All Forum Posts by: Lee Ripma

@Sergio Avina That sounds like the right call, building in CA is a nightmare! Keep us posted when you close on the MF! 

@Jon L.

I am all about tankless and plan to put them in my MF units in Kansas City. I was talking to my landlord in LA about this and he asked why I was all about tankless. He thinks they don't last as long and they are prone to hard water buildup. He also thinks that they don't last more than 7 years. So I like them because the tenant pays to heat the water when they need it and not when they don't BUT he has the counterpoint. That's all I've got for you. 

@Morgan Smith, That makes sense and it sounds like you're going into it informed. My problem with TK is that you pay top dollar for a place that is "lipstick on a pig" rather than a nice renovation. If I'm going to buy a house retail then I might as well get it off the MLS and get a rehab job targeted at an owner occupant. Similarly, I could buy a house off the MLS that needs a small amount of updating, have someone local do it, turn it over to PM, and I'd have the same thing as a TK but at a lower price point.

What I really want to do is reuse my down payment over and over again to get into properties, hence the BRRRR method. TK is often SFH, I'd really rather have a MF so that I can invest in things like a coin operated washer dryer and storage units to increase NOI and have economies of scale as I grow my business. If I want 1,000 units then it's easier to get them in MF than SFH. I went through a lot of options, thought about TK, thought about my goals, went to KC, and just closed on 7 units, a duplex (that I'm turning into a triplex) and a quadplex with my RE partner. We will renovate and do a cash out refi on both. We won't have nothing in the deal after the cash-out, but I will have a whole lot less than if I had just bought the places retail. So that was my process over the last year and a half, it took me a long time to get there. I also think there are other ways to invest without buying houses and if I didn't want to get involved I would probably tend towards funding through a crowd funding platform or to those I met on BP. You can really get high interest on short-terms loans for RE.

Just make sure that wherever you buy really does have good rental potential and will cash flow because it probably won't appreciate much. If you PM me I'd be happy to have a phone conversation about my process. Best of luck! 

@Morgan Smith If you want low risk there are other options besides buying a single family home from at TK provider in Independence that will get you there. Have you seen the place? Have you seen the area? If you want low risk really think about doing those things first! I've been down the TK vs. not TK road and I'm not going TK but I do think there are decent providers around. Why RE? 

@Morgan Smith, 

What's your goal, cash flow?

I think your insurance is a little low, I'd use 90/mo. 

Is this a TK or something you found on the MLS? (or something else)

Do you know the area you are purchasing in? There are some really bad areas in KC, I learned this by going there for the weekend and driving around! What's the zip?

@Bryce Lowe-White I'm not expert at this stuff but people pay 45-75k to relocate tenants, that is just crazy. I think you can kick them out if you plan to owner occupy that unit (and then you could rent the front unit to someone else). I would certainly talk to an attorney about all of this to make sure that you're doing everything you can to leave yourself with the most options. Also if you do keep that tenant make sure you raise their rent the 3% a year, that is the maximum allowable. I'm just moving into a new rental in LA (Echo Park) and was talking to my new landlord about rent controlled tenants. He has one that he has offered 75k to leave and he still can't get rid of him. My new neighbor was inherited with the property and has been living there for 30 years, she pays 600/mo for a place worth at least 2400/mo. I'm just terrified to buy tenants in LA because of stories like this, so really do talk to an attorney! 

Mike R. That's awesome you've got so many big bear rentals! I'm looking to get my first vacation rental in mammoth this year but I'm also building a portfolio in Kansas City (just closed on 7 units). I'll PM you, we should grab coffee in LA!

I know folks are desperate to buy in LA but I think it's great to rent a rent controlled place (can only go up 3% year) and invest elsewhere. Commuting daily to barely afford something in a crappy location just isn't worth the quality of life sacrifice imho. My wife is a 10 minute drive from her office and I work from home. We can walk to lots of great places in Echo Park. It costs us far less monthly than a mortgage in the same area and less than a mortgage monthly in other areas where the quality of life is lower. Since I've started investing in the mid-west I'm actually really considering a move out of CA. The prices are just so high and it's so crowded. So I think that spending the time searching for a great rental is the way to go. Look for family-owned places that are not likely to sell. My 2 cents.

Any chance you can get this unit delivered vacant? I would not want to buy tenants in place in LA.

Is it in East LA? Montebello? I know the LA area so I'm wondering. I would probably avoid the new construction and go for more units if both are in equally good areas or equally up and coming areas. If you are able to come up with a number on the new build then you'll be able to compare apples to apples. I like the MF because you'll get 3 units instead of 2 and won't have to go through all the pain of constructing on the lot. Just my 2 cents.