All Forum Posts by: Joseph M.

@Lee L. I could see many people that rent out single family homes decide to sell . One advantage of single family homes versus multi has been that they aren’t subject to rent control . Of course even at market rents the return of houses in L.A doesn’t make sense based on current values . There are $1.5 million or more homes in West la that rent around $5000 or so a month . Of course many of these landlords bought when prices were a fraction of current values . I could definitely see it being motivating for people to sell their sfh rentals if prop 10 does pass .

@Thomas Welker I don’t know if there are any stats or studies on it but it seems pretty common these days . In all of CA for example it’s difficult to find cash flow so a big percentage of CA investors invest out of state . With the internet and technology these days and resources lIke BP, it can be easier than say 20 years ago .. there was the internet but it wasn’t as advanced and not everyone was online like today .

@Samantha Miller I agree with Omar one should make sure the investment makes sense financially first and foremost. There is a part of the new tax bill that gives incentives for investing in “opportunity zones” in distressed areas . The rules are still being worked out but might be something you want to look into . https://www.cnbc.com/2018/10/19/investors-can-get-tax-breaks-for-investing-in-opportunity-zones-treasury.html This is a FAQ about them from the IRS website https://www.irs.gov/newsroom/opportunity-zones-frequently-asked-questions

Great episode! Just wondering does this mean BRRRR with no seasoning is not possibly anymore ? Or is it that the advantage of doing this HUD method is that you can get a lower interest rate versus doing a BRRRR through a portfolio lender with no seasoning ?

@Samantha Miller I don’t see avoiding investing in certain areas based on demographics as redlining . An investor has no legal obligation to invest in an area. It is of course illegal to discriminate against a tenant based on race , gender etc , but one can discriminate based on income , credit score , eviction history etc . There is money that can be made in lower income areas but like you said it comes with the need for more hands on management and more risk . Oftentimes it is hard to even find property management that wants to work in certain areas . Many want to own rentals for passive income and if one has to be actively managing their properties and dealing with evictions it becomes not very passive . Another reason one might not want to invest in the lower end is that often there is little to no appreciation. The exception of course is gentrifying areas but there are far more non gentrified areas low Income areas. There can be a big reward for being early investing in a neighborhood but of course one is taking on more risk in the earlier stages .

The L.A city council voted 13-1 to endorse prop 10 Not too surprising . They definately aren’t pro business or pro Investor —— “The council voted 13 to 1 to endorse the measure, with Councilman Mitchell Englander, who represents parts of San Fernando Valley, the lone no vote.” “If Proposition 10 passes, it’s likely that the city will consider strengthening its rent-stabilization policies beyond what it is allowed to do now. Mayor Eric Garcetti has endorsed doing so.” https://ktla.com/2018/10/23/l-a-city-council-backs-prop-10-which-would-allow-expansion-of-rental-control-across-california/

@Christine Kankowski Yeah there was actually an article I saw recently about landlords doing this . It definitely makes sense — “In preparation for the passage of this ballot initiative we must pass along a rent increase today,” reads the letter. Gross says that the tenant who brought the letter to the coalition lives in a building that is not subject to rent control restrictions, and now faces a $700 increase. But the letter also includes a promise from the property manager to reevaluate the new rental prices following the results of the election. https://la.curbed.com/2018/10/5/17937754/prop-10-los-angeles-rent-control-increase

@Bobby Nilsen That is nuts about Mountain View making rent control retroactive , seems like a very unfair thing to do.

My point is the crowd that is Pro taxes on businesses and landlords is usually the same crowd that wants to halt gentrification , but their efforts would actually advance it .

@Seth Borman I was thinking gentrification both in terms of retail and residential . Currently commercial landlords that have owned a long time have low taxes , they might be fine renting out to the mom and pop business for years and years or maybe using the building as storage or some other use . Not every landlord is actively seeking out the best use. Many don’t want to deal with the hassles of redevelopment etc if they don’t have to . But if they are hit with a big take hike if Prop 13 for commercial is repealed then it’s going to set a fire under them to do something .