Closed My First Buy & Hold in Los Angeles

Real Estate Deal Analysis & Advice
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Closed My First Buy & Hold in Los Angeles

Ryan Rodriguez
El Monte, CA · Member since 2016 · 24 posts · 14 votes

BiggerPockets Family, 

I want to share with you all a quadplex deal I closed back earlier this year in East Los Angeles.

About the Deal:

Property was listed on the MLS for $615k. Each Unit was 700Sqft with 1 bed/bath. The property also had a detached 4-car garage and a laundry room. I initially put in a offer for $630k, but was outbid by another all cash buyer and placed as back-up offer. A week later, the first offer fell through and they accepted my offer! When I first visited the property, I can tell the owner had neglected to keep the property updated and let the tenants run things. The owner was 80 years-old and had the property all paid off(dealing with a very motivated seller). All units were rented well below market rent and I realized this would be a great value-add opportunity. I ended up negotiation the purchase price to $595,000.

The next day, I went knocking on each of the tenants door notifying them I was the new owner and giving them a 60-day notice for an increase in rent. I ended up having one tenant leave one month at a time. This was great for me since it allowed to renovate each unit one at a time without making me pay the entire mortgage payment each month. Overall, I spent about $40k in renovations and have brought all units to market rent. All the tenants now living at the property have been screened by me and are absolutely wonderful. I am now collecting $5k in rents per month ($1350,$1350,$1100,$1200). Currently cash-flowing $1,645 a month with a 20% down payment. My cash-on-cash return is 11.2% (which I believe is great in the LA area). I hope this deal show folks that it is possible to invest LA. I bought this property at 23 years-old working as a full-time financial analyst in Santa Monica. I also have my real estate license. Please reach out to discuss more!

Please see below the property analysis:  

12Reply
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Most Popular Reply

Ray Lai
Investor / Vendor · San Diego, CA · Member since 2016 · 1k+ posts · 949 votes
9y

@Ryan Rodriguez
Welcome to BP!

Awesome breakdown of the numbers, those are sexy. Getting 11.2% COCR is outstanding in LA... doublecheck the numbers though. It's great seeing real estate change hands from a motivated 80 year old to a 23 year old hustling in the city. Nice job getting that real estate license. I'm guessing you bought MLS? Any plans on keeping the pipeline flowing to add more to your portfolio?

Couple of ways to improve the accuracy of your numbers:
Consider adding vacancy as a % (typically 5-10%) because it's impossible to keep all unit 100% rented
Need to add CapEx for your future big costs (roof, HVAC, etc)
Considering adding a reserve for any other unexpected expenses.

Keep up the good work!

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  • Ty L.
    Investor · Northern Virginia · Member since 2017 · 159 posts · 59 votes
    9y

    Congrats and sounds like a great find.

    1Reply
  • Ryan Rodriguez
    OP
    El Monte, CA · Member since 2016 · 24 posts · 14 votes
    9y

    @Hardik Patel Thanks Hardik, will do!

    0Reply
  • Ryan Rodriguez
    OP
    El Monte, CA · Member since 2016 · 24 posts · 14 votes
    9y

    Thanks @Simon Ruiz! Very great for my parents! I plan to repay the favor to them through real estate wealth. 

    The first way my license helped was that I had full access to the MLS. Would not have found the deal otherwise. In addition, as a licensee, I am able to see a lot more detail then public remarks. This helps gain a little more information on the property, which positions yourself to better negotiate and present a good offer to the seller. Also, title reps give you access to pull title reports on the properties and IMO a lot easier to compare comps. Lastly, the end commission ain't bad either (2.5%*595000) - Broker fee. Used the that money to reinvest.

    0Reply
  • Justin Y.
    New York City, NY · Member since 2017 · 8 posts · 1 vote
    9y

    I am impressed on your first closing. I am looking to purchase my first property mid next year (2018) and I was hoping if you can share your excel sheet and evaluation. Furthermore, I also have my excel sheet setup and I am happy to share it with you as well.

    I notice we have very similar backgrounds - I just recently graduated and I am working full-time in the financial industry. Furthermore, I just started my real estate courses where I am aiming to get my real-estate license.

    After reading your post I do have several questions for you:

    1. Since you also live in the LA area, did you hire a property management to look after the quadplex?

    2. Personally, I don't have anyone in my family who can help me through the process financially. I was wondering if you received help from family financially from the down payment, closing cost, to the cost of fixing the property?

    3. Was location a factor to you when purchasing the quadplex?

    4. I notice you mention that you got your real estate license since you were 19 and you also found the property through MLS. Did you have to pay a monthly or yearly subscription to the real estate brokerage company to maintain your access to the MLS?

    0Reply
  • Bola A.
    Rental Property Investor · Houston, TX · Member since 2014 · 146 posts · 35 votes
    9y
    Can you elaborate on how the license helped you in this deal? Congratulations.
    0Reply
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