All Forum Posts by: Josh Prince

Hi @Eyal B. I don't have an answer for you - I have done Ikea cabinets before, but even those are not cheap. Although, I do find that if the units are in a nicer area, new tenants appreciate nice cabinets.  I tend to overspend on redoing vacant units, but so far it has worked out with getting nice tenants. 

I would be interested to hear if you come up with something (or someone) you like.  

Great post @Account Closed says, a lot of people want to charge to "mentor" - I have no experience with that, so I cannot comment intelligently. All I can say is that I have been able to get all the information I need for free - or maybe for the cost of a cup of coffee, and I am happy to pass it on for the same price. It feels good to help people, and to be frank, it also makes me feel good about myself.

@Matt Mason I know a hearing officer who does work for LAHCID (formerly LAHD) and he sees a lot of cases with very low rents.  Often times in inheritance situations.  Some old school landlords didn't really need the income and had a tacit agreement with tenants of "don't bother me and I won't bother you."  Then he dies and the kids inherit and want to get the rents up. It is a sad situation because there may be tenants who have lived in an apartment for decades at a certain rate, and a rent increase would drive them into the streets - but on the other hand, maybe the new owner cannot afford to maintain the property at the low rents.

@Ewa Reza I agree, I don't think it makes economic sense for people to accept buy out offers if they are thousands of dollars under market, but some people like the idea of getting a big pile of cash - perhaps it is penny wise pound foolish, or maybe it is the imputus to move to a more reasonable area to live. I one time offered a modest buy out to a tenant of an illegal unit ($5,000) and found out that they were planning to leave once they had saved up $800 for the security deposit for a new unit - they would have left on their own or perhaps for a much more modest amount!  You don't know until you ask, but once you offer a certain amount, you can bet that no one else will leave without receiving at least that baseline amount.

Hi @Ewa Reza  if the property is under rent control and you seek to evict tenants under the Ellis act, you will still need to pay relocation fees to the tenants.  These can range from $7,450 per tenant (under the Mom & Pop reduced fee) to $19,300 if the tenant has been there for more than three years and is "qualified" (older than a certain age or has children).  In addition, no one can rent the property for at least five years.  

Clearing out properties using the Ellis act only really makes sense if you are going to redevelop it as non-rental property (like condos), move your entire family in or like @Matt Mason says, if you got the property at a huge discount (even then, the five years lost rents plus the fees would make it hard to pencil out).  

If you want to get low-paying tenants out, and the rents are significant at market, you are better striking a private deal with the tenants.  Even if you have to pay significantly more than the statutory relocation fees (say $30,000), you will at least be able to re-rent the properties at market immediately (and not have to wait five years).

Hi @Hyuma Leland - thanks for letting us know what happened.  Sounds like that was money well spent to avoid an expensive situation.  I assume there was no way to get any kind of reduction from the seller to make the deal worthwhile?  If you disclosed the information to the listing agent, he will be obligated to tell any other potential buyers.

Hi @Hyuma Leland  , 

I have looked at and been in escrow in a number of properties in Eagle Rock, Echo Park and Silver Lake.  In my experience if you can have a contractor and architect walk the property they can give you a general idea of the construction and the properties of that geographic area for a reasonable price.  While that is absolutely no substitute for a battery of surveys (soils, etc) performed by the appropriate engineers, it can help get you a basic idea about the property and what kind of work might be necessary.  

Often times if there is an issue with the retaining wall, it will be apparent (cracks, tilting, etc), same with drainage (evidence of past erosion, water pooling) and foundation (cracks, displacement, etc.).  They are all expensive and retaining walls and drainage can often bring in your neighbors (and their attorneys!).  Hillside properties are lovely, but they can come at a price!    

I have found that everyone in a certain area with construction of a certain age has to deal with the same issues.  Try to talk to some professionals who have done a lot of work in the area, and perhaps hire them to work on your property if necessary! 

Please let us know how it goes!

Here is one, I have many more!

I was rehabbing a rental triplex in a lower-class area of town, and I dropped by early one morning before anyone showed up to see that my circuitbreaker box was popped open and someone had crudely hardwired a heavy duty extension cord directly to the contacts in the box.  The extension was laying on the backyard area pointing towards a certain neighbor. 

I immediately assumed that the neighbor was using my vacant property's electricity to power his house during the evening, and had disconnected for the morning, but not cleaned up his evidence yet. (I had already seen enough to make certain judgments about him).  My first impulse was to cut the cord into about 15 pieces and throw them over the fence to his backyard.  After calling a friend, he suggested that I not escalate the situation, but instead nicely coil the cord and leave it on the neighbor's lawn with a note saying that I am trying to be a good neighbor and am happy to help out, but I cannot afford to provide him with electricity.  I couldn't bring myself to write the note, but I decided to coil and leave the cord. 

About an hour later I get a phone call from my worker who was restoring my floor with a heavy duty sander, asking if I knew why his extension cord was on the next door neighbor's lawn...!!!! (he had opened up the breaker and hardwired it because he needed a higher voltage/different shaped outlet than was in the unit)

So, that was a real screw up in terms of my judgment and jumping to conclusions, but thankfully had no financial consequences.

Welcome @Ravi Chaudhari - I am in LA too.   There is some good information here on BP and a strong community of helpful people.  I have chosen to invest only in the Los Angeles area and it has worked out well for me.  Admittedly, none of my properties fit the "2% rule" that is widely discussed on here, but the appreciation has made up for it. Also, personally, I feel uncomfortable investing in an area I don't know really well, and that only applies to a few parts of California (I am not well traveled - I admit it!).  However, on BP I feel like I am in the minority as I read about lots of other people investing absentee out of state and having very good and profitable experiences.  Let me know if you are near Century City during the workday and we can get a cup of coffee one day.

@Dave Kay I have been in this situation before.  I suggest you ask the seller if he or she is willing to serve a three day notice for failure to pay rent during the escrow.  Also, have the seller sign an assignment of right to collect rent - giving you the right to collect the past due rent.  If the seller is happy about the terms of the sale anyway (and not looking for a way to blow up the deal), they should be willing to do this, as they are never going to collect that old rent anyhow.  

Now, armed with these two documents (evidence of the expired 3-day notice and the assignments of past due rents), I would talk to the tenant, either during or after the close of escrow, and encourage him or her to leave rather than be evicted.  Personally, I am willing to pay cash to get tenants to leave quickly and without destroying things, but I know many others are more frugal - the risk of the judgment against the tenant may be enough to get him or her to leave without actually filing an unlawful detainer lawsuit (aka eviction action).

Although I have never been in this situation, I imagine that the seller may not be willing to do more than file a 3 day notice - i.e. file a lawsuit because they might risk being involved in litigation following the sale of the property - remember, the seller is selling this 4-plex so they don't have to deal with this nonsense any longer.

Please let us all know what happens here!

Hi @Kelly Heraux-Arana - welcome to BP and good luck with your new license.  I hope we will all be fighting for your listings one day soon!