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Vallejo presents serious opportunities for real estate ors. Even so, with such a unique market, ing in Vallejo can present its own particular set of challenges. Today we will be speaking with Doug Brien. Doug is the CEO of Mynd Property Management, and he is here to give us his top three reasons for failure in the Vallejo real estate market.Alex Osenenko: Boys and Girls, Alex here with Mynd Property Management, where we are talking about Vallejo real estate ing: how to do it, how not lose your butt. I have a guest today to help me unpack this large, vast and important topic. My guest today is Doug Brien. Doug, how are you?Doug Brien: I'm doing great.Alex Osenenko: Great, great. Doug and I are doing a whole series on Vallejo real estate ing, and the reason why he's such a qualified guest for this particular subject is that, back in the day, he was a founder and CEO of a company called Waypoint. These guys have purchased over 750 homes in the Vallejo area. So he's got a little bit of a background in the market. Doug is now the CEO of Mynd. And the topic today is going to be the three reasons why people will fail ing in Vallejo. Let's unpack those, Doug.Doug Brien: Yeah, so this is a good one. Alex, you know, I like to consider myself a student of the game and, to me, right now in my career real estate is my game and I want to be learning. So, I'm constantly reading and talking to others, trying to learn. And I think learning where the land mines are is super important in real estate. And so, I will share a few of the land mines that we stepped on in our time at Waypoint. I will share with our guests so that they can afford to avoid these. These are general in it really applies to every market, but I picked three that I think are especially prone to happen in a market like Vallejo that can be very block by block. It's not homogenous neighborhoods where you can have a neighborhood and kind of generalize what the rents are and building quality. It's just, it's not like that.Alex Osenenko: Like Sunset in San Francisco. Sunset in San Francisco is Sunset in San Francisco. It's pretty much 42nd Avenue or 14th. It's very similar. I mean, there might be weather differences, but in Vallejo, as you say, it's very, very, very almost to specific.Doug Brien: Yeah, pocketing. We used to think of it as pockets. And so, these pockets can impact some really big things. Number one is your rent. I think that, as a real estate or, you want to get really good at picking or performing certain variables that are going to have a big impact on your ment. The number one variable that creates the most volatility or unpredictability in real estate ment is rents. 50 bucks, you think, on $1500-$1700 rent, what's the difference? It's 50 bucks. Surprisingly, it will start to move your cash-on-cash and cap rates pretty meaningfully. So, getting your rent right is important. It also has a huge impact on the value of your property if you apply a cap rate to your NOI (). Maybe there's another episode we go deeper on that.Alex Osenenko: Yeah, we should get the nomenclature definitely explained. But, go ahead.Doug Brien: Long story short, rent matters and you have really got to understand, on a block-by-block basis, where you're owning and what you're comparing your market rents to. And then, be really careful that you don't have too high of a rent for your location so that you end up with a desperate, poorly-qualified tenant who's willing to pay your high rent because no one else will take them because of their eviction history or tenants. You can end up with a situation where you think you win, but really you’ve lost because now you have someone living in your house and they can’t afford it.So, make sure you get the right rent for your neighborhood. I think you want to have an honest assessment of the type of resident that you can attract, and to set up your underwriting criteria for residents, accordingly. So a lot of markets or neighborhoods in Vallejo are blue collar. Like, you're not going to get people who make six figures in these neighborhoods. They're just not going to live there. And so, it's going to have an impact on like what you can realistically get in terms of income-to-rent coverage and FICO score. You really have to set your box appropriate to your neighborhood. Yes, you can be really choosy, but be careful that you're not being so choosy that you have extended vacancy. It's related to rents, but getting the right resident is, I think, very important in Vallejo and in the Bay Area. In California, it's expensive and time-consuming to get that wrong and to have to evict someone.Alex Osenenko: There's one caveat I will add to this, if you don't mind. We have the Fair Housing and all kinds of very specific governmental policies in terms of non-discrimination and other things. So, folks, when Doug is talking about choosing the right resident, it's really about the income profile and stuff like that. It's very important that, I think a lot of landlords will fall into this trap of, “oh, I want a family.” Well, you can't really do that, right? There are very, very specific rules. So this is where I recommend hiring a property manager or at least hire a company that can place a tenant a resident for you. You don't want to manage ongoing. That's fine. But that's recommended, right Doug, would you say?Doug Brien: Yes, and I'm glad you highlighted that because that is very important. I talk to a lot of ors who say, “you know, I want to meet my potential tenant or resident get a feel for that.” That is highly illegal and something that, if you do enough, you're going to have a Fair Housing problem. When I say “set your criteria right,” at the companies I've always been involved with, you have a different tenant qualification standard for an A-neighborhood, a B-neighborhood, a C-neighborhood and a D-neighborhood. It's just the reality of these neighborhoods. You're going to attract a different kind of person; however, there is a set of criteria applied to each neighborhood uniformly. We're not changing it depending on who it is. It's appropriate for the neighborhood. So, that is the way you want to do this in terms of being aware of and not violating fair housing law.Alex Osenenko: Absolutely. And so, number three. What is your number three, Doug? How do people fail—the third most often reason you see?Doug Brien: Yeah, so they do not know the area well enough. And again, not diving into that block-by-block—which side of the block, which side of the street—not knowing the location well enough. They end up buying next to that parks a bunch of dilapidated trucks and has pit bulls running around the front yard come six o'clock in the evening. Or () has some other dynamic that the buyer was not aware of which is a real impediment to attracting the right resident and getting the rent that they thought they would get. So they get the location wrong—that's the third mistake.Alex Osenenko: Got it. So to sum this up: three reasons why ors could fail is not setting the right rent, not getting the right criteria established for your resident in that specific neighborhood, and then, not knowing the area and making a mistake—literally buying a house that, had hadn't been four houses to the left, you would have done well, but you didn't get the one.And so those are the three things. Now it's not all doom and gloom, boys and girls, because we've done a thorough interview with Doug on why you should in Vallejo—the five reasons. There are only three reasons for failure and five reasons why you should (). And all you have to do is go to Mynd.co. M-Y-N-D dot CO. Type in Vallejo real estate ing and you will unearth a number of interviews. So, if you're serious about doing something in Vallejo, this is probably a good resource for you. Mynd.co, type in Vallejo, get the stuff. Doug, thank you very much for your time.Doug Brien: You're welcome, Alex. Thanks for having me.Alex Osenenko: And thanks for watching.There are many things to think about when ing in real estate, and this is especially true when ing in Vallejo. With a diverse, block-to-block, house-to-house market, Knowing the correct rent to set is key to generating serious cash flow. Likewise, setting the right criteria for potential tenants can save an or plenty of heartache, in the long run. And nothing is more important than knowing the neighborhood and choosing the correct property by evaluating those around it and building a real understanding of the community, at large. Doing so can position an or for serious success in any market and in Vallejo, in particular.