All Forum Posts by: Bana Haffar

For starters, I would recommend getting pre-qualified for an FHA loan to see what you would qualify for on your own. The type of partnership you are describing with your friend is fine as long as you draw up a formal partnership agreement and clarify how much % ownership each will have, how decisions will be handled, how sale proceeds will be divided etc... It's also OK to add her to the grant deed without having her on the loan, people do that all the time.

Purchasing an income property with an FHA loan will affect your ability to re-purchase FHA because you can only have one FHA loan at a time and it has to be for your primary residence. The play would be to re-finance the first income property into a conventional loan before getting FHA financing on an second property.

Hi Karim, 

I've been helping investors buy cash low positive income properties in LA for the past couple of years. Although acquisition prices have generally gone up, there are always decent cash flow positive deals floating around. It's really a question of being able to see the potential of a building, navigate rent control, get your buyouts handled BEFORE removing contingencies, and renovating in the right aesthetic to extract the highest rents. Let me know if you'd like to get in touch. I'd be happy to send you some cash flow positive deals in Northeast LA. 

I would agree wit David Tipton and add that it would also depend on the property itself and how the numbers look. You still want to be making solid rental income from the remaining rental units on the property. 

...you could also look at is as a temporary situation, renovate the units you live in then move out and rent them out at market. 

I vote for NELA and Boyle Heights from the rental property angle. The proximity to DTLA allows you to attain strong rents by targeting those who cannot afford to pay $3k for a concrete box in DTLA. Some noteworthy developments that will be game changers for the area are the Los Angeles State Historic Park renovation, slated to open in Spring of 2016, the Six Street Viaduct connecting Boyle Heights to the Arts district, and Regional Connector Transit project in Little Tokyo allowing commuters to bypass Union Station and travel from East LA to Santa Monica without transferring lines. 95% of my business is in these areas. 

The trouble with getting accurate CAP rates is finding out the exact operating expenses of the property and accurate rents. Oftentimes, agents and Sellers fudge these numbers.

Another useful alternative metric to consider for multifam properties is GRM (gross rent multiplier). The GRM is obtained by dividing the property's sale price by its gross annual rental income however does NOT include factors such as utilities, taxes, maintenance and vacancies. It's basically another tool to determine whether the asking price of a property is a good deal.

What sources are you using for OPEX and rent numbers for your CAP rate calculations?

The Sears Tower Adaptive reuse redevelopment in Southern Boyle Heights is another noteworthy development that will add even more rental units at rates between 15-25% above market. 

Hi Alex,

You are definitely thinking in the right direction. Generating passive income from Multi family investments while building equity is always a good idea. 

You mentioned FHA financing, if you quailfy for an FHA loan you can put as low as 3.5% down and still benefit from a 30yr fixed mortgage as opposed to putting 20-25% down for a conventional loan.

Your mortgage broker should be able to advise you regarding this issue.

Also, feel free to contact me anytime with additional questions [email protected]

Hope that helps!

Hi Will, 

I live and work in NELA. Cypress Park may not seem like much now but if you look at it on a map you'll see that it's suffocated by the uber hip and highly sought after areas of Silverlake, Echo Park, Mount Washington, and Lincoln Heights. It's only a matter of time before Cypress Park follows suit. 

A nicely rehabbed 1200 sqft Craftsman could go for anywhere between $450k to $500k. You could also look at the deal as a buy and hold until the area picks up. 

It would be wise to try and correct any unpermitted additions prior to selling. Building and Safety along with an experienced real estate professional would be able to advise you regarding the permitting process. Unpermitted additions will significantly ding your resale value regardless of the quality of the rehab.

Always happy to offer more insight on NELA as- [email protected]