All Forum Posts by: Wes Blackwell

@Leland S.

Yeah, I would think SOMEONE would be willing to vouch for him... I mean, if this deal went successfully, wouldn't you be willing to vouch for him too? Surely you can't be the only one.

One idea is to look at their profile on here and contact come of their colleagues and followers to see if they can offer any insight. Also, he should be able to provide some examples from previous deals he's done as proof.

I'm just like my momma in that I tend to be too trusting and give everyone the benefit of the doubt, but with large dollar sums involved it's fair better to be safe than sorry. Be sure to do your due diligence when partnering with someone new... especially when you're the one putting up all the money, because you're the one taking the risk.

@Leland S.

If you're the primary investor, perhaps you may want to look into private money lending rather than partnering on a deal. Just a suggestion.

But, what you really need to determine is who is responsible for what, who is in control and has the final decision, and what happens if things go wrong.

For example, if you're both on title to the property, you'll both be required to sign off to sell the property, and if there's some disagreement about list price or whatever, it could be a major headache if your partner doesn't agree with you and makes the sale difficult.

If you're a little wary or unsure of your partner, put yourself in a position to have as much control as possible over the project. For example, if you're the money and he's the contractor, you could put the title to the property in your name only, and then hire him as a contractor and sign a separate agreement with him to pay him half the proceeds from the sale or something like that. 

If it's someone you have just met on here, do you have references for them? Have they done deals with other investors before? That may help ease your concerns...

I would recommend doing a basic google search for partnership agreements and just read through them to see all the topics that are covered...

https://www.lawdepot.com/contracts/partnership-agr...

Who's contributing capital, how / when is it withdrawn, financial decisions, etc.

And of course, discuss ALL of this prior to signing anything. If they are untrustworthy you'll probably find out pretty quickly.

@Charles Heuer

@Aaron K. nailed it... house hacking is a viable strategy in any market. The only thing that changes is the price and the amount left over to pay at the end of the month.

The real goal of house-hacking is to reduce your monthly obligation to the mortgage payment, essentially allowing you to control a property for far less per month than would normally be required.

If you're getting a duplex, you're more than likely still going to have to come out of pocket at the end of the month, but that also depends on how much you're putting down.

With a fourplex, your goal should be to get as close to living in the property for free is possible. You're probably not going to end up with any cashflow, but if all the bills can be paid and you can live in one unit for under $500/month, you've likely shaved at least $1,000 off your monthly payment by renting out the other units, and can use that $1,000 in savings every month to save for the next property or make improvements to the current property and increase it's value and get more rents.

The real problem with this projection is that no one has a real estate crystal ball, and far too much can happen with the economy and politics in the next 2-3 years to be able to accurately tell you what the experience will be like in Phoenix.

A real easy way to experiment with this would be to look up 2-4 unit multifamily properties on Realtor.com or MLS, see what the units are renting for, deduct one of the unit's rents for you to live in, and then use a simple loan calculator to see what your monthly PITI would be vs. the gross rents. This is the same thing I do with investors looking in Phoenix, Stockton, Sacramento, etc. so the process is essentially the same no matter what market you're in.

@Danny Oh

There are TONS of flippers in the Sacramento market, and know some folks that have been here since the early 2000's and have flipped hundreds of homes in the area.

But there are lots of buy and hold investors here as well, just closed 4 transactions for buy and hold investors last month in Sacramento.

Here are some posts I've written about the Sacramento market that will quickly get you up to speed:

• https://www.biggerpockets.com/forums/621/topics/586279-investing-in-sacramento-or-stockton-which-one-is-better  
• https://www.biggerpockets.com/forums/621/topics/590913-rent-growth-in-sacramento-is-triple-the-national-average
• https://www.biggerpockets.com/forums/621/topics/585796-sacramento-rent-control-101-everything-you-need-to-know
• https://www.biggerpockets.com/forums/621/topics/396725-millennial-migration-to-sacramento-2017---here-comes-the-rush
• https://www.biggerpockets.com/forums/621/topics/398662-heres-what-fixer-uppers-on-the-mls-are-selling-for

@Daniel M.

Hey Daniel! I work A LOT with investors in the Sacramento market, and here's my advice if you're just getting started.

Buy a 2-4 unit multifamily property (duplex, triplex, fourplex, etc). It's still considered residential, and you can live in one unit and rent out the rest of them. You could get it for as little 3.5% down with FHA financing, and with a fourplex you could probably cover all the expenses of the home and live there for free.

That way, instead of paying $1,000 to $2,000 per month in rent or even towards a mortgage, your mortgage is paid for you (by the other tenants) and you can save that money to pay down debt, invest in the next property, make improvements to the home and increase the value and rent, etc.

That could get you in the real estate investing game AND cover your living expenses, despite California's higher prices.

@Kevin Zhang

Rental market is on fire my friend:

https://www.biggerpockets.com/forums/621/topics/590913-rent-growth-in-sacramento-is-triple-the-national-average

Rental growth rate is triple the national average. Tons of migration here from Bay Area Millenials, inventory is low so prices and rents have gone through the roof in the past few years. Migration pattern should continue through 2020, easily.

I'll reach out via PM to get your questions answered and help you determine if Sacramento is the right market for you :-)

@Jason Mendoza

Hey Jason!

When choosing a market, naturally there is a LOT of criteria to consider. Ultimately, it's going to depend on your investment goals and strategy.

For example, if I'm working with someone in the Sacramento market, it's probably going to be a Bay Area investor who'd like to invest in a market with good appreciation and rent growth, but is still located in California, and is lower priced than Bay Area where most deals don't make sense on paper... too pricey.

But if it's Phoenix, Scottsdale or Tempe we're talking about, it might be someone looking to AirBnb / VRBO a small condo in a hot part of town. Most will be from Phoenix, but some will be from other states yet visit here often enough to like the idea of owning something here.

So the best thing to probably start with is your budget, since that's something that often can't change and it definitely can limit your options for market choice.

Then you're going to consider your strategy... are you looking for cashflow? Appreciation? Multifamily? Value-add? AirBnb / Short Term Rentals? Mobile homes? That will limit your options even further.

Then the next thing to consider is the job market and population growth. If people are moving there, that makes for a favorable investor balance in supply vs. demand... that makes for good appreciation and rent growth usually. And that means your investment becomes more valuable over time.

BiggerPockets (of course) is an invaluable resource in connecting to local investors and professionals, who can tell you a lot more about the market (local blogs, Cromford type reports, etc.).

You'd be amazed what you can learn by reading the local news. Simply search "(City Name) Real Estate" and read the news articles from the past 3 years. You'll get a really good sense of what's going on the market over time, where's it's been and where it's headed.

@Mary Jay

As Milton said above, it's going to depend on your overall plan / strategy. What's the goal? To replace your current income? If so, you'll need $8k/month in cashflow. That's going to be real hard to do if you don't even have the cash for a downpayment.

Are you looking to get some income from rental properties, and then switch careers to something you enjoy more? Or maybe even take a paycut? That might be more feasible.

If you're going to buy something where there's little cashflow, you're banking on one or two things: (1) The property appreciating in value, or (2) a long term hold / retirement play. I do a lot of these in Sacramento in Stockton where there isn't as much cashflow as the midwest but the properties appreciate well in value and are viable for long-term strategies (10-30 years). The Phoenix area has this potential too (5th largest city in America afterall), but I wouldn't plan on living off your cashflow in 3-5 years... especially if we encounter a recession. Timing may be bad to quit your job.

What you may want to consider doing is buying something in the midwest that does cashflow, and then spending the money when you buy it to fix it up, get max rents, etc. Then rinse and repeat once or twice more over the next few years. Then you'll get the cashflow without the repairs (because in a sense you made the repairs up front).

Ultimately, it sounds like you have a lot of life planning to do, and lots of options to weigh. There can be a win in here somewhere for you, but you'll need to really plan carefully as to what's going to happen after you quit your job.

@Kay Cannon

I haven't done it myself... but have an associate who knows a guy who's making an absolute killing with mobile homes here in Phoenix. Flipping 'em, selling 'em, you name it. Definitely a potential lucrative market for this out here. You'll have to do more research, and I suggest getting in touch with @John Fedro to learn more about the business model.

@Dave Peterson

Ehhh what the heck. I'm always down to help. PM the details of the property in Gilbert (bed/bath, sq ft, pool, condition, pics if you got it) and I'll run the numbers for you :-)