Updated almost 7 years ago on . Most recent reply
Starting a Large Renovation on 5 Unit Oakland Apartment
Investment Info:
Large multi-family (5+ units) buy & hold investment in Oakland.
Purchase price: $640,000
Cash invested: $640,000
5 Unit Apartment in Oakland California. Purchased at a sheriffs auction for $640,000. Oakland has very strict rent control and tenant rights laws, with more proposals introduced all the time. We are just about to start a major renovation on the building.
What made you interested in investing in this type of deal?
If a good deal comes a long, you have to jump on it. Although the city of Oakland is making it very hard on landlords to do business in the city. If another apartment deal came along, I would have to be incredible for us to buy it.
How did you find this deal and how did you negotiate it?
We had a friend that told us their apartment was going to go up for auction due to family issues. Sheriffs auctions are not publicized like foreclosure auctions, so there was only 2 other bidders.
How did you finance this deal?
Cash
How did you add value to the deal?
There is one vacant studio on the bottom floor. The previous owner added 2 additional un-permitted units in the basement making a total of seven units. The additional units were ripped out which caused a lot of issues, but it showed that we could put rooms down there, so we are converting the studio into a 2-3 bedroom apartment. We have to move fast on the vacant studio because Oakland has a vacancy tax of about $5,000 per vacant unit coming soon. We are also looking into sub-metering the water
Lessons learned? Challenges?
Working with tenants will be a challenge. We have to pay them to relocate and then when the renovation is complete they get 1st right to rent their previous units, for the same rent.