All Forum Posts by: Alvin Uy

@Saj Shah THIS!! I completely agree with everything you said. 

I too am so tired of many Californians and others giving up on Cali. It seems like everyone to be jumping on OOS investing bandwagon and can’t find the hidden gold mine in front of them.

I personally own 7 properties in expensive-*** SoCal. Los Angeles. You can’t beat the appreciation here on SFRs. Its rent control exempt!!! This is why im focusing on SFRs as the majority of my property asset type. They outperform my 4unit.... on rent and appreciation.

The new rent control laws are backfiring. In my opinion, it will force rents to go up 5-8% every year in the right markets. Because supply and demand. I see it now... its basically a license to raise rents every year. I have raised my rents every year at 4% and my tenants expect it and have never complained. Im cash positive on all my properties.... almost $200k in gross income after 10yrs of investing in SoCal.

I just opened escrow on a SFR fixer this weekend in SoCal. I was going to flip it but after running my numbers and after appraisal value came in... I have a $250k spread on "as is" value. After rehab (est $60-80k max), my LTV might even be under 80% LTV....Which i can refi into a conventional loan. If i rent at market rent, Rent will be negative about $15 bucks for the first year.... but i have $200k in equity off the bat.... and raising rent next year will cashflow.

You can find deals in Cali if you try hard enough. If I can do it in Los Angeles. There’s no reason you can’t...  you just need to find the right strategy for your market. 

@Nathan G.

Im in SoCal, so rent control is a big issue and makes it difficult to evict.

For me.... So far so good, but i do wished that i got my property vacant because i don’t like inheriting tenants... and because i cant just raise to market rent compared to most states outside of Cali.

Is it a banked owned REO? You may want a local licensed realtor that has experience with REOs.

@Jay Hinrichs

Not quite sold on the design aesthetics but

im sold on the bullet proof paneling... its a damn tank!! Perfect vehicle to have if you own properties in a war zone... especially in case stray bullets come flying while you’re collecting rents or evicting tenants.

PS... I was lucky enough to have bought Tesla stocks at IPO. So, i really hope it does well.

Where in SoCal are you?  You should attend meetups in your area. 

Thanks for the follow up.  Project is taken longer than expected but still in progress. A few plan changes as well as project management changes happened that affected timeline... My wife and I have taken over the project and design.  Not to mention that city took their sweet time to approve new plans and permits (as some have predicted).   Original structure is completely demolished.   4/3 is going in the back ... smaller 3/2 is going in the front.  Modern Farm House style (with not so super highend finishings). 

Eagle Rock prices seems to continue to rise and so is rent. Theres a demand for housing in this area. My wife and I are actually considering keeping the property as a rental since we can make our the numbers work as a keeper. We also have the option at exit to buyout JV partner. "New construction" makes this duplex desirable because it is exempt from LA rent control. We should be done before summer next year...hopefully no more delays. We will decide then which exit to take. Stay tuned.

I’ve learned a lot since the beginning of this project.  

In my opinion, this depends on the area... and property/tenant class. In Los Angeles, where there's rent control, my 5 SFRs outperform my 4-plex. My wife and I manage our own properties and I would argue that I get more complaints from my 4unit vs my SFR tenants. Because of rent control, i cant evict my 4plex tenants (that Ive inherited) without "just cause". My SFRs are exempt from rent control... also appreciated in value much quicker than my 4-plex for some reason.

That said, I have no experience with larger 5+ units. But my plan is to buy one more SFRs or 2-4unit that i can finance under fixed conventional loan (because thats all I can qualify for with my DTI). Then move up to larger MF complex using commercial financing.

I know this may be counter intuitive, but consider yourself lucky to be boots on the ground in L.A. market. There are opportunities to be made here in SoCal.  You will thank yourself in the long run if you can figure out a way to invest in SoCal.   Its always going to seem expensive.  It seemed expensive 10yrs ago.. seems expensive now... going to be even more expensive 10yrs from now.  I see that as a blessing and a very clear sign its a good market. 

Also, Dont let the initial negative cashflow stop you. Its very very temporary. Trust me on that one! Regarding rent control... i see it this way. Its essentially a license to raise your rent 8%/yr (4% in LA Rent Control). Ive raised my rents every year... tenants expect it and never complained. In fact, i see it as a blessing when tenants leave because my rent roll jumps every time! I have a 4/2 SFR in Eagle Rock renting for $3200 last year... jumped to $4200 this year around summertime because my old tenants left ( i had 5 good solid applicants within 5 days it was listed).

Thank you for your comment!!    This is exactly what I needed to hear.  I’ve been investing in Cali for several years before I found BP earlier this year.   Since I joined BP, every new investors i meet here are wanting this cashflow focused strategy to replace income.   Seems like everyone have been on this OOS cashflow only bandwagon. I personally have not been able to reconcile my gut feelings with everything Im reading about OOS investing.... specifically struggling  with this concept of cashflow-only strategy as I do not see it being a true wealth builder without appreciation.  Cali has been an easy target for being the worse state to invest in.  But Not sure if I completely agree with that sentiment.  Its a high barrier of entry but can also be a generous wealth builder and very stable in the long run.

I own 5-SFRs and 1-4plex in Los Angeles. Majority of which were bought within the last 5-10yrs. My wife and I rehabbed and managed them ourselves. All are cashflowing. All have doubled or tripled in value within the last 5-10 yrs. All are less than 50% LTV because rents have increased every year and we were able to pay down mortgages much quicker. I have one SFR that's already made me a millionaire ( originally purchsed at $415k... just recently appraised for $1.45m). I doubt any of these midwest properties can do that kind of return.

I was told the existing footer/foundation will need to be torn out and redone entirely to meet new code requirements in Los Angeles... and to work with mod builders system.  

 Not necessarily a terrible thing since property will then be deemed as “new construction” if new foundation is poured.... which will consequently be exempt from LA Rent Control.  (a huge plus).