All Forum Posts by: Jason Monroe

Thank you @Jeff Greenberg, @Michael Farrugia

When I was shopping for my deal that I did in Oakland I ultimately found a bridge loan worked the best as my buyer profile didn't meet the target and the DCR wasn't 1.2 or higher. The banks in the Bay Area wanted a 1:1 - 1:1.5 ratio in loan amount to network worth across the team.

Such that the team needed to have 1 million to 1.5 million in assets to qualify so the bank wouldn't need to keep it as a portfolio loan. As I was seeking a 1 million dollar loan. 

In my travels I learned that some banks REALLY don't like buildings with overhang parking for example.  Most of the multi family people on the podcast on bigger pockets describe having the seller carry 10-15% of the loan for the first term perhaps a partial carry is in your cards as to get you north of 30% down. Some of the loan brokers also had requirements such that the loan amount needed to be 500k or more else you would get hit with a portfolio loan penalty rate. 

@Michael Farrugia,

In my experience the ratio that means the most is 

Gross Income / New Debt service 

If this ratio is 1.2X or higher then what you said above about the property being more about the income for the building is more often than not correct. If it's not 1.2X or higher than the buyer profile CAN be just as important than the financials for the building 

@Quinton Slay, I had similar opportunities with my family it doesn't become real until 

I would strongly encourage you to view the podcast on bigger pockets featuring Lisa Phillips who talked about sub 30k investments in Baltimore she has a much more down to earth story in a package that is much easier to relate to. Her web site: https://affordablerealestateinvestments.com/about-...

She also has a youtube channel where she takes a lot of questions and addresses concerns. She is a female investor who has gone through the ups and downs and takes on the prospect of doing some amount of the rehab herself. The activities that she engages in today make her a role model so I would again encourage you to find role models / coaches that might help you both level up.

My very first property I had fixtures that didn't need to be there for what it was and lots of other investors talk about over upgrading their first property. It's not that it's bad, but it's part of the maturity process. When your cash flow for a year is wiped away because of tenant damage it will cause you to have to re-examine your model so that you can try to steer away from making those types of mistakes in the future. 

When you reach the end of the useful life of a HIGH END fixture (3-7 years depending) and replacing it will be expensive to replace and since you would have been doing it for a minute both of you will be able to appreciate the amount of time to recoup your investment of the high end fixture and might not select that same fixture for the tenant class your trying to attract.

@Jason Chen, is very active in the community and his remarks sometimes resemble "that guy".  Many a time he attracts a response with his comments which make the community more valuable to advertisers and other partners. Made more plainly the community needs actors with antics to be present and shake things up.

@Joel Owens, @Jay Hinrichs, @Mindy Jensen

More Mindy, This would be a great blog / show. As Jay called out. He used to resist technology and these various control mechanisms that are put in place to enhance and secure the transaction. Now he has changed his perspective toward these controls. 

Helping to aide against the risk of wire fraud and the things that investors can do to ensure that they don't conduct themselves in ways that put themselves in harms way would be a great show / blog 

Perhaps you could do a featured topic to elicit contributors? As a technology professional I have been doing things in a particular way for so long I don't know that I would best volunteer for this topic but maybe could be a technical editor.

So..... My grandmother has this townhouse property in Lenexa. It's was built in the early 1960s I'm the person on the ground I'm pushing for a private sale one of her neighbors collects units in the community that my grandmother lives in. 

I am trying to push a deal to her as the property is odd and not really appropriate for a traditional retail buyer since it would require significant rehabbing in order to work as a rental or owner occupancy. 

In this scenario where the seller and the buyer have already been identified and the price worked out would you use an attorney or try to get a fixed price from an agent since at that point all the heavy lifting is done?

@Jay Hinrichs,  there are so many things wrong with this story 

1) No Multi Factor authentication ( It's a feature with google apps you just have to turn it on ) 

2) Poor password discipline 

3) Your vendor is accepting non encrypted non digitally signed emails :-((  

There are companies like https://www.mimecast.com/ that are "relatively" easy for business to consume as part of their processes thus providing for secure messaging 

There are so MANY companies that don't have the proper tooling or processes to enhance security and thus combat fraud. It's sad I try to fight back but it's so hard due to lack of awareness and impetus to change. 

So...... @Ariel Smith,

What I am hearing you say is that some people buy multi family in San Francisco with protected tenants who pay pennies on the dollar from a market rate perspective. They take significant losses operational losses on an asset because they are only counting on the appreciation of the asset and expecting a change of life event to occur for these protected tenants are some point where they can start to re-position the asset. 

It turns things from real estate investment to real estate speculation. 

Dead Equity isn't dead equity because your speculating on the value and praying for a fire / earthquake or some other catastrophe where the insurance might provide for better income than one would be getting from the property otherwise. Merika!

Thanks @Ariel Smith, given that the tenants are protected is the only option would be to do an Ellis Act and then try to do a TiC ? 

It seems like after an Ellis Act is complete it wouldn't be possible to just rehab the units and re-position the property at market rate because of restrictions. Is the TiC generally the thing that people look to do most as far as strategy for one of these properties? 

1731 Oakdale Ave in San Francisco 

It's a triplex 

https://www.redfin.com/CA/San-Francisco/1731-Oakda...

Brings in a tremendous 36960 in rents per year. That is big times 

I am not in contract or anything but some of you people near me do these deals and I don't understand the general approach to re-position these? 

Is the new thing to do an Ellis act eviction and empty the building, rehab the building significantly, and get a rent control exemption and then sell it or keep it for the long term? 

Doing sufficient upgrades to warrant the exemption is pretty big money is there some value sort of play that might not require such significant capital also how do you finance the upgrades if the ellis act is the approach? Would you start with a construction loan or start with a commercial or residential loan and then roll that into a construction loan once the permits are approved and the building is empty?

Thanks,

Jason

I am confused I always thought vacancy and rehab for turn over as different buckets on a ledger. 

One is capital improvement and the other as vacancy. If your looking at a building with below market rents there is a liklyhood you have entrented tenants. They have been there for a while and it might need more than just some touch up paint. 

In order to get market rate rent you might need to some amount of improvement on a unit. Those improvements tend to have a useful life of 5 to 7 years. Thus you want to build that into your cost model.

Also Jason Chen wants you to articulate your strategy. Are you looking at repositioning a property and 1031 out of it or use it to provide for your retirement.