All Forum Posts by: Jon Schwartz

Jon Schwartz has started 37 posts and replied 926 times.

Originally posted by @Oleg Enik:

@Jon Schwartz Hey Jon, thanks for the reply! I have another question for you then? Why do you say it is the best to connect with investors? If let's say I am not planning on doing a joint venture with anyone, how would the connections with investors benefit me the most?

Not disagreeing, but just curious to hear your opionion

To learn from them and for recommendations to the *best* agents, property managers, wholesalers, contractors, etc.

0 Votes

Originally posted by @Oleg Enik:

Hey BP,

Everybody knows that your connections and networking is the most important thing in real estate. And I totally agree with that! I love connecting with people and getting to know them and what they do.

My questions is, as a person who plans to invest in the near future, but wants to set his foundation right now by getting to know the right people, what kind of people are the most important when it comes to connections? I'll give in an example to clarify my question.

I already can predict what most people are going to say: real estate agents!! While I value what a good real estate agent can bring to the table, I'd love to hear some other responses for 2 reasons. First, I am licensed myself and where I live (Los Angeles), in my experience working in acquisitions, there are not that many real estate agents that can bring me good deals. Most deals that RE agents bring are on market and are over priced. There are many other ways to find deals besides using agents.

So to continue my question, which party would bring the most value to the table? Would it be property managers, contractors, lenders, other investors, etc?

I'd love to hear your guys' opinions and why you think that is the most valuable party that can bring something to the table for an investor. And just to clarify, I am not looking to invest at this exact point of my life, but as soon as I get all the right pieces in place, I'll be ready to utilize all the connections I have made so far.

Thanks!

Oleg, you should be connecting with other INVESTORS!

Go to meetup.com and search "los angeles real estate investing." Join every meetup and start attending the virtual sessions.

Best,

Jon

1 Vote

Originally posted by @Joe Bertolino:

Originally posted by @Nate Marshall:

California is done. The only hope it has is to remove the democrats from power there, stop coddling the cartels and clean your forest floors. The rest of the country is tired of supplying resources to fight fires and cleanup after San Francisco.

CA has been a donor state for decades and will be one again shortly... nobody is supplying resources to CA and taking on our burdens.

No kidding! Who supplies the majority of America's produce, almost all of its new tech, and almost all of its entertainment?

0 Votes

Austin, Texas

Originally posted by @Shawn Blake:

I'm looking to make my first real estate investment using an FHA loan, and wondering whether Los Angeles or New Jersey (Central) would be a better investment. I will be eventually locating to Los Angeles but have concerns about investing there first given high taxes, high insurance (wildfires), and housing legislation. Does it make sense to start in NJ first (where i currently am) or in LA where the rental market is strong?

Also - Looking to connect with agents in both locations.

Thanks!

Shawn,

My vote's for LA, though I wouldn't fault you for choosing Central NJ. Lemme clear up some misconceptions and share some opinions that might help you decide:

Income taxes in California are high, but property taxes in California are low. CA investors are shocked when they buy buildings in TX and see how high the property taxes are! In Los Angeles, the property tax rate is 1.27%, and thanks to state law, the amount of tax you pay can't increase more than 2%/year. You should check with your local county in NJ as to A) the rate of property taxes and B) how often and in what manner property taxes are reassessed. I'm 90% sure you'll end up ahead in LA.

Also, when you move to LA, your income from your NJ property will be taxes as CA income. Unfortunately, you won't be able to escape CA income taxes once you move here regardless of where your property is.

Insurance in LA isn't more expensive; in fact, it's less expensive. Wildfires happen outside of LA, so I don't think we're paying more insurance inside LA as a result of CA's wildfires. Also, because so much of the price of buildings in LA is the land, the insurance, which only covers buildings, is relatively smaller. For example, I lived in a $1M home with an $800/yr insurance bill. Why? Because the home had an estimated rebuilt cost of only $300K. The land it sat on was the lionshare of the value!

Housing legislation is a b*tch, and that might be the reason to invest in NJ. We have pretty strict rent control, but it actually doesn't apply to single-family homes, and there are loopholes to take advantage of if you're househacking a multifamily. What's the rent-control climate in NJ? If you want to talk specifics of LA, I'm happy to chat more about that!

The big plus for LA, I think, is the appreciation here. I don't know exactly where in Central NJ you'd be looking to invest, but there's almost always a handful of submarkets in LA that are really exploding. A well-position purchase here could grow in value significantly over time.

Good luck!

Best,

Jon

2 Votes

Originally posted by @Anne Sweens:

I'm interested in a duplex (zoned R1V2) in Los Angeles (near the beach). One of the tenant's leases includes the use of a backyard unpermitted garage studio. I'd like to legally convert it to an ADU (which I hope is feasible). Upon purchase, I'd like to owner-occupy this unpermitted studio. However, do I have any rights to do so since the tenant's lease includes this studio? Or would I have to first get ADU approval in order to "reclaim" that area? Their rent is significantly higher than the other tenant's since they have access to this additional space. I haven't been able to find any guidance on this so far, so any information would be much appreciated. Thanks!

Anne, Nick is right. Here's a little more of a nerdy explainer (I'm a landlord, not a lawyer, FYI):

Your tenant's lease entitles him to the studio space. You can't "take it back" without materially changing his lease. He'd have to agree to give it up.

Your ace-in-the-hole is that, as the owner, you're legally entitled to move into a unit and relocate the tenant. There is a relocation cost, between $8K and $17K depending on the tenant's age and years in the unit. Still, you file some documents with the city and give your tenant notice, and if he doesn't move out, the sheriff will come and remove him.

So as Nick said, approach your tenant about altering the lease to exclude the studio from his use. I would offer a rent reduction as a carrot and the threat of relocating him as a stick. The proposition is basically, "I'd like to take over the studio space and, in exchange, reduce your rent by $X. If we can't come to an agreement, I'll have to relocate you."

Here's the kicker, though: at the moment, evictions are on hold. So, at the moment, you don't actually have the option of relocating him. You don't have leverage until evictions are restarted in LA county. I have a friend who is entitled to evict a tenant under the Ellis Act, but his hands are tied until the eviction moratorium is raised.

Good luck!

Best,

Jon

0 Votes

Los Angeles County, California

Originally posted by @Matthew Duch:

Originally posted by @Jon Schwartz:

Originally posted by @Matthew Duch:

Originally posted by @Marcus Tam:

@Matthew Duch

yeah i agree MF house hack is the way to go. Let me know if you find a duplex for under $1.5m in LA haha

Definitely. I'm on the lookout myself. Honestly willing to pay up to $1.2 million for a good Duplex, but I don't have that kind of cash, so I'm most likely going to do it with a partner.

Hey guys!

I was excited to see this thread, then bummed to see it's a few months old, then excited to see it's been revived and where it's gone. Whirlwind read, I'll tell ya.

Just to chime in: I'd definitely recommend a duplex over a condo.

Going back to the original post, Marcus was talking about spending $200K up front and $4500/month for his condo. I think it's important to put price aside and focus on these metrics because it makes the translation to a duplex easier to comprehend.

Let's say you find a duplex and the unit you won't occupy bring in $1800/month. If you can accept $4500 as your monthly out-of-pocket, then you're looking for a building with a total monthly cost around $6300. Doing some very quick math with ballpark estimates for mortgage insurance, utilities, maintenance, etc., $6300/month would carry a $1M building if you put 10% down.

The 10% down would be $100k, so you have $100k leftover for the reno.

In this very rough comparison, instead of buying that condo, you could buy a $1M duplex and be paying just as much -- except you'll be getting a lot more in principal paydown for your money. And the duplex is more likely to cashflow sooner than the condo.

That's my two cents. Happy to talk more math if you're interested.

All the best,

Jon

Hey Jon! Thanks so much for taking the time to read this thread and for sharing your wisdom with us. I agree that multi-families are the superior investment due to its value for dollar, and ability to cashflow better than condos/duplexes. I also know that we can use 75% of the rental income from the non-owner occupied units to help us qualify for a larger loan. That said, do you think this market is still a good time to purchase properties? I know people are bidding 100k+ over the listing price in some areas of LA, and to me - that feels absolutely ridiculous. I know that we should be prepping ourselves to be able to purchase properties in any type of market, but I can't bring myself to putting an offer that is way over listing.

Best,

Matt

Matt, I don't think it's a great time to buy. Apparently, a lot of the big analytics firms are now predicting that home values will continue to rise next year, but I dunno... I don't see how multifamilies can hold their value when the s*** hits the fan post-election. Unemployment in CA is in the double digits. Evictions are going to be plentiful. I don't foresee any kind of collapse, but I think a lot of troubled landlords are going to be forced to sell. And maybe I'm completely wrong!

Best,

Jon

3 Votes

Originally posted by @Christopher Smith:

@Jon Schwartz

1) To begin with 3 million FMV in California captures innumerable small business owners standing entirely on its own, but if that weren't bad enough, the valuation standard is actually aggregated across all properties owned so it's not in fact in excess of 3 million per property making it much worse still.

2) Commercial properties have a very suspiciously expansive scope in the initiative (the devil is in the details, as is typical, and here as well) thus capturing both mom and pop businesses and in many cases even agriculture.

3) Unsurprisingly those proffering the provision have acknowledged it is but a first step, once they get their foot in the door with passage of the initiative they will shoot for full repeal of Prop 13 targeting all real estate owners.

4) But you make a really great point, sell it as tax on fat cats (while in reality it's scope will hit many many small businesses) makes it palatable to a largely uninformed electorate and further softens them up for delivery of the really big hammer when they shoot for full repeal of Prop 13.

In fact it's a perfectly rational strategy from their standpoint and one that now needs to be exposed by those that will have to pay the price. Hence it's the appropriate time to nip in the bud this blatant and transparent end run around longstanding Prop 13 that was overwhelmingly implemented by the people in their direct repudiation of governmental excesses.

I'm buying what you're selling, Christopher! Do you have any links or references to support your third point? That Prop 15 is the first step toward reversing Prop 13?

Thanks so much!

Jon

1 Vote

Originally posted by @Raymond Navarro:

The entire property is just over 2 acres with one water meter. We rent the house on one side of the acre and the other just contains landscaping with horse stalls, no other structures. The side with landscaping is what they are watering. The Landlord crosses to the side I am renting to turn on the water and proceed to use it. Since April of this year, he has watered at least 2 times a month for about an hour each time. It seemed a bit more frequent at first, but I started noting their visits starting from June.

They have tried to credit me with what appears to be an arbitrary amount every month, but I am not comfortable with that arrangement and would have never signed the lease if stated that the Landlord would be watering the other acre. This is NOT stated in the lease. I tried to rectify this with the property management company, explicitly stating that I do not agree with the monthly contribution arrangement. The replies are summarized below:

"He [the Landlord] will not be putting the water in his name, and we will not be making any further adjustments to this issue" and after mentioning that I do NOT agree, "Unfortunately that is the way it is going to be and it is not open for further discussion."

Please let me know if you need more context, I'm in need for advice. I am waiting to hear back from legal counsel, which sought out earlier today as well.

Thank you all.

Raymond, I'm a CA landlord, but not a lawyer, so I'm talking from my layman's understanding, not as a lawyer.

In CA, a landlord can't arbitrarily enter your leased property except in the case of an emergency. Technically, your landlord is breaking the law when he turns on the spigot attached to the house you rent. He's also stealing water from you if the utility is in your name, regardless of who owns the house.

First off, I'd order this book and read it:

https://store.nolo.com/product...

This will make very clear to you what your rights as a tenant are.

Then, I'd follow the above advice about putting a lock on the spigot. You're entitled to do this; it isn't a permanent attachment to the house, so your landlord doesn't have much argument in preventing you from putting a lock on the spigot.

When your landlord starts complaining about the lock on the spigot, armed with what you've learned in the NOLO book, explain to your landlord exactly what your rights are and that you will no longer entertain his trespassing or theft. FYI, the law also protects you from retaliatory actions.

Maybe you don't have to go this hardcore right away, but just know that the law (and courts) are on your side.

Best,

Jon

0 Votes

Originally posted by @Christopher Smith:

In addition to an irresponsible Draconian Rent Control measure, California will also be voting on an equally irresponsible Confiscatory Property Tax increase in November.

Props 21 and 15 respectively, will combine to tragically foist the burden of the state's longstanding gross fiscal mismanagement squarely on the backs of businesses at perhaps the very worst time for them economically in recent memory.

Please make these proposed measures known to all California business owners, and please vote NO on BOTH in the upcoming November ballot.

Also understand that those proposing these measures have clearly indicated that these initiatives represent merely a first step in their long-term plans to effect the single largest wealth grab in the state's history.

Christopher,

I'm a definite NO vote on Prop 21 and a likely NO vote on Prop 15, but aren't you exaggerating a bit?

As I read it, Prop 15 will assess property taxes at current valuation on commercial properties worth more than $3M. I read this and think about Disneyland and Universal Studios, two giant landmasses paying taxes based on 1978 valuations. If we're going to raise revenue from somewhere...

All the best,

Jon

5 Votes

Originally posted by @Matthew Duch:

Originally posted by @Marcus Tam:

@Matthew Duch

yeah i agree MF house hack is the way to go. Let me know if you find a duplex for under $1.5m in LA haha

Definitely. I'm on the lookout myself. Honestly willing to pay up to $1.2 million for a good Duplex, but I don't have that kind of cash, so I'm most likely going to do it with a partner.

Hey guys!

I was excited to see this thread, then bummed to see it's a few months old, then excited to see it's been revived and where it's gone. Whirlwind read, I'll tell ya.

Just to chime in: I'd definitely recommend a duplex over a condo.

The 10% down would be $100k, so you have $100k leftover for the reno.

That's my two cents. Happy to talk more math if you're interested.

All the best,

Jon

1 Vote

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All Forum Posts by: Jon Schwartz

Jon Schwartz has started 37 posts and replied 926 times.

Post: Who to connect with as an investor

Post: Who to connect with as an investor

Post: NY and CA are the land of the flee, and Texas is the destination

Post: House Hack Multi-Family in LA or NJ?

Post: Duplex: Owner-Occupy Unpermitted Garage Studio & ADU Conversion?

Post: Is buying a condo in Los Angeles a good investment?

Post: California Draconian Rent Control and Property Tax Inc Nov Ballot

Post: Landlord is using water I pay for in California.

Post: California Draconian Rent Control and Property Tax Inc Nov Ballot

Post: Is buying a condo in Los Angeles a good investment?