All Forum Posts by: Jason Monroe

I have opinions if you direct message me will be able to share more freely. I didn't see this message 

I asked 

- How many doors under management do you have ? 

- Give me 3 references 

- What is the workflow for maintenance 

- Do they support quickbooks for accounting 

- The use of docusign within the office 

[ SNIP ] 

I don't operate in San Francisco, rather Oakland. I suppose people need to think Ellis act as in the equivalent to turning the unit to "miscellaneous storage" for a LONG TIME in the case where you're not going to tear the building down to rebuild or do a condo conversion.

If you can afford to keep the unit down for at least 5 years then perhaps it might be a strategy  If you're going to return the unit to the rental market before 10 years there generally is a need to attempt to inform the previous tenant and allow them to move back. I am not a real estate lawyer just someone who has looked at the docs. 

Getting the approval to convert a duplex to a condo is certainly an approach that would take some time and approval from the city. If you're "value-add" strategy has a window less than 5 years then perhaps that might be the best approach but getting approval from the city before going nuclear might provide the best outcome. 

@Hassan Karaouni 

YOU ARE FORGETTING THE LAWYER! 

IN A RENT CONTROLLED MARKET THEY COME RIGHT AFTER THE AGENT. Most of them can be found on yelp and the like. The retainers are real money 

As far as agents
I would encourage you to look into the newsletter from Steve Pinza (https://pinzagroup.com/) 

They are a larger broker in the Bay Area and they do a lot of work in Oakland. They typically represent both sides of the deal. I have bought a building from them. 

The people on their team understand "value-add" 

Financing Partner: 
Most of the time the equity position for a 5+ unit building starting out is like 30%. I have heard of owner occupied financing but I have never sought it out. Try Colin @ 

colin AT harborwestcommercial.com

I have heard he has done owner occupied 5+ units in the past. 

Cash for Keys buy outs are a usually a lot, but these days with rents going up everywhere you probably will have to find other ways to "displace" people. Owners have to be subjected to "economic harm"
https://www.oaklandca.gov/reso...

So, the buy outs typically will be more than that. You are going to have to pay that regardless of 2 units or 22 units. 

Contractors: 
Use the section 8 or some other inspection criteria to "accept" the work. If you have some standard you'll at least be able to put that in the contract and have something to hold people's feet to the fire with. Even if you don't want a HUD voucher tenant in your property it will provide you the most options if you use their standard for accepting work. Buy an outlet ground tester start to learn what "bad work" looks like.

IN THE END
IT WILL TAKE LONGER THAN YOU WANT to make the deals work. IT WILL COST MORE THAN YOU WANT to make the deals work. 

If you don't budget those things into your cost model then you need to make a LOT of money or have access to a bunch of capital to outrun problems as they come up. 

@Ciji Masser

As useful as the wear shoes until they have holes in them and attempt to offer skills on fiverr.com or upwork.com 

NO One mentioned P2P lending 

There is a bigger pockets podcast about it 

https://www.biggerpockets.com/...

I don't know the cost of housing in your market. You can move markets if those costs exceed the amount of money you can get access to. Although this high interest approach might not be for everyone if you can acquire the property you can always get a 2nd loan if needed to do all of the rehab work. 

Once you do at least 1 deal things might become less scary and MAYBE, MAYBE the upside will cover the loan holding costs. Is this a high risk strategy, YES. It will allow you to start more quickly where you can start asking "where do you find quality contractors?".  

This would be in the type of scenario where "partners" aren't available. *Dawn* the guest on the podcast is a member and at least at one time she was active and I did talk to her once or twice. 

I was one the very first people on biggerpockets to post about COVID / Coronavirus back on March 6 and I brought up the point. 

When owners / buyers underwrite deals from here out you need to include epidemic / pandemic as part of your underwriting so that you increase the "what if fund" which would typically be through raising the vacancy some percentage points for the city, and asset class you're looking at.

@Maurice Selva sort of eluded to the point. If a tenant can't pay and the owner / landlord wants to seek legal action against them. IF your city hasn't posed a moratorium on evictions then you're likely going to need to wait a while to be seen by a judge anyway so you aren't going to get relief that way especially not quickly.

Getting a tenant to pay backed rent is going to be like trying to fill a below ground pool with a dixie cup. If you're diligent and have a LOT of time, and a lot of cups (wax paper cups wear out) then it's certainly possible. 

Some of you silly people seem to expect if a tenant pays 1k a month rent they somehow are going to be able to catch you up in 3 or 4 months. I would imagine they might catch up in 10+ months and if they move good luck.   

The reality is that if a tenant can't pay and they are near market rate that money is GONE. The lease will likely expire before you'll see all your money and then you'll have to settle with a bill collector to see any of that backed rent. If they are below market it could be a device (read leverage) to help give them an incentive to leave.

 I wish you all good luck and hope you're not stuck but Mike Swan 

https://www.biggerpockets.com/users/mikeswan1234567

who about a year ago said he was hording cash and others in that situation might be down to buy your building.

Most of my tenants are voucher based, but I appreciate your concern. 
 

The point to me posting this is that now there is a documented scenario where public health crisis could in effect abate rent.   This another risk scenario that one should consider when asking yourself when creating a model for a deal as far as cash reserves. 

That's the real question to consider 

If tenants were effected and couldn't pay rent as a result of contracting coronavirus no evictions. This is an interesting twist where because of a public health crisis landlords are forced to essentially extend credit to renters who are pay check to pay check. 

https://www.mercurynews.com/20...

@Account Closed 

https://www.sfchronicle.com/bayarea/article/Oakland-councilwoman-introduces-ordinance-that-15017712.php

In essence multi family buildings if this passes the tenants would be able to raise their hand and say I want to buy. They like any of you wouldn't need to be able to demonstrate the means they would be able to "raise" the money which in effect would allow some opportunistic tenant to raise their hand say they want to be the sole person to buy. Then go to an agent who would contact someone on their call list like me. The tenant would likely be offered a cut like a real estate agent for bringing parties together.

Thus creating another middleman for a deal. 

This is essentially what exists in Washington, DC. It's called TOPA 
https://ota.dc.gov/page/tenant-opportunity-purchase-act-topa

Wedgewood has a LOT of properties if they offered the city of Oakland a pipeline to buy 50  properties. This speaks to the question about is it okay for corps to buy up the supply as to drive up the price ?  Maybe in some markets in certain circumstances you want that as it would stabilize the price but in places like the Bay Area today it's counter productive. 

If the holding entity sits on their inventory in a scarce market for a period of time waiting for the market to increase does that help the situation for anyone ? 

The city has to ultimately try to stimulate the market to be more active which is always a significant challenge. 

As @Brian Garlington has mentioned I have not had any super challenging experiences with housing in Oakland. The inspectors show up if they have findings a correction can happen and a new inspection date scheduled and they have shown up for that re-inspect as well. 

A friend of mine has a 3/1 SFH in San Pablo, CA and a section 8 tenant. The comps were evaluated in that instance as well.

I have multi family properties in Oakland CA 

I have worked with agencies and those agents will often times provide the MAXIMUM schedule for the unit type. Section 8 will always do comps. All of my section 8 units are 2bd 1ba