All Forum Posts by: Ori Skloot

Hi Everyone,

I am evaluating an opportunity to purchase some residential properties in Richmond CA as a bulk sale. 6 single family dwelling and 2 duplexes.  I'm thinking that getting a loan on each property will be a headache, but maybe not.  I've talked to a few lenders so far.   One declined, one said they could provide a loan on each property, and one can offer a blanket loan.  The terms I'm finding out there are around this:

The issue I'm finding is that all of them will loan at a 70-75% LTV of the appraised amount or purchase price, which ever is lower. It will be a large purchase price for me and I would rather not sink 30% cash into the deal. I've seen posts on BP of people managing to put much less down on bigger deals like this (aside from seller financing as the seller is not interested).

I also don't love the long yield maintenance period. 

Can anyone point me to a lender in the Bay Area (or elsewhere) that could loan a larger amount of while still having good terms?

Finally, a lot of people talk about going and talking to a local bank or credit union.  Any specific names people could offer that are in the Bay Area, preferably near Berkeley?

Thanks for the help!

Ori

Tenant had refused to vacate earlier and won't go without a big fight if I don't provide 90 days.  My inspection contingency period starts after the property is vacated, so I'm not concerned about the timr period. 

Hi Everyone,

I am in contract to purchase a SFD in Oakland.  This could be my first deal that came out of a direct mail campaign.  I have yet to see the inside of the house.  The seller is willing to pay cash-for-keys so that the tenant will vacate prior to close of escrow.  (NOTE: long story as to why we need to do cash-for-keys, but the seller is paying).   Below is the letter I want to send the tenant, any feedback for anything I'm missing?  Any conditions I should add to protect myself?  Thanks for any input.

Dear [Name],

I am following up on our conversations regarding you vacating [Property]. 

Per your request, we are prepared to offer you $1,000.00 to help with your transition under the following terms:

• The property shall be completely vacated within 90 days of this signed agreement. To be vacant, the property must be empty of all personal belongings inside the house, the garage and anywhere else on the property.
• All standard fixtures shall remain with the home, including: refrigerator, stove/oven, dishwasher, laundry washer and dryer, lighting fixtures, bathroom and kitchen hardware.
• Upon execution of this agreement, [Name] shall allow Ori to do a preliminary walk-through inside the house and the property.
• At 90 days, [NAME] and Ori shall do a walk-through of the property to confirm that it has been vacated and no damage has been done since the preliminary walk-through. If the property meets those conditions, [NAME] shall sign a “release of rights to possession” (see attached page) and Ori shall hand him a $1,000.00 cashier check.

Sincerely Yours,

Ori

Update:   I offered him $1000 and 30 days.  He said he would take no less than $5000 and 90 days or otherwise he would see me in court.  

How expensive is it to evict someone?  Im concerned that if I evict him this guy will trash the place on his way out. Which option would you take from here?

Thanks so much for the feedback. 

Hey Daniel,

I'm also keeping an eye on this property auction.  In my experience these auctions have a reserve that is set so high that it doesn't make sense for an investor.  That's not always the case, but I've gone through a number of auctions and couldn't believe how much people paid.  

Regarding your spreadsheet, you are showing rents as if this is a 4-plex.  Isn't it a duplex?  If you change to a duplex then the property will not cash flow.  Also, don't forget that you need to pay 5% to the auction site.  

To buy this property you have to pay cash. 

Good luck!

\

Yes, it's a single family house.  It would be cheaper and easier for me to have him vacate the day after we close.  If possible I want to avoid evicting.

Hi there,

I am looking at a property in Oakland.  Owner is interested in selling, but he has a relative living in the house who doesn't pay rent.  I want to approach the relative and offer cash for keys.  My question is how much to offer?  I've seen other posts that suggest 1/2 the deposit.   In this case there is no deposit but a deposit would probably be around $1750.   So offer $875?  I don't want to offer too much, but given the housing prices in Oakland that seems low to me.  Anyone else have experience with cash for keys in the Bay Area?  Any advice would be appreciated.

Thanks!

Hey Jeremy,

Tell us a little more about what you are hoping to get out of the meeting?

Regards,

Ori

@Michael Healy

If you are going to upgrade the efficiency of the home I would recommend looking into utility rebates available for multi-family upgrades.  Many states have a well-publicized efficiency rebate program for single family dwellings (in California we have Energy Upgrade California).  Not as well known are the multi-family rebates available (again in California we have the Multi Family Upgrade Program).   I have done efficiency upgrades on multi-family properties where 30-60% of the project was subsidized by the rebate program.  To get the rebate in CA, you have to achieve a minimum of 10% modeled energy savings, and the more efficiency measures you add the higher the rebate.  It's based on the estimated efficiency of the project, so there is definitely a loading order (insulate the shell first, then look at your mechanical systems)  The difficulty is that there is almost always a waiting list because the programs are oversubscribed.  That said, if you submit your property with a clearly defined scope and follow up with the program admin folks, you may have a chance of getting in with a little persistence.  

For folks who are buying SFDs (1-4plexs) these qualify under the single family programs and there is plenty of funding in most states with a rebate program.   As a contractor I've done hundreds of home efficiency upgrades with rebates.  As an investor, if done several of my own properties.  Here is one example of how the costs and rebate of the efficiency upgrades panned out:

1450 square foot house in Berkeley, CA. Single story, nothing fancy:

1. Attic Insulation: $1600
2. Wall Insulation (drill and fill - didn't open up the walls): $3000
3. Remove Asbestos ducts: $1250
4. New high efficiency furnace and ducts: $9,000
5. New high efficiency tankless water heater: $4500
6. With permits the total cost came to $20k
7. We got a $5,200 rebate check in the mail 6 weeks later from PG&E

If you want to find out what rebates are available for efficiency and solar in your state check out this site: Database of State Incentives for Renewables and Efficiency