what direction to pursue - Posted by rob

import · September 27, 2003, 5:08pm

Posted by Ronald * Starr(in No CA) on October 01, 2003 at 20:48:31:

Robert–(CA)-----------

As I said in the first post, try the central valley or the rim. You might get some cash flow and you will likely be very pleased with the appreciation over the next few years.

Or go to some other state. Looking back at my original response, I see only part of one sentence. It is: "Or go to some other state. I invest in rent houses " the ending is: “in the state of Oklahoma.” I don’t expect much appreciation there. But I do get good cash flow.

Cutting your consumer expenses and investing is always a good idea, it seems to me. You buy properties as you can. In the first few years of investing, you may not build up much of an empire, but you can accelerate as you go along and get more experience and more assets to reinvest. Then in a few years, you are seeing real serious wealth building. Many people see little progress in their first couple of years and quit. That is not the way to get wealthy. It takes persistence. Wealth is usually built slowly.

So buy what you can with what you have now. With a positive cash flow. Cut expenses. Reinvest the money from the first properties and from your earnings into more properties. It will come. Persistence is the “secret” of real estate investing success.

Good InvestingRon Starr******

import · September 27, 2003, 5:08pm

what direction to pursue - Posted by rob

Posted by rob on September 27, 2003 at 17:08:19:

Hello,

I’m looking for some guidance from the vets or those who have come from similar situations. I’m obviously looking to get involved in RE and realize it will take some time to reach my goals. My goal is to have enough posiitve cash flow thrown off from properties that I will no longer need to rely on corporate america. I understand this will take years !!

My financial situation is fairly precarious in my opinion:

residence - SF Bay Area

salary - 85k
savings - around 10k - started regulary saving 500 pr mnth again
401k - 30k - obviously flucuates a bit, but I contribute about 400 per month
rent - 1500 per month (including electric, cable, phone, etc)

debt

car - 8k owed, 500 per month (this will come down by about 200 in the very near future - i.e., different car, however amount owed will jump to high teens)
cc - about 10k in debt - never behind in payments, I make a little headway on them each month
credit - no issues, pretty good, although the above balance sheet probably doesnt looks so good.

Now, I realize I could wipe the cc debt clean with my savings. However, I am hesitant to do so with the job market and economy the way it is currently. So I may need to live off that money.

I am well underway in the education process and have a long way to go. So my question to the panel is this:

To me it seems the most obvious route is to track down pre-foreclosures and try to get immediate cash out of deals through flip to another buyer - try to build up some capital to work with(I am not an expert on this process as of yet, still learning). However, it seems to me that this would be without a doubt the most competitive/most difficult area to focus on.

To the panel : Does this seem the way to go rather than trying to find a property that may throw off a few hundred bucks positive cash flow?

Any comments or thoughts are welcome, especially from folks who were in a similar situation and are now out of it.

thanks !!

import · September 27, 2003, 8:30pm

Re: what direction to pursue - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on September 27, 2003 at 20:30:24:

Rob–(CA)-------------------

You will find it very difficult to make money with real estate in Coastal CA. It can be done, but requires extreme effort.

Buying preforeclosures? Well, give it a try if you want, but I think you are wasting your time. Property values are going up regularly around here and virtually everbody who goes into default can sell quickly through a real estate broker. There is enough equity to pay the broker, so they will take the listing.

If you do try preforeclosure investing, be sure and read the “home equity sales statute” and the “foreclosure consultants” law for CA. We have special laws that do not exist elsewhere. If you don’t follow them they have extreme penalties should there be a law suit against you.

You are very unlikely to buy properties with a positive cash flow locally. If you want cash flow I encourage you to investigate the central valley, and the “rim” which is the foothills between about 2500 and 4000 ft elevation between Paradise and Mariposa.
Or go to some other state. I invest in rent houses

If you can make a bargain buy locally, you can resell quickly for a profit. It might not be quick or easy to do, but it might be a viable approach.

Good InvestingRon Starr***

import · October 1, 2003, 6:36pm

Re: what direction to pursue - Posted by robert

Posted by robert on October 01, 2003 at 18:36:37:

thanks Ron. Man, you’re all over this board. I’ve heard good things about that neck of the woods and actually found a listing where the numbers made good sense and I think was a very doable situation for me.

That aside, given my financials, would you try to save more money/raise capital/reduce debt, or pursue cheaper properties that do have some cash flow and count on (hope for) some appreciation?

I won’t hold you to your answer ;-), I’m still learning but was just curious as to what your thoughts are in that respect. I realize the bay Area is too expensive and foreclosures are probably a tough tough area to have success with here.

take care