All Forum Posts by: Adam King

Hi @Robert B Azimi,

A home that has been registered through The Mills Act, can be rented out the same as any other property, and it can even increase rental revenue as there are people who really like the thought of living in a historic house. There are a few things to consider when attempting to Mills Act a property.

- To utilize the Mills Act requires a few things: An application (not free), inspections, and most importantly a contract with the city in which you promise to rehab and maintain the historic nature of the property.

- The inspections are only 5 years, but tenants are not likely to take care of them home as well as you, and refurbishing hardwood, lath and plaster, and anything else is going to be much more expensive than the typical Landlord special (white paint, and grey LVP)

It will all come down to making your numbers work. The property tax savings are going to be in the ball park of 40-60%, but to be safe you should double your expected repairs budget when calculating the NOI.

If you have any other questions, or want a more in-depth response, I would love to help!

Hi @Patricio Acosta. That is awesome that you found a great flip in Coronado! My partner and I have a flip that we will be starting in mid march as well!

Code enforcement in Coronado is stricter than the rest of the city, and it does fall under the coastal commission jurisdiction.

Depending on the parameters of the flip you can safely factor for an increase in your timeline for permitting of about 30 days. 

I personally use a company called swift permits. They cost slightly more than the normal permitting process, but I usually have permits in hand in a week or less.

My GC is has some experience on Coronado, if you would like I can connect you, so you can get his opinion as well.

Hi @Cindy Chan,

I work very closely with @Ryan Hall, his work and communication is phenomenal. I highly recommend you reach out to him, he is fast, professional, and does amazing work.

If you would like me to make that connection, reach out to me.

Hi @Bruce B. Lee

My name is Adam King. I am a lifelong San Diegan, and I have house hacked every home I have ever lived in. 

There are 2 key components to house hacking in San Diego. Capacity and Tolerance. 

1) Capacity: how many people can you comfortably fit in the property, is there room to add more, or add more value to the tenants to increase rent.

2) Tolerance: How many people are you comfortable living with, if there are vacancies are you able to handle that.

House hacking is an amazing path to homeownership, and a nice low barrier to entry into self managing your properties.

Hi @Marc Zak, my name is Adam King. I am a lifelong San Diegan, and an avid investor.

Everyone here has had some great insight. Let me do my best to break it down into bite sized chunks.

1) Your property tax increase is going to be 2% of the original assessed amount that breaks down to be .024% of the purchase price. A $24 per year increase, per $100k purchase price.

2) The average year over year appreciation in San Diego for the past 30 years is ~6%, there will always be annual fluctuations, last year we did ~10%, but without a crystal ball, no one can say for certain.

3) Your interest rate is only a starting point. every year the interest you pay will decrease, and the principal you pay will increase. This means that every year, your IRR (Internal Rate of Return) will increase.

4) In an appreciation heavy market like San Diego, the IRR is going to be the best way to calculate your earnings as cash flow is fairly low relative to initial costs (down-payment, closing costs, carry costs while placing tenants)

5) To calculate your IRR, you want to use this formula: (Appreciation + loan pay down +/- Net rents)/ down- payment.

you can include the Closing Costs, and carry costs, but I usually do not. Those are the cost of doing business.

I will use my clients property, purchased last year as an example:

(57,000+6228-3500)/$190,000=31% IRR

My client lost money throughout the year(repairs, vacancies, etc) and had an 8.1% interest rate.

All this to say if you can stomach a few down or flat year, you will make a killing!

If you have any questions, reach out to me at any time!

I highly reccomend @Ryan Hall. He is best contractor I have had the pleasure working with.

I highly reccommend @Ryan Hall He does amazing work!

Hi @Christian Gibbs, as @John Burke said. You best bet is to contact a realtor, and have them run comps (most will do it for free). If the value is there to where you currently own 20% or more, then you should reach out to the lender and ask them to schedule an appraisal.

Keep in mind that appraisal is not free, likely ~$600 depending on who they choose. With that being said, having the comps that your agent has provided you ready for that appraiser can go a long way to make sure you get your desired outcome. 

Hi @Alan Kopmeyer,

My name is Adam King, I am a lifelong San Diegan. In real estate I am an avid investor. I have done flips, buy and hold, LTR/MTR/STR, and I have house hacked every home I have ever owned (even though it annoyed my wife).

I would love to answer any questions that you may have, especially in regards to the "house waking" strategy. This is where you buy, live in, rent it out, repeat. That strategy is what I have been doing for my last few home purchases, and will hopefully allow me to retire by 55.

I look forward to helping you!

Hi @Samuel Koekkoek it seems as though most of your questions have been answered.

My name is Adam King, I am a lifelong San Diegan. I have investments all over the city in multiple asset classes. Some cash flow amazingly, and some lose money every month, but they all serve a purpose.

As some have said, if you buy a Duplex your monthly payment after taking in rent from the other side will likely be close to what you are currently paying. Which for 200k or more down, may not seem like a great idea.

Conversely, a strategy that myself and several clients have used lately is value add. Find a duplex or even SFR that has ample room and zoning to add more units. Build extra units, at least one, but preferably as many as zoning will allow.

Doing this does 3 things to help you in the long run.

-Increases the Value of the property, almost always by at least the invested amount, in many areas of San Diego, it can increase the value of the property by as much as 150% of the invested amount

-Decreases your risk profile, having 4 units instead of 2, helps stabilize your rental revenue when vacancies and repairs have to happen.

-The large Capital improvement to the property greatly increases the basis for which you are able to depreciate the property. This tax savings can be huge when you are self managing, but still very useful for when you want to leave the state and have some property management company run it for you.

If you have any more questions, feel free to ask me. I would love to help!