Author Topic: What real estate investments DO make sense on the West Coast  (Read 3091 times)

waltworks

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Re: What real estate investments DO make sense on the West Coast
« Reply #50 on: January 04, 2019, 12:22:15 PM »
Suspect he is looking at return on the original investment, not on current value.

Sure, but that changes nothing.

$100k house, rented for $1000/mo

3 years later:

$100k house, rented for $2000/mo
or
$50k house, rented for $1000/mo

Even if we're just talking the original price, the rents have to double to hit the 2% rule.

-W

bearman

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Re: What real estate investments DO make sense on the West Coast
« Reply #51 on: January 05, 2019, 11:01:56 AM »
The good ROIs I've seen are a combination of a handful of good factors. For the case where they went from sub-1% to above 2%, the series of events was:

1. Saw an MLS listing in one of my focus areas with 2 duplexes on one lot for $370k-ish and each unit at $800/mo
2. (Quickly) came to learn this was one of like 10 properties being sold by a trustee with a very mediocre pm. Made the case that this needed commercial funding and that would push down return (and price).
3. Got it under contract for $350k-ish and negotiated a long evaluation phase, so I could confirm the properties could be split in two.
3. Closed with short term owner financing
4. Refi'd into two 30-yr fixed 6 months later
5. Painted interiors (another $10k?) and upped rents to $1400/unit at turnover about a year after purchase
6. Having kitchens redone now on all four units plus some exterior improvements ($40k total) with projected rents at $1800/unit in the fall, with potential to nudge to $2000/unit year after.

These are very large - each unit is 4br/2ba - and ideally close to a college, so the key here was repositioning with students in mind.

To make sure my overall point wasn't lost in these details: no genius involved here, no hot market or abnormal appreciation, just simply having broad knowledge about a focus area and being known by agents/pm, makes unlocking things like this possible. There are no online links you will find that offer up quality 2%. You find them via phone conversations with a variety of people and assembling disjointed facts into a plan that optimizes for best opportunity.

That said, it's been 1 year exactly since the last good purchase, and I've been looking hard, making offers, etc. Hopeful 2019 isn't as difficult to find deals.