All Forum Posts by: Rick Albert

 I focus on Los Angeles County posts, House Hacking, and Buying and Selling

I have had two clients now do a REVERSE 1031 Exchange. This is when you buy first, then sell. The 180 days still applies, so after you buy, you have 6 months to get your property sold. Because it is a more complicated process, the exchange fees are higher (around $7K versus $1200) but in the big scheme of things it could be to your benefit.

When you speak with the exchange accommodators, ask them for referrals on lenders that can facilitate this, as not all lenders can make this happen.

Starting a business relationship on a lie is never a good idea. 

Your lease is likely have your name on it anyways.

If they are going to sue you and you go to court, I can just imagine seeing the "victim tenant" telling the judge how you misrepresented yourself to them.

You will be surprised when tenants find out you are the owner. They can often be nicer knowing they aren't talking to a property manager and knowing that the place will be kept up nicer since you live there too.

There something called "paying it forward." Most seasoned investors didn't make it on their own. They had help and now there is an opportunity to pass along knowledge.

If it is in the city of Los Angeles, most MFU are subject to rent control. If there is a house with a detached ADU, if the main house was built prior to 1978, it is subject to rent control.

A buyer can attempt the Ellis Act, which could take months (owner occupied loans generally require the borrower to move in within 60 days) and cost $20,000+. It depends on the tenant's situation. It isn't easy. It's complicated and poses more risk. Especially if the tenant claims harassment. That's why I don't generally recommend it.

I've helped a client buy a house with ADU using the VA loan. He bought it in 2020 and now rents it out completely and I helped him buy another primary.

The challenge will be finding MFU that are vacant. It's not impossible as I have had many clients do it. A house with ADU would be easier. The main downside is the loan limits for a house with ADU match a single family, not those of a duplex (which is higher).

 Be careful when doing business with family unless you are paying full retail value for their work. Otherwise they have to prioritize higher income producing projects. I had a client get burned because of this and it made things awkward. 

No one here can tell you how much to charge without more information such as location. But you should really dig into it. Zillow now has renting rooms options and you can go on Facebook Marketplace. 

Sleeping in the loft is a great idea. I lived in our 380 square foot ADU and rented the main house for two years before moving into the main house. The biggest advantage is I could still refinance since it was technically owner occupied.

In terms of privacy, it depends on how the loft is laid out. Maybe you can put up a wall and add a door and now you have a 5 bedroom. Just check local guidelines as to what makes it a legal bedroom (typically a heat source, window you can escape out of, and a closet).  

I would be weary of charging different prices for an adult versus a child. To be honest, they cause the same wear and tear and you don't want to be accused of fair housing laws (family status). 

I would increase the rent because that is significant wear and tear. But if you increase the rent, how do you know they can pay it? With the new additions that are coming in, they don't have jobs so it might be tough on them.

If you like the tenants, then I would increase the rent and still do the background check. Even if it comes back blank because of lack of history, you at least rule out if they are lying.

How are you financing the build? That could actually be more expensive then you realize.

You also have to factor in time. The time to build new might take you a year or likely more. You would need to ask contractors.

You buy something already built and renovate, you get tenants in and start making money that much sooner.