All Forum Posts by: Erin O'Connor Smith

@Tanner Marsey except when the market crashes and you need to sell for reasons beyond your control as has happened to people I’m close to

@Jonathan Hulen I agree!!

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@Frank Geiger I adjusted the CapEx up, thanks!

@Account Closed thanks so much. I reposted with my updated numbers, more conservative figures. No repairs I know of but there's always something... might create storage units for rent in the basement for the extra $100 per month. I know that area moderately well, it is blue collar with slim pickings for rentals... Is there a reliable source other than agents who can speak to the strength of the rental market? I'll check zoning. Thanks again.

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First time trying this, most of the expenses are guesswork until I hear back from agent... your help appreciated!

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Investment Info:

Single-family residence buy & hold investment.

Purchase price: $292,000

Ocean-front condo in Santa Monica's Ocean Park, originally a primary residence. Steps to the sand. Large one bed one bath 865 sf with one parking space. Third floor with side views of beach and ocean.

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

I bought this in 2001 and lived there for several years until outgrowing it.

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

I used an agent, it was a straightforward deal. I got credits for repairs, so I got it for a few thousand below asking.

How did you finance this deal?

30 year conventional mortgage, paid off in 2016.

How did you add value to the deal?

Letting time and appreciation do their thing. I think the value now is around $865k, making it $1000 per sf. My tenants have been there for 10 years. It is a TORCA building, which means a condo building that was converted from apartments, so although my unit's rent is not under rent control other conditions apply. Cash flow is now about $2790 per month.

Lessons learned? Challenges?

I'd like to move back in someday but I'm not sure that will happen... I said I'd never sell but I'm not sure that will happen. Ocean-front property in Santa Monica is a rare treasure.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Los Angeles.

Purchase price: $825,000

Triplex of three single family homes on one parcel purchased in 2004 on a half-acre hillside lot with incredible views in 90065.

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

It was a 1031 exchange from a townhome in San Luis Obispo, my agent scouted it out for me. The townhome was my first rental property near a college campus, and my agent thought I could step up into multi-family.

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

My agent found it, he taught me a lot about the ROI numbers and helped me get out of my comfort zone. Other people I knew who dealt in real estate looked it over for me and gave me the green light.

How did you finance this deal?

Purchase price was $825,000 for the triplex, using $200,000 down via 1031 exchange plus an interest-only 5-year ARM to finance the rest. I've refinanced twice since then but never pulled cash out. Current value $2.5M. Cash flow $5402 per month, or $1800 per house.

How did you add value to the deal?

2012 remodel of the front house of kitchens and baths, adding granite and hardwood floors. Added 6' redwood enclosed fencing around each of the houses to establish better yard delineation and privacy. Depreciating the capital improvements.

What was the outcome?

Better house = better renters = higher rents. Considering a possible lot split into a total of two parcels, one with two houses and the other with one. Thinking I could sell off one to reinvest in another multi-family but need to look at the numbers. Such a great cash flow I don't really want to touch it... but there's a ton of equity there. Looking for ideas.

Lessons learned? Challenges?

Tenants must be trained, and screened very carefully. I tell them up front I'm looking for people who will treat the home like it's their own, and if they help me keep expenses down I'll help by keeping rents down. I tend to get excellent long-term tenants this way.

Also, my history with property managers is that I always lost money with them. Managing myself has brought great returns.