All Forum Posts by: Brian Garlington

Investment Info:

4-Unit apartment building in Oakland, CA purchased in 2017 and sold in 2022.

What made you interested in investing in this type of deal?

This was my first deal I'd ever done. I was reading books, listening to podcasts, and lurking around the BP forums for around 2 years before I was ready to take down my first property. In the ultra-competitive Bay Area it is difficult to find 1) find value and 2) afford the price points. I was working a 9-5 doing construction management so was constantly moving around to different job sites. Oakland was a central location with relatively low price points (sub $800k at the time), although higher crime that surrounding areas. I identified a few up-and-coming neighborhoods that I could afford and would be willing to live in to house-hack. I was looking for 2-4 unit properties to help offset the mortgage payment.

How did you find this deal and how did you negotiate it?

I used a real estate agent to identify potential properties and negotiate on my behalf. I was outbid on about 10 properties. On Christmas day, I got a call from my agent saying one on the buyers backed out of a deal and they wanted to see if we were still interested. Fortunately, we were the only ones ready to make an offer and got it under contract the next day for slightly under contract. We were lucky but prepared.

How did you finance this deal?

FHA loan with 3.5% down. Purchase price was $700,000. I spent about every penny I owned at the time and funded the repairs out of pocket. I wouldn't recommend doing that again - there were a few stressful months while I paid for repairs directly out of my incoming paychecks. I've been thinking a lot about cash reserves since this.

How did you add value to the deal?

I lived-in and renovated 2 of the 4 units over a 12 month period. I essentially lived in a construction project for a year. I could have done it more quickly but chose to do many of the repairs on my own. Great learning experience but I wouldn't do it again. Now my time is more valuable :) One of the units was previously renovated, so after the first year I had 3/4 units renovated plus exterior painting and other improvements.

The final unit was under rent control with long term tenants. They were paying around $650 for a $1600 market rate units. Welcome to the Bay Area!

I was able to increase rents from $4,600 to $6,000 and improved the quality of the building significantly.

What was the outcome?

I stabilized the property and moved out after the first year. I hired a property manager and it became a relatively passive asset for a few years. It cashed flowed a few hundred dollars a month but my "on-paper" returns were washed away by increasing taxes, labor/repair costs, high vacancy, etc based on owning in a C-class neighborhood in a tenant friendly city.

I sold the property for $957,000 in 2022 and am re-investing the proceeds into better performing assets in North Carolina.

This project got me in the real estate game and was the correct decision for me at the time. I took the equity and experience gained and will leverage it into more profitable and more scalable investments. 
Since moving out of the building I've been building an out of state investing business.

The icing on the cake was the check at the sale, but the confidence I gained though this project was the most valuable part of it. 

I'd like to propose a simple question. If you have the ability to source investment capital regularly at a realistic interest rate, let's say 7% APR. Is it wiser to borrow the money rather than 'earn' the money traditionally in which you pay 30% income, federal, state, etc. tax on? I realize this is a loaded question and want to keep it fairly surface level to invite as many opinions on this as possible!

I am looking to purchase my first rental but I am a little confused about the current mortgage rate. I know the mortgage rate is pretty high currently and is continuing to rise. So my question is, should I wait until the mortgage rates come down to invest or go through with an investment property if it makes sense. 

Effective May 5, 2022, Hayward will become the latest CA jurisdiction to be able to enforce the following: ”…Any person, social host or property owner shall be liable for any unlawful use, discharge, or display of fireworks at their property or gathering…”

For details, look up Ordinance Nos 22-01 and 22-02: https://library.municode.com/C...

Hi,

I accepted all the terms on of the seller's counter offer for a property in Oakland.  There are multiple offers from what I understand.  The counter offer expires at 4PM this afternoon.  I submitted my response at 10:50AM, but haven't heard back.  I reread my counter acceptance and I believe my agent may have made a mistake.  

In paragraph 6:

Acceptance of Seller Multiple Counter Offer:  Buyer's acceptance of this Seller Mulitple Counter Offer shall be deemed revoked and the deposit, if any, shall be returned to Buyer unless by 5:00PM on the fourth Day after the date Seller signs in paragraph 5 (if more than one seller, then the last date) (or by 10:50AM on 4/28/2022) (i) it is signed in paragraph 8 by the Seller, and (ii)a copy of this Seller Mulitple Counter Offer signed by Seller in paragraph 8 is personally received by the Buyer or Buyer's agent...

Does this mean that the experation date of my acceptance is at 10:50AM on 4/28?  Did my agent make a mistake?  I submitted my acceptance at 10:50AM. 

Thanks,

Calvin

I have a 1,360 sqft home in Hayward, CA on a 6,100 sqft lot. The 2 garage  measures 17'x20'. The garage shares a wall with the second living room.

Here is a picture so you can get an idea of the lot + house sizes: https://imgur.com/a/chPO0k5

Initially, I had decided to convert the garage and second livingroom into a small (530sqft ish) 1br1bd to rent out. I am doing everything myself with the help of family that work in constructions. Estimated costs are about 20-30k (if anyone knows someone that can help me out with title 24, please let me know!)

However, someone on this forum recommended to look into making it a dettatched ADU, as I would not lose square footage in the main house (with conversion, main home would be 870 sqft) and would bring up the value of the property if I ever look to sell the house or get a HELOC for future. For this, I would not be able to do the work myself so I asked my brother-in-law (who builds homes under a contractor) and he said he can probably do it for 120k-140k. WIll look around for quotes on this as well to confirm prices.

What do you guys think? Is the added cost of doing a detattched ADU in the backyard worth it? Or should I continue with the original plan to convert the garage?

Thank you!

I have a simple straightforward question for you bp folks:

If you wanted to become an expert at analyzing small, medium and large multifamily properties as well as commercial property potential investments what would be your path to getting there from beginning to end. 

Thanks

Can anyone recommend an architect with experience designing basement ADU's? Thanks

I am looking to finance the construction of an ADU in Oakland. I own a duplex and there is an existing ~550sqf building that I am going to convert into an ADU. I haven't been able to find anything better than a personal loan because banks I've spoken with will not give financing for an ADU on a multi-unit property. Has anyone else overcome this hurdle?