All Forum Posts by: David H.

I posted about this firm in another thread, they have a ton of knowledge with regards to development, commercial, and real estate corporate structure. They are helping with a development project

https://www.equitylegalllp.com/

Originally posted by @Peter Banyan:

Too close for comfort, I would not combine 2 representatives under 1 hat.

Can you elaborate on this for me? I am thinking to get the most unbiased info you would have two reps. But at the same time if a broker also has legal experience and can answer questions then this is making more sense, at least for this transaction. Here is the Brokerage page  (San Diego Estate Brokerage) . 

However, I can see more for residential where it may be required to separate the roles, but the last agent I worked with was super motivated for his commission. Not that this is bad as everyone has to get paid for a job performed, it just didn't feel like there was a fiduciary duty. Wouldn't an attorney even have more strict rules when it comes to this?

Question - I am looking at buying a commercial unit with 3 tenants. One of the leases is a bit strange so I inquired about it to my broker who said I needed to speak with an attorney. I just found these guys in San Diego who will represent me legally and also act as my real estate broker on the deal.

Are there any conflicts here? They are based in San Diego where the property is, thinking that if I can handle it all under one house it may be cheaper and easier, but again I have only used brokers and only done two deals. 

https://www.equitylegalllp.com/

I am considering using these guys who are both brokers and San Diego attorneys. I am going to post about it as I have never come across this blend of expertise and don't know if there is some kind of conflict as they handle legal and the brokering. But it could be worth it for my commercial property I am looking to buy. If you call them let me know what you think??? Haven't hired them yet

https://www.equitylegalllp.com/real-estate-brokerage/

Hello,

I am just beginning to look at this as a viable option for retirement, or better yet, to have as a business. There's a property in Florida that is a 1 bed / 1 bath, estimated rents 900, estimated tax 900 yr, HOA 320

what else do I need to figure? I am sure there will be some repairs. I ran it through the calculator and the estimated ROI is around 5%. What benchmark do people use for returns?

Also I am in San Diego, so it is across the country. I in 34 years old and dont own any properties. So I am in the begining stages. As much as I would love to own in San Diego, it's a bit of a challenge to do so. 

I also would like to know. I live in an expensive area of the U.S. Where the numbers don't work. Everything I read here happens to be people who buy homes for 100k or less. That means I need to invest out of state for my first deal. I'd like to see what people say regarding your question

@Amit M 

Thank you for your perspective. I learned a lot by researching cashflow vs appreciation. And yes after reading all of that, this deal would have been great had it been a couple years down the line.

Turns out others wanted this property and it boosted the purchase price and reduced my ownership interest. I wasnt ready to put in 150k of my savings for an ownership interest under 10%. Even that number was hard to swallow.

But what I did realize is currently I am looking for properties that can cover my expenses, and eventually down the line I will shift or sell off assets to look towards cash flow. But that thought process alone was helpful.

To answer you questions the partnership seemed good, but there were some questions there that I couldnt clear up. As the partner wanted to do more rennovations and I wasnt sure by him putting in money how that would also affect my ownership interest. To many unknowns. The development potential was great, you could put in a small hotel or apartments. Would have been fun with great retail space down below.

Originally posted by @Moses Kagan:

Is the property delivered vacant? If not, and this is a rent control area, you need to budget to relocate the tenants.

Concerned your insurance estimates are low. Regular insurance alone on a property of that value can easily be $1500-2000... and, if you're in a FEMA flood zone with four structures, I'd expect you'll end up considerably north of $2,000 / month.

Have you checked on the utilities? In LA, for a multifamily dwelling, it's very unusual for tenants to pay water / sewer... that's usually on the landlord.

Overall, I think the yield is sub-par. On the other hand, large lots with (partial?) commercial zoning near the beach are probably good bets over time. So, I think it's not a crazy deal. But you should get very comfortable with the rents / expenses... it's ok to do a deal with a low yield, but you want to go into it with your eyes open.

====

Hello Moses,

I did not get a quote on this property for insurance. I asked my partner who is going to put down the 1.25 million cash what he estimated these to be and put them in the calculator here. He said $2,000 a year.  However, I myself thought they were low but didnt expect them to be 2,000 a month and would be a huge problem. 

The property is delivered vacant. It was owned by a church and currently sits empty. No rent controls in this area so I am good there, but just a few critical unknowns, because, well I am just not as educated yet in this space. 

Where can I become better and finding out utilities, sewer, electricity for a property? Do I have to get this information from the seller or is there another way that you do this (Calling utilities etc... I need to get better at doing my due diligence and getting a process.)

Zoning is mixed use commercial - apartments / retail. 

Originally posted by @Billy Maloney:

@David H. I would consider looking for your own 4 plex for that money. You may even consider moving into one unit. I have been seeing 4 units on the MLS between 650k in a not great area, to 850k in a ok area in Los Angeles. If your open to any area in So Cal then your chances of finding something just under 800k and putting 20% down are greater.

 Have you considered investing outside of California? Curious what people are doing who are smarter than me. I have listened to a bit of podcasts and its mentioned to be careful when you start making more money, which our business is. 

Originally posted by @Randy Landman:

$1.4 million for your first deal.  Wow you really swing for the fences.  You say these rents are estimated.  Is this property vacant now?  If so why?   You forgot vacancy and Cap Ex in you expenses.  $6200 minus the expense you listed  and subtract another 8% each or so for vacancy and repairs gets you to around $3300 a month cash flow.  Your 11% would get you $4,300 a year or less than a 3% return.  Do you really want a 3% return on your life savings?  I'll pass, unless you can make these other "possibilities" a reality. 

 The property has been owned by a church and they didnt do anything with it. Lots of room for a value add, with a very tight rental market. It wouldnt be hard to rent these as they are two blocks from the beach. I didnt add in Vacancy and Cap Ex because I dont know how to do that? Any advice on this?

And you are correct the returns as is dont look great. I was thinking equity and possibilities down the line for retail / apartments. But what I am learning here is that isnt the best way to get into real estate.