All Forum Posts by: Joaquin K.

What a mess!  I would tend to agree with those that support the "Be Thankful" approach (take the $200K in equity, move forward, and don't make an even bigger mess with litigation).  Lesson learned!

On the flip side - I'm not a lawyer, and don't know if specific guidance exists for real estate investments, but let's keep in mind if you were to contest, verbal agreements and oral contracts are generally valid and legally binding.  Unfortunately they are very difficult to enforce.  I also agree that your friend has quite a bit of leverage if they did want to play hard ball.

For residential class (1-4 units) we purchase as individuals and transfer title into the name of our family trust.  This will help avoid (complicated and costly) probate later. Financing is easier in this model. We are protected by a large unbrella insurance policy. You’d be surprised how inexpensive these umbrella policies can be. 

For larger multifamily (5 or more units) we are set up to own in an LLC. California requires an $800/year filing fee, as already discussed.

Good luck!  

It’s not difficult to get the pro price. Make sure you have a pro extra account and log purchases into the account religiously. If you or one of your guys forgets to link a purchase to your account, you can always do it online after the fact. If you’re checking out with more than $1000, it’s worth visiting the pro desk and asking them to send the purchase to “the bid room”. It will take about a minute and often results in significant discount. I have found that the discount varies widely, and is likely based on the mark up at the store. For example - flooring, toilets, lightbulbs, and similar high-volume items are often heavily discounted. Give it a shot and let me know what you get! 

I wanted to add some details on my recent experience...

Our properties are in Southern California and are relatively high end. I typically use tile and carpet, but wanted to give vinyl plank a try.

I just used 1700 sq ft on a high end SFR turn. I shopped around quite a bit (considering quality and cost) since I generally like to select a vendor and then use that material moving forward (for all projects).

Home Depot stocks 4 colors of Lifeproof Luxury Vinyl Plank Flooring, and they offer several other colors with 1 week lead time. I always use material that is stocked to avoid construction delays. I found the Home Depot pricing pretty good, and since I shop there all the time they are a preferred vendor. We also looked at Floor & Decor, Lumber Liquidators, and Lowes, as well as some online shops. Several companies offer non-interlocking panels that basically just lay on the floor (generally called "Loose Lay", and they are apparently very heavy and therefore don't need adhesive or interlocking). I would have given these a shot but could not find local supply at a reasonable price.

The list price of the Home Depot (in stock) Lifeproof "Essential Oak" was $2.79 /sq. ft. I have an HD Pro Account and was given an 18% discount on this relatively small order in the "bid room", so I felt pretty good about the price (effectively $2.28/sq ft). No adhesive or under-layer was required, and the material installs just like laminate. Each box has 8-10 planks, and I believe each of those planks is unique in look. Since the pattern repeats in the next box, its important to manage the installation so that two identical patterns (from separate boxes) don't lay side-by-side.

The floor looks really good, and I'm thrilled that its 100% waterproof.

I don't have any negative feedback to date, but will keep this thread updated if I identify and signs of accelerated wear.

I wanted to add some details on my recent experience...

Our properties are in Southern California and are relatively high end.  I typically use tile and carpet, but wanted to give vinyl plank a try.

I just used 1700 sq ft on a high end SFR turn. I shopped around quite a bit (considering quality and cost) since I generally like to select a vendor and then use that material moving forward (for all projects).

Home Depot stocks 4 colors of Lifeproof Luxury Vinyl Plank Flooring, and they offer several other colors with 1 week lead time.  I always use material that is stocked to avoid construction delays.  I found the Home Depot pricing pretty good, and since I shop there all the time they are a preferred vendor.  We also looked at Floor & Decor, Lumber Liquidators, and Lowes, as well as some online shops.  Several companies offer non-interlocking panels that basically just lay on the floor (generally called "Loose Lay", and they are apparently very heavy and therefore don't need adhesive or interlocking).  I would have given these a shot but could not find local supply at a reasonable price.   

The list price of the Home Depot (in stock) Lifeproof "Essential Oak" was $2.79 /sq. ft.  I have an HD Pro Account and was given an 18% discount on this relatively small order in the "bid room", so I felt pretty good about the price (effectively $2.28/sq ft).  No adhesive or under-layer was required, and the material installs just like laminate.  Each box has 8-10 planks, and I believe each of those planks is unique in look.  Since the pattern repeats in the next box, its important to manage the installation so that two identical patterns (from separate boxes) don't lay side-by-side.  

The floor looks really good, and I'm thrilled that its 100% waterproof.

I don't have any negative feedback to date, but will keep this thread updated if I identify and signs of accelerated wear.

I've looking into small multi-family in California for past projects (though I never pulled the trigger). Through that research project I learned that although many companies offer modular SFRs and large multifamily styles (and even barracks, hotels, etc) designed for "West Coast" environments, there are limited options for small multifamily builds. Its really important to find a company that caters to your environment, as structural requirements for Southern California differ significantly from structural requirements in Michigan.

A company called "Express Modular" offers a duplex called "Arlington" designed for "West Coast" environments. When I looked at the time, I was provided duplex information showing 2 levels, each unit being a 3 + 2.5, and total square footage of 2838. They also have a design called the "Goleta", which is a duplex of 3 + 1.5's and total square footage of 2150. You can download basic layouts online. Please tell them I sent you. They can run numbers for you and provide information on basic customization.

The company is available at https://expressmodular.com.

I am very interested in understanding what is available, so please keep this thread going.

Does anyone have a solid referral for debt collection in California?  My investments are in Orange and Los Angeles (LA) counties.  

How do people typically collect on debt owed after eviction and other lawsuits?  

What % of debt collected and/or other fees are charged?  

I have been using my eviction attorney to follow-up on debt collection for tenants that are evicted.  The attorney generally charges 40-60% of debt collected.  Is there a better way?

I understand fully that the best medicine here is to not evict, but anyone that hasn't experienced at least one eviction hasn't been in the business long enough.  Thanks for your advice.

If you don't have access to a legal consult you can easily find information on rent increases online from the state. Your city might have additional rent control laws that need to be considered. I believe if you rent in Sherman Oaks (City of Los Angeles), your rental unit may be subject to the City's Rent Stabilization Ordinance (RSO), which limit annual increases to a published percentage. Check out these resources:

http://www.dca.ca.gov/publications/legal_guides/lt...

http://hcidla.lacity.org/What-is-Covered-under-the...

I find LA rent control so restrictive that I no longer purchase within the city.   Good luck! 

I know a guy who's having some success with this in Orange. He has the parents cosign and said there is not a lot of risk of eviction or nonpayment. He did let me know that wear and tear on the homes is incrediblely high, so that needs to be factored in to your numbers. Obviously turnover is also higher. 

I don't need advice on general numbers - I need input on structuring seller financed / creative financed deals. Below is a scenario. Please provide input and help me figure out how to structure a deal.

My Current Situation: I'm not desperate for a deal. I'm in Southern California and prefer to own here (I've done well over the last ten years and know the market). I own several multi-families already and have strong income. I am coming out of a 1031 with about $500K gain. I have plenty of time to identify my upleg - timing is not an issue.

Seller Profile: I'm working with a multi-family owner in Southern California. The owner is retired, not working, and living in her multi-family. She is retired and looking to down-size and use some of her equity to live. She is savvy (former RE agent) and understands capital gain tax implications. She tells me she does not know where she will go if she were to vacate her apartment. I think she also might be interested in a "rent back" - ie. continuing to live at the property while she figures out her next move. She is struggling financially as she does not have enough cash flow. She has tried to pull some money out of the property, but I understand that she has not been able to qualify for any cash-out programs (probably compounded due to Dodd Frank restrictions - she has very little income). Seller has children out of state that are not wealthy, and have basically been useless is helping her try to find a short-term solution.

Property Profile: Multi-family property with value >$1.4M. Seller will take ~$1.2M. She owes ~$350K on a 6%, long-term note (her payment is $2500/month; she's about half-way through the payback period). Property is a triplex (in triplex zoning) that has a non-conforming 4th unit. It seems to me this non-conforming unit might be used to my advantage (ie. she may be hesitant to go to the MLS because the non-conforming unit will potentially cause problems for non-cash buyers).

I'm thinking of transferring my $500K 1031 gain to her as a down payment (and to pay off this note). I can fairly easily obtain financing (30-year fixed is generally what I go for) on the remaining $700K.

• Is there a smart way for me to give her payments (e.g. $100K for 7 years) that will allow her to minimize her cap gains taxes, while ensuring that I can leverage "attractive" financing as I am not in need of seller financing and would generally prefer to lock in 4-5% interest for 30 years (rather than be subject to higher "hard money" interest rates and shorter payback period).
• Under this scenario, I understand that I would not need an appraisal, and could waive other inspections. This would resolve the concern regarding the non-conforming unit.
• Any seller financing would be secured by the subject property (not my other assets).
• I'm not sure how the "rent back" clause gets documented, but I would like the contract to formalize that the owner can rent back her unit for as long as she like for $2000/month. No additional tenants would be permitted to reside for more than 30 days in the unit. The rent back period would be indefinite if legal (since I need to rent it anyway), and I would include a nominal annual increase 2-3%.
• What kind of "lease option" deals can you think of that might work here? A lease-option might make her feel secure as it would provide her income but not require her to vacate (if I understand these structures properly).
• Is it permitted to record a seller-financed note with 0% interest in the State of California? For example, if I offer to give her $500K plus $100K each year for the next 7 years is this legally permitted? For some reason I thought zero-interest carry back financing was not permitted in California, but I have not been able to find any useful information online regarding this restriction (maybe because I am imagining it!).

Who's got some solid thinking for me on this situation? I would like to try to make something work. Thanks