150k + below market value at the purchase is not the easiest of tasks.

(example: 

you buy a SFH for $700k as a fixer: [with a 3.5% loan : Loan on it would be: $675.500 ]

Renovation bc you do it yourself is 30k 

Home renovated is worth: Realistic number : $750k 

75% of $750k is : $562.500 and the loan is $675k (the money you owe the first bank to purchase this home): so wouldn't have enough in equity to refinance. 

In this scenario: you could add square footage to the home: and add enough value to the home so that the value was $1 million dollars, and now you would refinance to $750k so that you could get some of your investment out... 

(obviously these are assumptions) 

but that would entail a bigger renovation budget, holding costs, etc. 

Figure out what your plan will be? 

How much capital you need for that plan? 

What are the bench marks in the short term or long term that you could hit as you grow in this business? 

What is your buying power? Do you need to increase it? 

Do you have to buy in the OC or other adjacent markets that are less expensive? 

Why do you want what you want? What are you seeking? i.e. cash flow, quick capital, long term wealth? Appreciation? comfort? to travel? 

* lastly, about your comment including your dad- renting- etc 

You could start with Air b and b and see if you like to manage it: try renting out a bedroom and see how you like it? 

Or simply go to your dad and discuss your plans : it sounds like you are in the very fortunate situation that your dad is savvy and investment smart. It doesn't mean that you have to follow his every move.... at all, but he may know more than you think. 

Sometimes we choose to listen to random people on here (bigger pockets) when your dad will have your best interest at heart! 

Maybe you can partner with him and now you will have 100k and not 50K ;) 

for starters congrats, as you are only 23! Good for you! 

You have multiple options. 

I have helped my brother buy a fixer condo where 2 years after, he realized a net profit of $130k. 

I helped him buy under market and a fixer. 

He sold that and now bought a SFR : We renovated it and added an ADU : Mortgage is $4k and ADU will bring in $1500 p/month.

The Property appreciated to $750k from $600k purchase in about 14 months. 

The list goes on. 

Leverage with a low down payment loan: fix : and gain appreciation. 

Let me know if you have questions. 

@James T.

Hi Jimmy, (i'll think I'll answer on the forum post just in case other people are wondering and wanted to send you a PM on this also). Any city will be the same if you have the right people: (for 1000 sq ft in Pasadena) Usually vendors will charge more bc the market charges more in ie. pasadena as opposed to East LA bc they know people can afford more.... (which is not fair if you ask me). The people we work with charge the same price no matter what city. Costs: and people: 

1. Architects or Drafters (architects will be more expensive) 

2. City fees: city has a formula for what they charge and its a % of the full projected price for the project. 

3. Contractor : Usually they charge between $250 to $300 per square foot for a flat (ground level addition) : thats retail : our people charge between $175 to $200 per sq ft (for ground level construction) licensed and bonded. I know my answer is long: but I think you need to know these numbers before undertaking a project like this. (* also depending on where in Pasadena the home is: as the historic districts may add other rules and time-lines). 

So a ball park figure I can give you now will be: 

1. With a drafter: (needs more engineering bc its a second story): so about :$8k to $10k (for building plans and facilitating permits) 

2. City fees: Plan check and building fees: You would have to check with city for accuracy but I would say about $15k (pasadena is expensive) this is strictly a ball park based on other projects we have done for clients.

3. Construciton : A. Prepping foundation and structure (beams, foundation, roof etc) between $25k and $50k (ball park) : contractor has to see plans to bid accurately. B. Addition once prepped: 1000 X 200 p/ sq : $200k (all depending on architecture of the home: as a more modern design with a lot of glass and steel will be much more expensive : or more expensive materials would be more expensive also. 

So you would be at a total of just under $300k to maybe $350k (to be conservative) Where in Pasadena, assuming a great flow and design that is cohesive and aesthetically pleasing would give you a value of about $550 to $700 per sq ft : at $600 per sq ft value X 1000 square feet: that would be an added value of $600k (depending on neighborhood and comparable homes )

Spend $350k to get a value of almost double: $600k 

Take timing into account, holding costs, utilities and think if you will want to live in the property ? Usually you cannot live in the property as the project is too big and unsafe for a family to live there during construction. Let me know if you have more questions about this!

(The math and thinking is slightly different if you want to live in the home (primary residence) or if its an investment to re-sell) 

@Shakir Elvin No problem brother! Let me know if you need any help with realtors out there: I belong to a network of realtors all through out the US and can set you up with someone if you need it. (of course if you already have a great realtor) let me know about them to add them to my network! 

Purchase 2/1 under 1000 sq ft living area with over 7k lots in areas where the price per sq foot is over $500 per sq ft (a lot of areas in LA county) : fixers 

purchase them anywhere between 90% to 70% of ARV (they can even be at 100% of ARV as in retail) if in a great area and a great lot.

and ADD 500 to 1000 sq ft to living space | Renovate existing sq ft to match new home | ADD ADU (2nd unit or convert the garage).

Do it in cities where permit process is not that long and Sell them for a profit. 

Make $150k to $300k profit per transaction. 

Rinse and repeat 

(need a team of course for this). 

Let the math make the decision for you. 

Like @Jonathan Greene said: Who is your tenant? Create a tenant "avatar" and work backwards: 

When I was in college my brother went to a wedding and saw a photo booth there: the attendants were sitting down making easy money :) 

We decided to go into business together (with my brother) and have a photo booth business. I suggested to my brother that we test it out first before spending 10k on a photo booth, business license etc... 

So we went on social media and started marketing our "photo booth business"  :) 

We booked 2 events in one week! Now, all we needed was a photo booth! ;) 

My point: 

Do your numbers for a furnished bedroom and without: post on social, facebook, crags list and see what traction you get? 

So a survey and ask: how much would you pay for a furnished bedroom: Go to ikea.... or anywhere else and do inventory of how much you would have to spend? Its not that hard to furnish a bedroom and even if you get it wrong... you won't lose your life savings on it, but you will learn a lot.. 

I think you can avoid having to "learn" if you do my first suggestion. 

rent amount  (minus) Inventory costs $ : equals profit  

is it plus or minus? 

(also see your allocation of time: how much is your time and effort worth? Is the extra $150 per month worth it? or not?) 

Easy to get in = easy to get out.... 

Remember that moving sucks.... so if they have to put effort into moving, then they will try to stay longer also and not move at the first chance they get. 

Don't make it too complicated: 1. Due diligence 2. Market research 3. Math 4. Create a standard you feel comfortable and 

5. Take action. 

Good luck 

@Abdul Rahaman Congrats for starting the journey! I would say that you have to dive in read the: how to? blogs on here, you tube, instagram etc. 

Outside of that, you really have to get a plan of action. You would go crazy if you started analyzing property all over the country... 

What are your goals? 

How much do you have to spend or will have in X time-line? 

Is the focus appreciation or cash flow? 

What are you good at?  (in real estate) 

Start by choosing a market and sub market (1 to 3 markets): this dependent on price point and rental potential and goals. 

Then start looking for a good Realtor (emphasis on GOOD): if they are good, they will guide you from A to Z. 

There is 95% more to do, but this should keep you busy for now! 

Do it online : least expensive possible and then go to a good brokerage to learn the ins and outs and get training. 

Ask yourself also: what is your goal? 

I hear of people getting their license all the time to avoid paying a listing commission or to get the commission on the buying side... honestly, a mistake in my perspective. 

It all depends on your goals: if you want to do retail RE and close multiple/ many transactions, then it will be profitable and it will make sense. 

But I rather leverage liability on others when I can. 

@Bob Collett Hi bob: do you have a website for the management company? 

Quick question for you: how many properties do you manage currently? (this answer can be a private message if you like).  

@Damian Ramirez : thanks for the heads up. Do you have anything in the pipeline to wholesale? 

@Account Closed hey brother- congrats on almost graduating! (lets talk and see what you are thinking). 

@Brian Garlington thank you brother! I took a look at some of the messages already and there is a lot of info in there! Thank you for that. Wondering if you have time this coming week to get on a quick 5 min call with me: I have some questions that you seem to have experience with?