All Forum Posts by: Joseph P Finkelstein

It seems like everyone kind of hammered home the difficulty, or impossibility of finding an asset that consistently grows at least 12% a year. However, piggybacking off of @Joshua McMillion, The only way I know of taking an assent conservatively getting returns in the 10% range on equity is through leveraged appreciation when investing in property. The asset isn't growing by 10%, but the way your returns are from appreciation can get you there 

Hey Brandon. I work for a company that helps people manage their multi-family portfolios, but I have to imagine your situation is the same.

If/when you are an appreciating market, you make most of your long term gains from leveraged appreciation. What you'll find and I'm sure you can do this with your property is that your return on EQUITY (Capitalizing because its different from ROI) starts to go down y-o-y. 4.5% cashflow is great, but if you want to continue to grow your portfolio selling might be the right move. The general rule of thumb we use is that once you're around 50% equity to value its probably time to get into a bigger property through an exchange or refinance.

Hey, Dan. My sister is an estate attorney in Long Beach that has really been working round the clock trying to get her clients affairs in line regarding prop 19. I know its short notice, but if you still need someone, message me and I'll put you guys in touch

A quick disclaimer, I am not a lender, I am just a real estate agent, so I would verify everything with a qualified mortgage broker. A lot might be dependent on your down-payment. For instance, if you are starting with a small amount of capital, you might need to do FHA financing at 5-10%. With FHA, you should be able to qualify with your job history, and perhaps you might get a better rate with her cosigning on the loan.

If you have a larger down-payment, you can might be able to do a conventional loan, which again you might get a better rate using her qualifications. 

Some things you can tell your mom are, lending is very cheap right now. It's generally reflected in the price of purchases, but now really is a great opportunity if you have the resources to take advantage of the current financial climate. Especially if you do take out an FHA loan, the payments will still be quite large, because the LTV will be quite large, so even a quarter of a percent can make a huge difference towards affordability.

Also, numbers never lie. If your mother is number savvy, I would start putting together pro formas of properties around your area. At the very least show her how owning property can reduce yours, and maybe even her living expenses if you are in a cash flowing area. Then if she's open to that concept, you can start explaining to her how leverage and appreciation also play into potential returns, and that small beginnings now can potentially lead to the financial freedom of your whole family. 

Hey, Sasha. I would definitely further consult a lawyer or tax accountant for clarity. However, from my understanding if you are co-purchasing the home with your mother, you wouldn't have to worry about the inheritance proposition. Effectively you could purchase the property as Joint Tenants, and sole ownership would revert to you upon death. I don't believe this would create a taxable event. (Think one spouse passing interest to another upon death)

Hi, John. I work for a brokerage in the LA area that works mostly in the multi-family space. A good portions of the deals that get done involve some tenant carryover. Depending on what your county rent controls are, there are some strategies that are effective and dealing with getting tenants out. Most of our clients use a cash for keys strategy, or do a stepped leverage of the allotted rental increase as per whatever the current rent control laws are. You can also sometimes negotiate with tenants to vacate in order to upgrade the unit and allow them to pay market rent post upgrade. 

Hey, Sterling. I work for a brokerage firm that helps people invest in CA. We are trained, and use the Gross Rent Multiplier (GRM) when looking at our deals, which is essentially the inverse, or cousin of the 1% calculation. As opposed to dividing gross rent/Price, you divide price/gross rent which gives you a multiple. The lower the number the better. Once you have a feel for how the GRM works, you can use it as somewhat of a metric to measure deals in an area.

For instance, if the average GRM for a duplex in coachella valley is 15, and you find a property that you can bring to market at a GRM of 13, it could potentially be a good deal. Obviously depending on your goals, you might need a better GRM to make things work, but if you take an average of the market, it can give you a good ballpark of the market as a whole.

Not too familiar with the Nor Cal market, but in the SoCal market for clients with that amount, we generally tell them to do owner occupied financing for a duplex. The best thing you can do is sit down with a loan broker, and find out what your purchasing power is, and then from there start looking at duplexes on the market. I know that the bay is pretty pricey, but with the mass exodus, prices might be coming down. Could be a good time to look. 

If you want connection to a loan broker, message me and I can refer you to the guy we use. He is really good for the 2-4 unit space. 

I'm not sure there is enough information there to come to an offer. 20k after repair is a pretty thin margin depending on what and how much rehab you are looking into. Is this a rental property? SFH, Multi-family? How much rent do you think the market will command? What are average cap rates and GRM in the area? I think the answers to those questions could help you come up with a valuation that you are comfortable with.

@Brian Davila would love to join as well