All Forum Posts by: David M Trapani

Have three large national commercial tenants. They reached out and asked for reduced rent. On some gave 50% off one months rent and deferred that sum to be paid off in installments over 12 or 24 months. Another, gave them three months at 50% off, deferred to be paid off in installments over 12 to 24 months. Important to document these adjustments.  Confirming by email should work. 

Yes, looks like they had already imposed a moratorium on evictions.

https://www.sanjoseca.gov/your...

Condos can be a great way to start building a successful portfolio, with less out of pocket.

Some suggestions on what to look for:

1. 2/2 (sometimes 2/1 OK), in well-maintained complex, high growth city / town with stable employment;
2. Keep HOA dues under $300 per month, find those that cover water, sewer & garbage - you have to pay them anyway;
3. Carefully review the HOA budget & governing documents to be sure well-capitalized, no planned dues increases, no litigation, use & renovation limitations for the property - esp any rental limitations;
4. Do some cosmetic upgrades (paint, countertops, cabinet hardware, appliances, flooring - if allowed - see governing documents, lighting, etc.) to attract quality tenants, command market or above market rents, gain appreciation;
5. Gently bump rents on renewals (stay away from rent control cities / states) to gain more net cash flow / appreciation.
6. Don't hold them for too long; 1031 to duplex or sfh once appreciated - they tend to go into litigation, when that happens lenders won't lend to your buyers - which means you can't sell! Unless you find "unicorn" all-cash buyer.

Hope this is useful. Cheers & Best Wishes.

Yes, determining what type of real estate you'd like to invest in and where are key components of this decision. So many options & not all may be suitable to your lifestyle or experience level.

Once you find out what you're good at, whether that be single family, multi-family, STR, LTR, NNN retail, land what-have-you, suggest sticking to that. Trying to be Jack or Jill of all trades is risky.

Read somewhere Martial Arts legend Bruce Lee said:  "I don't fear the man (woman) who's practiced 10,000 kicks once. I fear the man (woman) who's practiced 1 kick 10,000 times"

Same is true for success in real estate. Find what your good at and stick to it. Try not to go too far afield, because you may lack the experience and knowledge, lose control or take a loss.

As a native Californian these last many years (now TN resident), have seen tighter regulatory control over private property in CA. Wouldn't recommend multi-family in CA (unless you house hack) as rent control is a detractor. SFH's are likely exempt from state rent control (depends on local rent control too though) but, as you know very expensive and hard to pencil in CA.

Narrow down the Cities and States you like and the type of property you like. Search best locations with growing population and job growth. Run your numbers. Then run them several times more. Find yourself an agent and lender in each State where you have an interest.

Best wishes, you're on an exciting journey Andrea!

Hi Sebastian,

Upgrades to a condo can definitely add value. It will generally get you better rents & better quality tenants. Better rents increase the value of the unit in the eyes of other investors in the market.

Have made upgrades (flooring, counter-tops, stainless appliances, fresh paint, new lighting, etc) on condos (or SFH) in major markets like San Francisco and growing sub-markets like Sacramento and La Quinta, CA. Other places too.

Much depends on the location - as always. SF is super high demand and super-charged on appreciation in up markets, so there you'll see a greater return on your upgrades. You'll see a good return in other markets, perhaps not as much as you might see in a major high demand City or on a single family home or multi-family.

If you're investing in San Diego, I'd say that's a high demand very popular place. So well thought out cosmetic upgrades can be a boon to both rental value and appreciation on re-sale or 1031 exchange.

Cheers & best wishes,

David

Yes, we draft our own PSA’s. They work in all the states where we’ve acquired Properties.

Hi Sean,

I work with one commercial broker in San Jose, CA. He has all the forms for various states. We do deals in multiple states. We usually have an attorney review the lease and sometimes PSA. It’s been working very well.

Hi Sean,

Your commercial broker should be able to find and do deals for you across the nation.

This includes his / her having forms for appropriate LOI, PSA etc. in multi-states.

Happy to refer you to my broker based in San Jose, CA. Worked with him since 1997.

Lately we've done 3 successful NNN retail deals in 3 states. Submitting an LOI on a 4th deal currently.

Cheers & good luck.

David

Hi Mike,

Have a successful Palm Springs sfh str last 2 years or so. 

As mentioned, among other rules, PS requires you (or your representative) meet each guest to review rules, etc.

As you are remote (as am I), you’ll need someone to handle that for you.

Luckily, I “inherited” the folks providing this service from my sellers. My folks also do the cleaning, maintenance, etc.

It’s not 25% but maybe around 10%-15% depending on the season. Pass this cost along to your guests -so it’s a wash.

STR demand is tremendous (and growing) in PS. So far it's well worth it. Plus, Properties tend to appreciate nicely & it's not a bad place to visit / vacation.

Happy to refer my folks if you like. They’re quite busy, but depending on your property location and if you match up it could work. Alternately, they may know someone who can handle  it for you.

Cheers & good luck.

David

HOA's can be tough as they limit your use of the property. Plus HOA dues inhibit cash flow.

I've done several condos to get the asset base rolling, but don't stay in them for too long.1031 out once you've made some cash flow and appreciation.

The other issue we often see is the HOA sues the builder or there's litigation on the complex. When that happens, guess what? You cannot sell to a conventional buyer because most lenders won't lend. Unless you have a cash buyer, your stuck with the property until case resolves, which depending on your jurisdiction, could take years.

One other exception is if you're in a very high demand / growth area such as San Francisco. May be worth doing in that case (if the HOA dues are not too crazy high), because you can make maximum cash flow and should gain appreciation in most markets. Of course, there's the minefield of Calif State and SF rent control plus Draconian SF STR rules. With the right combination, it can be super profitable nonetheless.

Otherwise, I agree with Jacob here, I avoid HOA"s if at all possible. You want the maximum rights and possible uses you can have for your property.