저자: Kevin · 외국인
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산타바바라 2베드룸 주택(약 750sqft) 현장 답사 영상. 호가 58.9만달러이나 입찰 8건으로 62.5만달러 수준에 거래 경쟁이 붙어 매수를 포기. 집은 노후(1923년), 전기·배관 개보수 필요, 에어비앤비 불가, 임대 수익률 부족으로 임대·에어비앤비·플립 모두 매력 낮음. 코로나 이후 시장 불확실성으로 가격 완충이 얇다고 판단. 주식·증권 자산 관련 발언은 없음.
다듬은 글
hey everyone Kevin here straight from the organ trail today I'm going to explain exactly why I walked away from an eight hundred twenty five thousand dollar deal in Santa Barbara California I'll explain at least six reasons why this was a deal to walk away from and most you know that even though I'm cautious with real estate right now I'm still bullish on below market value deals because if you buy something substantially below market value even if prices fall you've got a cushion and I'm looking for big cushions right now so let's get into touring the house and sharing that experience with you and then talking about why I walked away from it so I have to say it was a little eerie because the day I started driving on over to go check out this house it was raining it wasn't sunny like it is now and it just made everything feel a little bit more eerie the streets are mostly empty the commute was really easy this would have ordinarily been a 45-minute commute and most of y'all in my real estate investing courses like Kevin you have a 30 minute rule what is within 30 minutes now during the outbreak well we'll talk more about that in a moment but yeah it was much quicker Drive when I got there and I first pulled up I'm like oh okay like there there's some people walking around as soon as I get out of my car like immediately I start getting talked to it doesn't help that my face is on my car because that usually attracts people to the saying things like oh you sell this house hey let me tell you about the people who lived here beforehand which I have to say usually that bothers me when I'm like the listing agent because when I'm the listing agent I'm like dude I don't want to know I really don't want to hear the stories but in this case I'm like well if I want to be the buyer sure tell me about it I'll tell you this guy you could see in the image here this guy was on it yeah he told me about how busy the street is exactly where this school bus stops he told me about how he thinks the street one Street over on sunsets way better because you don't get all the through traffic and people are hauling butt down this street usually he also told me that I got to be careful going in there because oftentimes there are squatters in there after the last tenants moved out there were nothing but sort of a rotating door of squatters going in and out of that house so definitely some interesting insights from this person although what I did like is that he told me this was by far in his opinion the worst on the block which that meant I was in the right place and I'll be upfront I don't know as much about Santa Barbara as I do you know Ventura County but I still saw a potential value in this deal so that's what brought me out here you know first thing I noticed as well as all the apartment buildings across the street something I talked about looking at its potential rental competition here and when it was time to go inside the property I made sure to pop on my respirator I wasn't actually expecting to see people inside otherwise they would have probably put a you know some goggles on as well so I just put the respirator on in case there'd like literally been a showing because I don't know there could have been there could have been a showing three minutes before me and somebody could have been confident sneezing all over the place what do I know all I know is I don't want to bring something back home to Lauren and then she gets sick because she's got asthma and severe allergies and last thing we need is her having a respiratory illness now we did both decide to sign up for life insurance though because of that my favorite is linked down below it took us like five minutes before watching Tiger King which we are almost done watching Tiger King and I'll tell you when I first watched it like the first 10 minutes I'm like I don't want to watch this crap now I'm like I can't stop watching this crap also by the way something else that I do when I go off to a property and I unlock the lock box as I put on gloves and then after I touch anything I walk back to the car really quick and kind of use my elbow to pop open the door and then I do some real good sanitizing to make sure my hands are as clean as possible all the time but anyway this is the house it's a two-bedroom one-bath slightly below 750 square foot property it's also on a less than 4,000 square foot lot so it's a super tiny house and super small lot which in some respects even though that seems horrible is not bad because think about it kitchens and baths and landscaping are expensive I don't have a lot to do here I got one bathroom I got a tiny kitchen I got a little patch of grass in the front and back not that much work to do you see the rain gutters are all leaking and destroyed not that many rain gutters to deal with on a 750 square foot house maybe you don't even need rain gutters I know it happens to be raining in this video so that's probably not the best example but given that it only rains about 30 to 40 days a year in Santa Barbara I don't know that I really need rain gutters although maybe you could just nail them back on anyway exploring through the rest of the house the house actually isn't that bad which is kind of frustrating because you know I look at a place like this and usually I want it to be stinky and dirty and smelly and I want mildew and I want mold and I want to clean these things and I want to I want like something to solve I want to go in there and have to fix something because any time there's a problem its profit problem equals profit if I can go in there fix something great if I can buy this place and rent it out instantly I'm gonna have a whole lot more competition from people that don't want to do anything people who don't want to lift a finger are willing to pay more money and that's bad for me I want a discount we talked about this in the livestream too we regularly at 9:00 a.m.
every day the markets open we go through renovations like this and we're like well I do this I wouldn't do this and oftentimes I catch myself saying man I wish this place were screwed up a little bit more if it's not messed up enough come on so upon closer inspection I see that most of the electrical system is ungrounded we see that the foundation has not been retrofitted yet the Plumbing's the original plumbing the cabinetry is warping a little bit and overall the cosmetics while they look okay the expensive stuff isn't that great the original windows and this is an older property his property was built in 1923 so this is kind of an example of yeah it's it's a bay basically a mixer but the cosmetics aren't like vomit bad and like I'd want worse right now and on top of that the systems aren't that good there's sort of like you know nobody spent any money upgrading the place over time so you got a few frustrations here I mean that thing's pretty much original so why the heck was I even looking at this deal well let me put it very simply to you the place was listed for $589,000 on the MLS it wasn't even like a secret a special deal listen for 589 and you've got comps in the neighborhood going for 825 840 and then you've got some larger properties which I can't really use going anywhere from 875 to $1,000,000 but I'm not really gonna count those this is hands-down fixed up an 825 er you know it probably pre Rona pricing so this is a little bit of a buffer you want to factor in there for Rona pricing but we'll talk more about that in a second the number one biggest complaint I have about this place is it's not air B&B able I knew that going into it so honestly I'm like heaven why am I even here but if I was going to do a deal in Santa Barbara I would love for it to be air B&B able mostly because I believe we are entering the biggest air B&B reset that Airbnb has ever seen people who have Airbnb is established and have five-star accounts and have to sell their property because of the rona or they have to turn it into a long-term rental those reviews go away so my competition just got eradicated so if I want to start an Airbnb business this is the opportunity to pick on starting an Airbnb business and we're gonna be talking a lot about that in the real estate investing course I'm starting lectures on that already as well as sort of a QuickStart guide since the course is pretty large I'm gonna do a little quick start guide at the beginning to get you all up and running and see this is why I work like 90 hours a week because I just keep adding stuff I can't stop now Airbnb is usually not my primary motivation for going into a deal but it is a backup strategy see if you go into a deal you've got a few options you could sell it for a profit that's good you can rent it for a profit that's good you could Airbnb it for a profit that's good see all of these things give you choices and options there like exit strategies worst case if you need them right there's so many options that you have in real estate well in this case backup option number one gone I don't like limited options if I'm gonna own real estate i want choice I want the ability to decide what I'm going to do I can't do option number one so that sucks now some people are like old Kevin well you know then wouldn't you want a larger lot too because you can redevelop it usually not my preference rather than spending a hundred grand on redeveloping something or doing an add-on or something like that I'd rather take that money and go buy another D there are certain times to develop though I just don't believe now is that time the number two problem is usually a rental breakeven in Southern California is somewhere around 28 to 30 percent down that means if you put 28 to 30 percent down on a good deal like a decent deal doesn't even have to be a great deal you usually have a break-even pricing there where you could pay a property manager and have a hands-off deal principle pay down you know equity appreciate all the good things that come the tax benefits all the good things that come with real estate usually around 28 percent down you get your breakeven you know then you put more on thirty five forty percent you really start seeing good cash flow that's what commercial real estate investors do anyway in fact a lot of commercial investors these days are having to put 50% down on commercial but commercials over price right now so the usual target is 28% down and you breakeven on the numbers and again you put a little more down and there's your cash flow vacancy reserve capex everything this place though because there are so many apartments around it and so many rentals the actual rents on this are squeezed and down and you'd probably have to put somewhere between 40 to 42 percent down on the cash flow well to break even on the thing not even cash flow and I and I look at those numbers and I'm like no and look I know California crazy I know California nuts but I'm okay with it but this that's pushing nuts so number two option renting it gone that leaves flipping it so back up option number one is out of the window Airbnb back up option number two is out of the window renting it so I'm looking at this idea of flipping it okay so let's say it's an $825,000 in house let's go worst-case scenario and say I can get $7.99 for the thing if I do a quick flip and the longer I hold on to this thing the worse it would be if flips are speculative they're riskier I'm not a big fan of speculating but let's just understand if I went in at $7.99 the place doesn't need that much work then let's say I had to pay somewhere around 625 for it worst case scenario $7.99 625 spread put in less than 50 grand in the place honestly 50 should be generous the place is tiny I'm gonna have some selling costs over here though so let's go ahead and pull off about seven percent that's fifty six thousand dollars so that's not so fun so I've got fifty six thousand dollars to sell it I've got fifty thousand dollars to fix it and my holding cost I've got a purchase price of 625 which on a flip like this brings me at $7.99 assuming I didn't get multiple offers on it $7.99 - 56 - 50 - what I paid for it and assuming acquisition costs and stuff her in this 50s 50s generous that's gonna put me somewhere around sixty eight thousand dollars in profit and I should be able to do that flip pretty quickly that's a good deal that's not bad but I've got a few other problems with this going into this deal with these numbers only after selling costs and everything gives me a 10% buffer so if the market shifts down 10% all of the profit is gone and I don't have post rona comps all my comps are pre Rona so thus ten percent is a problem this makes this bet more speculative now if I was able to rent this or Airbnb this in the future this is a little bit more appetizing because all of a sudden I would remove the 56,000 dollars here my holding costs and my fix-up costs would be less in fact to rent this I'd probably only have to spend somewhere on thirty thousand dollars and now if I paid 625 I'd have much more of a buffer with these numbers I would have a hundred forty four thousand dollars of bonus equity in the deal to insulate me pushing me in case of a fall which $144,000 is much closer to 20% it's not quite 20% say 18 percent but that's a lot better of a cushion and then the flip cushion but it doesn't make sense to rent it and it doesn't make sense to Airbnb it so with 10 percent on a flip it's just not that great in an uncertain market in fact it's kind of risky because I don't want to spend all my time doing this for no profit and so that's where we go back to the purchase price 625 to get it but wait a minute it's listed for 589 why would I have to pay 625 for it well because there eight offers on it why are there eat offers because it's not bad enough again I mentioned this on live streams in the private investing course almost daily I'm like it's just not bad enough I just finished the live stream where we were analyzing one where there was clearly like mold on the wall and I'm like this is great this is perfect because it immediately shuts out like instead of eight buyers we'd have like two buyers on it it's so much less competitive when there's really nasty stuff but you saw this place looks fine it's not that bad because it's not bad enough it's selling for this premium see if I was able to buy it for list price at 589 now all of a sudden I would have an additional cushion of what 25 plus 11 of another $36,000 that gives me another buffer that's like I'm going in with a hundred grand potential profit on a flip with that as a cushion for a Rona fall so not so ideal that I'm gonna have to overpay for it so number four reasons for this one not happening it's just not bad enough reason number five I'm walking on this one is not having enough local professionals in the area that can help me see in Ventura County I got people all day long who can help me do deals paint floor and plumbing electrical everything and a lot of them need work right now and I want to provide that because I want to do deals I want to provide work but if they have to drive to say in a Barbara any kind of deal you could get on pricing goes out the window because now they're break grudgingly driving to Santa Barbara and on top of that they might just straight-up say no which leaves me in a lurch and having to find new contractors in Santa Barbara which is bad now I'm not saying you can't find contractors but it's a lot harder to find contractors when you're thirty minutes away from the property if this property we're right next door or three minutes away I could I could start anywhere I could easily find contractors because I could be there every day because it's three minutes away I don't want to drive to this place thirty minutes one way is an hour round trip just to be able to meet some new contractors and that's also reason number six I'm way too comfortable sitting here I'm drinking my coffee on quarantine lockdown to drive an hour round trip I don't want to show it for rent to a bunch of different people because I'm trying to rent a place out door and rona time and I'm just too lazy to drive that far I get mad that I have to get in the car and drive seven minutes away but seven minutes away is very bearable thirty minutes is a chore that's exactly why we have the thirty minute rule that's exactly why this deal is a No Deal join me in the courses link below get your free quote for life insurance takes you like four minutes on your phone and folks will see you later
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