New to re investing – tips appreciated!

[Prairie Dog]

Thanks for the replies. Eye opening to say the least. We really appreciate seeing the bigger picture here and learning from your experience.

We have focused on sd, two submarkets in particular. One inland and one quasi coastal. We recognize that the heyday of flipping has past but can hard work, informed choices and a conspicuous lack of greed still be a recipe for success?

I hadn’t been looking to get back in rentals, however, that was because of a single, horrible experience. I am ready to shake that off and take a fresh look at it.

It appears that rental vacancies has vacillated between 3 and 5% since late ’02. Given the inventory of f/c’d sfr’s hitting the rental market should I shy away from 3/2’s and look at mf’s with 2/2’s and smaller?

I love to hear about any experiences with rental management companies or live-in managers (reduced/free rent, etc.).

My previous landlord experience was with a newer home so maintenance was fairly predictable. Any costing advice when I’m crunching numbers would be greatly appreciated.

Thanks again.

[investor]

Prairie dog. I agree with the above. renting is not something I personally would entertain again unless it was a 4-8 plex or higher. Supplying the down and then caring the rest of the note? no way to someone who has gone to foreclosure. How about being the bank? Buy the home. Take 15-20% down from the signer; carry the rest of the note for 5-7 % interest-only with pre-payment penalties so you are insured of getting your return. As long as the value of the house does not fall below the down payment, you should have a cushion against foreclosure. The people who sign the loan are responsible for all of the costs since it is their home. You are fairly worry free as long as they don’t destroy their own home. Your return is 5-6%,passive income, backed by the house. Not bad in this market.

[investor]

Prairie dog. I agree with the above. renting is not something I personally would entertain again unless it was a 4-8 plex or higher. Supplying the down and then caring the rest of the note? no way to someone who has gone to foreclosure. How about being the bank? Buy the home. Take 15-20% down from the signer; carry the rest of the note for 5-7 % interest-only with pre-payment penalties so you are insured of getting your return. As long as the value of the house does not fall below the down payment, you should have a cushion against foreclosure. The people who sign the loan are responsible for all of the costs since it is their home. You are fairly worry free as long as they don’t destroy their own home. Your return is 5-6%,passive income, backed by the house. Not bad in this market.

[investor]

Prairie dog. I agree with the above. renting is not something I personally would entertain again unless it was a 4-8 plex or higher. Supplying the down and then caring the rest of the note? no way to someone who has gone to foreclosure. How about being the bank? Buy the home. Take 15-20% down from the signer; carry the rest of the note for 5-7 % interest-only with pre-payment penalties so you are insured of getting your return. As long as the value of the house does not fall below the down payment, you should have a cushion against foreclosure. The people who sign the loan are responsible for all of the costs since it is their home. You are fairly worry free as long as they don’t destroy their own home. Your return is 5-6%,passive income, backed by the house. Not bad in this market.

[investor]

Prairie dog. I agree with the above. renting is not something I personally would entertain again unless it was a 4-8 plex or higher. Supplying the down and then caring the rest of the note? no way to someone who has gone to foreclosure. How about being the bank? Buy the home. Take 15-20% down from the signer; carry the rest of the note for 5-7 % interest-only with pre-payment penalties so you are insured of getting your return. As long as the value of the house does not fall below the down payment, you should have a cushion against foreclosure. The people who sign the loan are responsible for all of the costs since it is their home. You are fairly worry free as long as they don’t destroy their own home. Your return is 5-6%,passive income, backed by the house. Not bad in this market.

[investor]

Prairie dog. I agree with the above. renting is not something I personally would entertain again unless it was a 4-8 plex or higher. Supplying the down and then caring the rest of the note? no way to someone who has gone to foreclosure. How about being the bank? Buy the home. Take 15-20% down from the signer; carry the rest of the note for 5-7 % interest-only with pre-payment penalties so you are insured of getting your return. As long as the value of the house does not fall below the down payment, you should have a cushion against foreclosure. The people who sign the loan are responsible for all of the costs since it is their home. You are fairly worry free as long as they don’t destroy their own home. Your return is 5-6%,passive income, backed by the house. Not bad in this market.

[patb]

get good at analyzing cash flow and
get a cap rate in mind

[patb]

get good at analyzing cash flow and
get a cap rate in mind

[patb]

get good at analyzing cash flow and
get a cap rate in mind

[patb]

get good at analyzing cash flow and
get a cap rate in mind

[patb]

get good at analyzing cash flow and
get a cap rate in mind

[CA renter]

[quote=SD Realtor]While your intent is okay there are some vagaries that need to be answered. Most important is, are you talking about San Diego or not? Also while you appear to be quite altruistic, if you are talking about helping people out I am assuming you would purchase the home first, then basically rent the home back to the previous owner correct?

So, if that is the case then you would be purchasing the home at trustee sale. I will say right now that our group is almost at a complete standstill because we have found the trustee sale path to be to competitive as margins are quite small. If your intent is to hold the property for quite awhile then you are okay. However know that you will need to do quite a bit of legwork. If you are thinking you can pull this off with a few hours a week then you are sadly mistaken and you will piss most of your money away. Also I concur with an above post that you may find after awhile that your current owners could not pay the mortgage and they will very likely fall behind on rent so you will end up evicting and getting new tenants. More time, and more money. If your goal is simply to flip that is fine just know that margins are quite thin nowadays.

One thing you may want to learn more about is trust deeds.

Alternately if you are looking at buying a home as a short sale, then renting it back to the original owner, I cannot comment on whether or not that constitutes fraud or not. If you think you can get a short sale, then relist it and resell it and still get margins…. well… good luck with that. Maybe last year you could have however the market has slowed considerably and I think more times then not you will lose money.

Again, all this is predicated on San Diego as well. I don’t know about other cities. I think you need to clarify your goal a little bit more and I could make a better recommendation. Buying and flipping right now is scary at best. You are about 2 years late to that party and right now everybody is into it and people will be getting burned unless you do it right. The best chances are ULTRA low end where you buy it, major rehab and sell it. Other side of the coin is high end and hope the high end doesn’t crumble while you hold it. Just know on the low end you will be competing against guys like Don Rady and people that have good crews, can rehab homes quick and own brokerages so they soak up all those costs.[/quote]

Excellent post, SDR.

I know someone who’s been watching the market for years and has even been involved with foreclosure remediation, so isn’t exactly naive. This person is now thinking of forming a fund to buy foreclosures. My response to him: You’re a day late and a dollar short; the time for that was two years ago. Anyone thinking of getting in at this point — especially those who are not old-timers with a lot of experience under their belts — are in for a world of hurt, IMHO.

As for becoming investors/landlords…my family did this for decades (both had their broker’s license, and my mom was invoved with both residential and industrial RE, so they had more knowledge/experience/tools than most). Lots of money can be made, but even more can be lost. It is not for people who are looking for “passive” income. There is so much that can go wrong with rentals, and there is a lot of competition right now for the good properties, which means there’s a high probability for new landlords to overpay if they outbid the guys who know what they’re doing.

[CA renter]

[quote=SD Realtor]While your intent is okay there are some vagaries that need to be answered. Most important is, are you talking about San Diego or not? Also while you appear to be quite altruistic, if you are talking about helping people out I am assuming you would purchase the home first, then basically rent the home back to the previous owner correct?

So, if that is the case then you would be purchasing the home at trustee sale. I will say right now that our group is almost at a complete standstill because we have found the trustee sale path to be to competitive as margins are quite small. If your intent is to hold the property for quite awhile then you are okay. However know that you will need to do quite a bit of legwork. If you are thinking you can pull this off with a few hours a week then you are sadly mistaken and you will piss most of your money away. Also I concur with an above post that you may find after awhile that your current owners could not pay the mortgage and they will very likely fall behind on rent so you will end up evicting and getting new tenants. More time, and more money. If your goal is simply to flip that is fine just know that margins are quite thin nowadays.

One thing you may want to learn more about is trust deeds.

Alternately if you are looking at buying a home as a short sale, then renting it back to the original owner, I cannot comment on whether or not that constitutes fraud or not. If you think you can get a short sale, then relist it and resell it and still get margins…. well… good luck with that. Maybe last year you could have however the market has slowed considerably and I think more times then not you will lose money.

Again, all this is predicated on San Diego as well. I don’t know about other cities. I think you need to clarify your goal a little bit more and I could make a better recommendation. Buying and flipping right now is scary at best. You are about 2 years late to that party and right now everybody is into it and people will be getting burned unless you do it right. The best chances are ULTRA low end where you buy it, major rehab and sell it. Other side of the coin is high end and hope the high end doesn’t crumble while you hold it. Just know on the low end you will be competing against guys like Don Rady and people that have good crews, can rehab homes quick and own brokerages so they soak up all those costs.[/quote]

Excellent post, SDR.

I know someone who’s been watching the market for years and has even been involved with foreclosure remediation, so isn’t exactly naive. This person is now thinking of forming a fund to buy foreclosures. My response to him: You’re a day late and a dollar short; the time for that was two years ago. Anyone thinking of getting in at this point — especially those who are not old-timers with a lot of experience under their belts — are in for a world of hurt, IMHO.

As for becoming investors/landlords…my family did this for decades (both had their broker’s license, and my mom was invoved with both residential and industrial RE, so they had more knowledge/experience/tools than most). Lots of money can be made, but even more can be lost. It is not for people who are looking for “passive” income. There is so much that can go wrong with rentals, and there is a lot of competition right now for the good properties, which means there’s a high probability for new landlords to overpay if they outbid the guys who know what they’re doing.

[CA renter]

[quote=SD Realtor]While your intent is okay there are some vagaries that need to be answered. Most important is, are you talking about San Diego or not? Also while you appear to be quite altruistic, if you are talking about helping people out I am assuming you would purchase the home first, then basically rent the home back to the previous owner correct?

So, if that is the case then you would be purchasing the home at trustee sale. I will say right now that our group is almost at a complete standstill because we have found the trustee sale path to be to competitive as margins are quite small. If your intent is to hold the property for quite awhile then you are okay. However know that you will need to do quite a bit of legwork. If you are thinking you can pull this off with a few hours a week then you are sadly mistaken and you will piss most of your money away. Also I concur with an above post that you may find after awhile that your current owners could not pay the mortgage and they will very likely fall behind on rent so you will end up evicting and getting new tenants. More time, and more money. If your goal is simply to flip that is fine just know that margins are quite thin nowadays.

One thing you may want to learn more about is trust deeds.

Alternately if you are looking at buying a home as a short sale, then renting it back to the original owner, I cannot comment on whether or not that constitutes fraud or not. If you think you can get a short sale, then relist it and resell it and still get margins…. well… good luck with that. Maybe last year you could have however the market has slowed considerably and I think more times then not you will lose money.

Again, all this is predicated on San Diego as well. I don’t know about other cities. I think you need to clarify your goal a little bit more and I could make a better recommendation. Buying and flipping right now is scary at best. You are about 2 years late to that party and right now everybody is into it and people will be getting burned unless you do it right. The best chances are ULTRA low end where you buy it, major rehab and sell it. Other side of the coin is high end and hope the high end doesn’t crumble while you hold it. Just know on the low end you will be competing against guys like Don Rady and people that have good crews, can rehab homes quick and own brokerages so they soak up all those costs.[/quote]

Excellent post, SDR.

I know someone who’s been watching the market for years and has even been involved with foreclosure remediation, so isn’t exactly naive. This person is now thinking of forming a fund to buy foreclosures. My response to him: You’re a day late and a dollar short; the time for that was two years ago. Anyone thinking of getting in at this point — especially those who are not old-timers with a lot of experience under their belts — are in for a world of hurt, IMHO.

As for becoming investors/landlords…my family did this for decades (both had their broker’s license, and my mom was invoved with both residential and industrial RE, so they had more knowledge/experience/tools than most). Lots of money can be made, but even more can be lost. It is not for people who are looking for “passive” income. There is so much that can go wrong with rentals, and there is a lot of competition right now for the good properties, which means there’s a high probability for new landlords to overpay if they outbid the guys who know what they’re doing.

[CA renter]

[quote=SD Realtor]While your intent is okay there are some vagaries that need to be answered. Most important is, are you talking about San Diego or not? Also while you appear to be quite altruistic, if you are talking about helping people out I am assuming you would purchase the home first, then basically rent the home back to the previous owner correct?

So, if that is the case then you would be purchasing the home at trustee sale. I will say right now that our group is almost at a complete standstill because we have found the trustee sale path to be to competitive as margins are quite small. If your intent is to hold the property for quite awhile then you are okay. However know that you will need to do quite a bit of legwork. If you are thinking you can pull this off with a few hours a week then you are sadly mistaken and you will piss most of your money away. Also I concur with an above post that you may find after awhile that your current owners could not pay the mortgage and they will very likely fall behind on rent so you will end up evicting and getting new tenants. More time, and more money. If your goal is simply to flip that is fine just know that margins are quite thin nowadays.

One thing you may want to learn more about is trust deeds.

Alternately if you are looking at buying a home as a short sale, then renting it back to the original owner, I cannot comment on whether or not that constitutes fraud or not. If you think you can get a short sale, then relist it and resell it and still get margins…. well… good luck with that. Maybe last year you could have however the market has slowed considerably and I think more times then not you will lose money.

Again, all this is predicated on San Diego as well. I don’t know about other cities. I think you need to clarify your goal a little bit more and I could make a better recommendation. Buying and flipping right now is scary at best. You are about 2 years late to that party and right now everybody is into it and people will be getting burned unless you do it right. The best chances are ULTRA low end where you buy it, major rehab and sell it. Other side of the coin is high end and hope the high end doesn’t crumble while you hold it. Just know on the low end you will be competing against guys like Don Rady and people that have good crews, can rehab homes quick and own brokerages so they soak up all those costs.[/quote]

Excellent post, SDR.

I know someone who’s been watching the market for years and has even been involved with foreclosure remediation, so isn’t exactly naive. This person is now thinking of forming a fund to buy foreclosures. My response to him: You’re a day late and a dollar short; the time for that was two years ago. Anyone thinking of getting in at this point — especially those who are not old-timers with a lot of experience under their belts — are in for a world of hurt, IMHO.

As for becoming investors/landlords…my family did this for decades (both had their broker’s license, and my mom was invoved with both residential and industrial RE, so they had more knowledge/experience/tools than most). Lots of money can be made, but even more can be lost. It is not for people who are looking for “passive” income. There is so much that can go wrong with rentals, and there is a lot of competition right now for the good properties, which means there’s a high probability for new landlords to overpay if they outbid the guys who know what they’re doing.

[Author]

Posts