All Forum Posts by: Alice K.

Welcome Srikanth! 

That is SO great that you converted a rental in SF. We need more units :) 
How long did the permits take you? 

I've heard some getting them in a jiffy with certain insider connections, and others taking many years.

Welcome @Tim McGarvey! Very neat you manage large projects in the Bay. As the others have said, I'm sure it will help you a great deal. :)

Originally posted by @Lynn Currie:

Hi @Aroldo Villarreal 

I've been working on a video series to help new investors and I have one that might be useful to you. It walks you through some initial numbers to help you analyze a property for a new construction spec home.

This spreadsheet is specifically built with the sale of the property in mind, but in it I talk a little about how to put the numbers together, evaluating comps (which is what you can do to determine the value of the land) and how to determine what you can build on the property.

Here's a link to the video:
http://vimeo.com/99876448

And here is the spreadsheet:
https://www.evernote.com/shard/s3/sh/a42d0a1c-3f16...

There are a couple of things to think about based on your conversations above:

• Depending on the size of the lots, you might have the option of building 2 duplexes, one on each lot. From what I understand, the City of San Antonio is pretty easy to get answers from. A quick Google search turned up this website https://www.sanantonio.gov/dsd/ If it were me, I'd take a trip down there and start asking questions. You'll probably walk out knowing exactly what you can do from the zoning side. Oh, and protip: bring a book, newspaper, or handy electronic device. You might be there a while.
• If the lots are combined, meaning that they are technically 2 lots, but at some point the city combined them to make them 1, it might only be developable as a single lot.
• If the cost of a new build it too high for the area, you might want to consider having a house moved to the lot. In Austin we're tearing down houses like maniacs. I just gave away a cute, well kept 3/2, 1500 sq. ft house to someone taking it outside of the city. The estimates that I've heard about for moving a house, then re-hooking it up to new utilities, etc. is around $50k. 

 I know it's 2 years later, but thanks so much for this video and spreadsheet Lynn-- extremely helpful!

What everyone said about choosing a different lender is smart and...
Here is a completely different viewpoint as a person who has wasted weeks of their life forming and dissolving businesses:
Why do you want that LLC? Protection? Taxes? A "feel good"?
Heaven-forbid something happen, the veil could be pierced regardless.
Taxes will likely be the same, since it's all pass through (unless you go the S-Corp route, which I doubt you will if it's not a flip situation)
To feel "official"? That was me... I realized, it wasn't necessary. Unless you want it there later, then, as I'm sure you know, best to do it now I suppose... To avoid transaction fees / needed to refi all over again. 

If you're just worried about protection, consider using a very good insurance with liability. 

Something you could chat with an attorney about and other RE friends-- ask them for their honest advice. :)

Cheers!

Originally posted by @Michael Harold:

Hi Joseph, please pardon my ignorance, but what are "A/B neighbors"?  And yes, HOAs can be very high.  They've definitely knocked properties out of consideration for me.

He probably means "class A / B". Usually white collar workers / theoretical higher/middle-income folks that theoretically are easier to manage. C / D are lower income / some are called "war zones".

E.g.: Where do you live now, is it safe? Is it a fortune to live there? That would probably be a B+ or A. 

Haha-- SO, I don't know what all the agent rage up there is about but, back to your multifamily investing.

DEFINITELY watch out for those HOAs. I was just looking at a rental with a friend on the MLS. The unit in San Mateo / Burlingame was going for a "steal" but, upon further inspection, they were trying to get the tenant to pay for the HOA. That's one option... And, that very idea had that particular rental sitting on the market for 1 full month. Which, is crazy for its location (right next to caltrain).

As far as Sacramento, although I don't operate there, often you can tell a bit about the neighborhood by getting into Trulia and looking at the crime rate map overlay.
They also tend to have lower cap rates (as you probably know well).

I would avoid the reds myself.

Cheers!

~Alice

@Dave Foster I'll remember you next time I hear of any Florida friends looking to 1031! Thanks for the pro advice.

Welcome Jeremy!

Also in the Bay Area myself. You're smart to read a bit before jumping in. :)

And, purchasing in an area you know/with contacts is very smart!

On 1031 Exchanges--

I am not a CPA / attorney, so you'll want to talk with one, but here is a starting off point to get an idea.

Every situation is different, but if you want to avoid taxes completely, you want to avoid “getting the boot”.
Then again, it could mean more money in the end, which probably is your goal, so maybe avoiding tax entirely shouldn’t be the end-all— this is something a CPA can help you with when the time comes.

@David Walker As I'm sure you're well aware, essentially what you have to do is find someone who wants to swap with you (heck, you can even do a 3-way swap).

The 2 important numbers are:

Actual gain 

and 

TAXABLE gain (aka "the boot")

Here is a watered down formula for that:

Mortgage on new building - mortgage on you current place = mortgage relief (this can be taxed)

+ cash received (this can be taxed)

= total taxable gain

My preferred route in order: 1) consider refinancing it if you think you can make those new payments with the rent. If not, no need for added stress (I don't know how keen you are about upgrades, etc for higher rents) 2) If you want to be done with the Tricities and don't have to worry about things, I'd sell or perhaps 1031 exchange (although, the 1031 may be a bit trickier to find, I'd probably just sell if the taxes weren't going to murder me). 3) If you don't mind having someone manage and the numbers work enough for cash flow in addition to a 10% property management fee, then just do that and move to Spokane and see how that goes :) Just my thoughts! Good luck to you and your family