All Forum Posts by: Josie Roman

Cash flow is hard in California but we have some opportunities in the Inland Empire and North LA County. Some those areas are selling at $180k-$225k range for a SFR, only back 30% from what they were during the bubble and experts say they will be back to the $350k - $400k range in a few more years. Many multi millionaire investors I know started with small properties in those areas just a few years ago and know they are purchasing 200+ unit apartment buildings.

Even near downtown LA we have apartment buildings for $50k per door, which is really hard to find, even in other mayor cities out of state. 

Alternatively, you can buy out of state and grow your net worth at about $100k or less a year.

It takes time to get familiar with all the areas, cites and pockets within cites. The first thing you should do is to get qualified for a loan and see what is your target price range. Then you can look at what you can buy d where. Let me know if you need any help with that. We are direct lenders.

The problem when bidding at live or online auctions is that you are competing with real big pockets. Hedge fund, REITs and other institutional money are many times buying to hold, and don't have to justify bad single investments to all individual investors. It's the year-to-year that matters so they can buy at higher prices than you. Additionally they have more resources, such as cheaper sources of materials and labor, since they have their people on staff and buy in bulk.

It's not easy to win a bidding frenzy. You could end up not breaking even on the deal just because you just wanted to win something and make it worth your time. Most proficient investors I know, who have been flipping and occasionally holding for decades, don't ever try auctions. If you do, best of luck, and please let us know how it goes!

Every city has different noise ordinances. You tenant s can call LA Building & Safety or even put a complain online. Then an inspector will can to test the noise if sensory equipment. Make sure your tenants tell them to come when the noise is the loudest.

It's a tough call that depends on the inspector, but if the decibels are over the limit, the studio could get a citation. If the noise persists, they could lose their business license.

If you need more space for your family, you could consider an addition, if there is space in the property for it. It can be a hassle to deal with the construction while living there, specially for the uninitiated, but it could be worthy as it would give your family more room and also add value to the property. 

As far as borrowing against the equity, bare in mind that most lenders won't lend you over 80% of the property value. With simple numbers, if the property is worth $1M, you will only be able to borrow a total of $800K, including the current loan. So if the current loan is $600K, an equity lender will only lend you $200K.

Regarding buying out of state investments, I caution people all the time on issues such as the management fees and other added costs. It is also very easy to buy something that does not have the value and won't be liquid in case of need. Feel free to check other posts I've written on the subject listed on my profile.

If you need more space for your family, you could consider an addition, if there is space in the property for it. It can be a hassle to deal with the construction while living there, specially for the uninitiated, but it could be worthy as it would give your family more room and also add value to the property. 

As far as borrowing against the equity, bare in mind that most lenders won't lend you over 80% of the property value. With simple numbers, if the property is worth $1M, you will only be able to borrow a total of $800K, including the current loan. So if the current loan is $600K, an equity lender will only lend you $200K.

Regarding buying out of state investments, I caution people all the time on issues such as the management fees and other added costs. It is also very easy to buy something that does not have the value and won't be liquid in case of need. Feel free to check other posts I've written on the subject.

Property prices fluctuate everywhere, in some areas thou, prices remain mostly flat or very close to it. 

In California cities you buy equity growth and liquidity. But California is not for everyone. You can buy cash flow in almost every other state with exception of New York. There are cities, like Indianapolis, where you can buy a house with a credit card and will rent for $700-$800 a month. You will find it hard to sell it thou.

Out-of-state local investors have made a pretty good income in the last 10 years or so, buying houses for say $30k-$50k, fixing them for $10 and selling them to, guess who? - California or other out of town investors for $150,000. They give them to you rented for a whooping $1,400-$1,600/month and they even manage your tenants for you, for a fee, which is nothing but a win-win for them.

If you want to join them, you should make sure you will not need to liquidate on those investments any time soon. I see here in BP many investors who bought those out of state houses and duplexes some years ago and can't sell them now, even at a lost. They bought those properties at inflated prices based on manipulated appraisals and comps from a different area type. You may have cash flow but you don't have actual resell value.

In most California areas, properties don't spend 3 weeks on the market. In California and LA you can buy a 20-unit apartment, like the one we have available now, for $1.2M, possibly fix it for under $100k, and double your money in a few months. Or even convert into condos and walk with $5M+. Or buy a 4-plex for $750k that would pay for itself and would double in value in a couple of years as you do some repairs and raise rents. You will never be able to do that in other towns.

There was a time when we had houses for $50,000 in Los Angeles, a very long time ago. With our ups and downs, prices continue in the upraise, which others states can't speak of. Housing demand in LA along grows over 15% a year while new housing only increases 3%. Most experts say that we are heading for a steady property value growth of at least 8% annually

If in doubt, just tell me how many billionaires do you know who have made their money with Atlanta or Indianapolis real estate? I can list about 30, without effort, who have made their money in LA real estate. Some have then gone on to own other cities in and out of state.

In LA the building permit process can take over a year, depending on the type of property and the type of site. Basically you deal with two departments: Planning, and Building & Safety. Planning will issue a Letter of Approval that pertains to Geo/Soil reports and plan design. This letter will list "conditions". 

Make sure you look at those carefully because, until each one of them is checked off, you can't break ground. I have seen as many as 55 conditions on a hill site. You may need to change your plans and resubmit to get some of those conditions checked off. Building & Safety will take care of the final approval. In LA you also need to have the landscape approved as well as getting gradient permits for retaining walls.

On the documents you have, there should be phone numbers and names of City officers who are handling the case and you should be able to call them and speak to them. They can take several days in returning calls so be persistent. Ask them what is missing to pull out permits and break ground and what is the estimated time.

I have seen the price bumped up over 50% by wholesalers, even on land deals that were coming to me highly overpriced. Not too long ago, someone brought me an entitled land in Malibu that have been purchased last year by the current owners for $150k. The land was 4+ miles from the beach, up on the hills, on a semi-canyon location. The house next door, 2700 sqft built in the 90's had just sold for 1.7M - average sales price in the area. The approved plans were for a 3.900 sqft house. There were no comps for such footage within 2.5 miles. Larger newer houses only 1.5-2 miles from the beach with amazing unobstructed ocean views had recently sold for just over $3M. This wholesaler talked about "unique breathtaking ocean views", when in fact that entitled land had mostly hillside views and only a narrow 30-degree very abstracted ocean view far on the horizon. They wanted $960,000 for this land. By my calculations, by the time you were done with retaining walls and luxury details, you would likely not break even.

There are companies that only wholesale and do nothing but sitting around all day waiting for deals to come around from from their deal network and send mailers.

Many wholesalers have grown spoiled in the last few years having to do nothing else but spending 2.5 minutes a month on the computer sending 200-300 postcards and waiting for the phone to bring 10-20 deals. Now that mailers don't work so well, they just try to stiff the next guy they pass the deal on to. 

This is why the BRE is seriously looking into legislating wholesaling. I am not opposed to someone unlicensed making a living out of real estate, specially if they work hard at it, like everyone else. But the question here is, what is the limit between making a living and scamming?

I have seen the price bumped up over 50% by wholesalers, even on land deals that were coming to me highly overpriced. Not too long ago, someone brought me an entitled land in Malibu that have been purchased last year by the current owners for $150k. The land was 4+ miles from the beach, up on the hills, on a semi-canyon location. The house next door, 2700 sqft built in the 90's had just sold for 1.2M - average sales price in the area. The approved plans were for a 3.900 sqft house. There were no comps for such footage within 2.5 miles. Larger newer houses only 1.5-2 miles from the beach with amazing unobstructed ocean views had recently sold under 3M. This wholesaler talked about "unique breathtaking ocean views", when in fact that entitled land had mostly hillside views and only a narrow 30-degree very abstracted ocean view far on the horizon. They wanted $960,000 for this land. By my calculations, by the time you were done with retaining walls and luxury details, you would likely not break even.

There are companies that only wholesale and do nothing but sitting around all day waiting for deals to come around from from their deal network and send maiers.

Many wholesalers have grown spoiled in the last few years having to do nothing else but spending 2.5 minutes a month on the computer sending 200-300 postcards and waiting for the phone to bring 10-20 deals. Now that mailers don't work so well, they just try to stiff the next guy they pass the deal on to. 

This is why the BRE is seriously looking into legislating wholesaling. I am not opposed to someone unlicensed making a living out of real estate, specially if they work hard at it, like everyone else. But the question here is, what is the limit between making a living and scamming?

Hi Nora,

Thank you for your comment and vote.

It is possible in certain areas. I'm sending you a direct message. 

I'd love to take a look at your units to see how I can help.

Best,

Josie