Still waiting for a good answer. . . - Posted by Metra

Real Estate Investing
1

Posted by Mark (SDCA) on September 14, 2000 at 11:24:19:

I used realtor.com.

  1. I have to admit that I WAS surprised by the # of listings that actually came up.

  2. San Fernando Valley only had 8. South Bay only 30. San Gabriel Valley only 34. So we aren’t talking huge numbers of opportunities here. Downtown/Westside actually had 156. Not really sure what to make of that. More bad areas I would guess. Or it may relate more to #3 just below.

  3. All the ones I saw were VERY small (1-2 BD, 400-700 sq. ft.)

  4. It was hard to tell much about the neighborhoods just from the pictures but most of the houses that had pictures looked pretty beat. So take your chances.

  5. I was quite surprised at the # of VERY small, inexpensive DETACHED homes available. I do not believe these were condos.

  6. One of the ones in the San Gabriel Valley was listed for 1250. It turned out to be a lease (NO option) so you take your chances.

Regards,

Mark

2

Still waiting for a good answer. . . - Posted by Metra

Posted by Metra on September 13, 2000 at 20:51:47:

I’m a novice investor in Los Angeles and becoming more and more discouraged because every article or testimonial I read by successful RE investors is ALWAYS about people who live in those Utopian parts of the country where a house still costs $20,000 to $40,000. Now, Where I live, this is so unheard of it’s funny. A single family home in my area will run you somewhere between $200,000 and $400,000 minimum and that’s not neccessarily prime real estate. Not to mention that positive cash flow is IMPOSSIBLE because the loan amount is too high for the rents received to pay it off.

I was lured into this business by the promise that a person with little money and bad credit could earn a good living. Getting a $40,000 loan from a bank or broker is one thing; but going after a whopping $250,000? I keep hearing that “No Money Down” techniques work EVERYWHERE yet I have not heard ONE testsimonial or read ONE article that relays a success story in Los Angeles. IS THERE SUCH A THING? Can I really succeed starting out with bad credit and extremely high property value? Who the heck is going to let me borrow $300,000 with little or no money down and bad credit?

3

Re: Still waiting for a good answer. . . - Posted by Bill Scott

Posted by Bill Scott on September 15, 2000 at 04:10:46:

Metra, you’re not looking far enough afield. I lived in So-Cal for fifteen years and I know there are plenty of cheap houses around. My law school buddy picked up a fixer-upper 2 bed/1 bath in Irvine within rock throwing distance of the city of Orange for $70,000 in 1996. I know there are properties in the affordable range in Riverside, Loma Linda, Redlands, older parts of Irvine and Orange County. Buy a Thomas Guide (I wish they had them for Ohio!) and find the neigborhoods that aren’t war zones and have the smaller, starter homes. Then start combing those areas on a regular basis and sooner or later you’ll find a house.

4

Re: Still waiting for a good answer. . . - Posted by Jim IL

Posted by Jim IL on September 13, 2000 at 23:52:52:

Metra,
I’ll admit, the home prices in my area are not as high as yours.
But, we also have a wide variety of price ranges here if you are willing to drive a few miles. (like 50+)
Bottom line is, forget the numbers for a minute.
It seems to me by your post that you are making the same mistake that many “Newbies” make.
You are looking for “Properties” and not sellers.
Take this example:
A seller calls you and says, “Metra, I have a home that I cannot make the payments on any longer and I’m broke.”
This home is in good shape in a nice area.
The seller simply wants out from under his payments.
He owes 95% of the value on it.
Can you make a solution for this guy?
Sure you can.
The payments are current, and the seller says, “I only have enough money to cover three more payments.”
So, you offer to take the property “Subject to” his existing financing.
He will make the next two payments, and after that, you pay.
But, you get possession now.
You can keep this home and rent it out, because now you own it, but in your market, the rents are at least 20% lower than the mortgage payments on this home.
So, what do you do as an exit strategy?
You sell the home on terms, rather than rent it out.
You can either L/O this home, which will give you some upfront money, a “premium rent” which will cover the payments, and a nice backend, since your price to the buyer is higher than FMV.
You can go higher than FM rent and FMV for price, because you are offering easy terms.
And, if you cannot get a payment from your buyer to cover the payments on the loan, then you make that up on the front end.
you have the buyer pay you enough to cover the differenc, and you do not have to come out of pocket.
It would not matter if this were a $1,000,000 home or a $10k home.
The numbers are irrelevant.
The only difference I see is that you may have to market this home a little longer if it is a high priced home.
That is why you had the seller pay for 60 days AFTER you got the deed.
Prices of homes does not matter, Metra, it is the sellers motivation that matters.
Heck in my area, I could buy homes all day long for $50k-$60k, but they’d need a lot of work, and be in bad declining areas.
The average SFH here in my town goes for $175k.
The rent on such a home would only be $1300/mo, and as you can see, renting it out would be a negative cash flow.
So, instead, I sell the home to a T/B’er and get my payments covered and create cash flow.

Also, the cost of living is all relative.
If homes sold for $50k here, on average, than the average income would also be lower.
Same applies on the upper end as well.
Higher home prices usually mean higher pay.

Forget the numbers, and look for the sellers.

Happy hunting,
Jim IL

5

I’m in the same boat, Metra, on the other coast. However… - Posted by Mrs SD

Posted by Mrs SD on September 13, 2000 at 22:41:38:

Although I sometimes come to this board to whine and vent because yes I am feeling frustrated, I do believe that I will someday be successful. I’m trying out every different kind of marketing technique to find the best one in my market, NYC (where junker houses in the inner city run for 100K+). I also plan to buy more courses once I get my first deal under my belt thereby enabling me to find solutions for an array of seller dilemmas, ultimately empowering me to make more money in more ways.

My old boss had a plaque in his office that read, “Whether you believe that you will succeed or fail, you are correct”. I too had a plaque (which has since been destroyed in a move)that read, “Success is achieved by persisting when others have given up” (or something to that effect). I’m trying to adhere to these concepts by doing a task every day related to advancing myself in my rei pursuit. On especially hectic days that may only amount to printing out posts from this site that I think may help or encourage me now or in the future, if I have more time I might stick 100 of my business cards under car windshields.

I’m a full-time working mother of 2 (one’s an infant) with very limited resources, so all of this is really difficult for me, but if I don’t believe in me, my husband and our business, who will??

Take Care and keep plugging away. I know I surely will.
Mrs SD :o)
Investor Intern

6

Re: Still waiting for a good answer. . . - Posted by PBoone

Posted by PBoone on September 13, 2000 at 21:38:03:

Metra,
Sometimes we have to pursue areas we would not live ourselves. After reading your post I searched the internet for the los angeles area for houses for under 100K. I found 178 matches in less than 2 minutes.
My point is the deals at 40K and below are probably areas I would not take my dog, but if I want to make money in real estate in these areas I would definitely take my dog,
Pat

7

Re: Still waiting for a good answer. . . - Posted by bill

Posted by bill on September 13, 2000 at 21:22:59:

I know what your saying i live in westchester NY and wish houses were that cheap here but at the same time finding homes renting for 2000+ a month is not uncommon. its a simple case of pay vs cost of living in that certain area. i know a few investers here and they make nice $ same game just bigger #s where to find the money? i would say use the creative strats that the books tell us to use, ie owner financing etc.good idea im just thinking of now is that since we make the big $ where we are . just buy the properties in the other states and get a management company to take care of our investments hmmmmmmm… lol good luck

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Re: Still waiting for a good answer. . . - Posted by JoeS

Posted by JoeS on September 13, 2000 at 21:20:26:

I live in one of those areas where a 2 family in good shape sells for 10-20K, but the wages here are $6/hr also. The business techniques are the same, the numbers are different. Look for income producing homes…2or3 family houses, not only SFR’s. They are out there, you CAN do this business where you live.

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Re: Still waiting for a good answer. . . - Posted by Mark (SDCA)

Posted by Mark (SDCA) on September 14, 2000 at 11:05:06:

The issue is not so much the absolute price of homes out here. It is the rent to price ratio. If the rent for a 200K home were 2K, you might be able to fly. The problem is that you are only getting 1500-1600 for that 200K home. So you have a big fat negative cash flow, especially if you come in with a small down.
Buy and hold is a tough sell out here. LO DO work though.

Regards,

Mark