All Forum Posts by: Justin R.

@David Yee geez for 450k I wold want that ADU to gross at least $3500 a month in CA. I know that wasn't your question, but that's a lot of capital or debt for an ADU.

To answer your question, in order, refinance (unless you have golden handcuffs 4% or below interest), heloc, second mortgage, private money. None of these are ideal in this high interest market. Just make sure you are aware of your interest rate ceilings, positive cash flow, and increase your property value by at least 110% of that cost.

Save your money during both appreciating and depreciating markets. Only by at the bottom, and only sell at the very top. Finally and most importantly, please sell me your crystal ball when you are done.

Honestly I’m just kinda holding still at the moment. I’m speculating we will see a market correction, not because intrinsic value isn’t there, but because affordability isn’t.

When a solid blue collar career or public service worker cannot afford a home door to prices and interest rates, something has to correct.

I’m personally saving, but if the right opportunity comes I won’t pass it up.

@Dennis Nikolaev sorry to hear.

Just an idea.

1. Get long term renters in there so you at least get some revenue and stability.

2. Try like hell for a loan modification, or a refinance with an interest only loan. If you can break even and let time happen you will be okay.

I think if you can get by for another 2 years things will get better. I don’t suggest you using up all your remaining personal emergency money for this though.

@Kevin L Owens only take advice from those that know more about the subject than yourself.

If you want to pursue it, and are willing to put in the work, and accept the risk, then don’t let anyone convince you otherwise.

The fears of worst case situations are always exaggerated. Don’t let fear stop you from pursuing your passion.

Best to you!

 @Dave Foster explained it great, new property must be at least came cost as sell as all previous (including debt ratio.) Im actually doing this at the moment.

You don't have to use the money for another investment, like you mentioned you can use it for a primary, but understand you will loose the 1031 benefit, and will pay tax on any proceeds along with depreciation recapture. 

Some additional food for thought. There is also a "reverse 1031" which allows you to purchase the next property first (given you have the capital.) Once that is purchased you have 180 days to sell your property/properties. Definitely takes capital, but less stress needing to identify. 

Perhaps there may be a terminology discrepancy here. Please define "partnering." You say you two will be "partnering" on a LP deal. If you guys are the "LPs", then the the company GPs are responsible for doing the entity structure. It sounds like you and your partner are more just "splitting" the equity share you are bringing. If this is the case, there are no reasons for you to start a CA entity for this, you can simply run it through your personal names. The legal protection will be from the business (GP created) side of things.

Yes for W/D hookups, but a no on landlord supplied.

Hookups give them the option to purchase a used set so they dont need to travel to the laundromat. No hookups simply eliminate a large majority of potential tenants.

The units themselves are just not worth it from a landlords financial prospective on a tenant class you are describing.

 Thanks for the info, I will look into Scott Meyers. Do you recall the name of the person you met who purchased in Napa?

I agree 100% on what your saying about lake county, but that is why they already have several self storage facilities up there. In my neck of the woods (Marin and neighboring Napa/Sonoma) there is nothing. I lived down in Los Angeles and had a beautiful indoor storage facility for my boat and RV.  I paid $400 a month for each, and they were safe, indoors, trickle charged, and detailed for an extra price if I wanted.

There are no like kind facilities in this area. Im currently parking my boat outside, and my RV in Antioch (closest indoor RV storage.) This lack of option for my area is what garnered my attention. My friend owns the facility in Los Angeles I mentioned. He purchased the property for 1.75 per sq foot. For cars (not boats/RV) he can rent for $350 per month. In Marin the sq footage of newer industrial goes for 3.25 to 3.50 per sq foot (Novato is the only city allowing new industrial growth in Marin.) Assuming all things were equal between Marin and Los Angeles except the purchase price, I would have to rent the car spaces for essentially double, which just isn NOT feasible. People wouldn't be interested in renting a indoor space at $700 a month.

I do think Southern Napa could possible be an option as it is more growth friendly, slightly cheaper land, people are more car people and willing to possibly pay higher car parking prices, and its close proximity to Lake Berryessa. I would even be fine breaking even at the end of the day for the long term play, and personal use of the facilities.

 This is a great question, and I continue asking myself this question constantly! I have been investing for 11 years, both in CA and out of state. I am a long tern rental investor by heart, and have been investing in 6 states (CA, GA, ME, MI, TX, IN.) I have a unique perspective on each of the US regions from my experience. 

As a general rule of thumb, the hardest markets in terms of barrier to entry, also offer the greatest upside long term. For example my properties in the South, and Midwest have showed much more cash flow on paper from the beginning. Yet my balance sheet/net worth hasn't been affected much by cash flow. My balance sheet is affected predominantly by my properties in CA, and ME (the two most expensive ones in my portfolio.) This is mostly due to appreciation, prop 13 (keep property taxes from big rate hikes) and principle paydown.

People can say what they want about CA. I personally am not a fan of the politics here, but the upside cannot be argued with. It is a beautiful, vast area and there will always be demand to live and invest here.

In terms of strategy, this depends on your risk tolerance, and capital. If you had the capital to place 25% down, and not expect a return for a few years, Im confident you will make gains simply from the hold and small rent increases. Ive recently purchased 2 small apartments here in the Bay Area. They were stabilized, buy under market rent. Basically I'm breaking even, and if a large Capex item comes up I will be paying for it out of pocket. These are long term plays.

A conservative 4% annual growth on a 2m property is 50k annually. Assuming a 20% Down payment that is a 12.5 percent return on your 400k down payment not accounting for anything else. 

Hello Ronald. Im just looking to connect and network with storage owners in my area. We were living in the DFW area (Weatherford) last year for a while and there are a lot of storage/RV parking facilities in the area. The land, building costs, and permitting in TX allow these. In the CA Bay Area its just a difficult niche to get into. There are always a higher and better use here for such large spaces. Even if I was to acquire a property and willing to take a hit on ROI, the permitting process would be difficult if not impossible.

What is the cost per sq ft of industrial in your area?

What height is your building, overhead door, and do you use "stackers"?

What would a car space, boat space, and RV space rent for?

What are you insurance costs?

Is it sprinklered?

What percentage of occupancy do you need to be flush with your PITI and HOA?

Thanks for sharing any info!