All Forum Posts by: Rick Albert

This is a lawyer questions because you can't generally pay a fee. 

Here in California, we get free general legal advice. Maybe there is one in Florida.

There are fees to be paid with rent control. If you live in the unit, you are exempt from some of the fees. But the other units I'm pretty confident are still subject to rent control. You can call LAHD to confirm.  

Have you ran the numbers as a rental? Does it make sense to keep it?

Could you sell it and put the money towards a better income producing asset? 

Selling properties get you rich. Renting out properties builds you wealth. In an ideal world you would keep it and then scale up over time (stacking method). Another option is if you lived there two of the last five years, you could rent it for two more years and then sell. 

Cash for Keys (C4K) can be extremely costly, time consuming, and risky. You need the units vacant before moving in. The only exception is if you have experience.

The C4K will likely start around $20K per unit. 

You will also need to see if they have a loan on the property and how much you would be putting down. 

Every case is different. Have you spoken with the Seller on the option of Seller financing? 

You make money four different ways:

1. Cash flow: Any money is good money in a house hack.

2. Appreciation: This is important to note. You can consider selling to scale up.

3. Loan Buy Down: Some calculate this as part of their "cash flow." It is unrealized cash potential when it comes to selling/cash out refi/HELOC.

4. Tax Benefits.

Depending on the property, you can utilize other methods to gain the cash. For example I used my current house hack to pull a HELOC and bought out of state. I'm staying put but expanding the portfolio.

Depends on what your goals are.

I would argue house hacking in more expensive markets is a genius move. You get bigger dollar appreciation, bigger loan buy down, and potential bigger tax benefits. This means you are increasing your net worth faster than if you go to a less expensive area. 

Your house hack could be a catalyst to buying more properties. For example I used a HELOC on my house hack and bought out of state. I never would have been able to do that had I lived in a less expensive area because the amount of cash needed wouldn't be there.

A couple of things:

1. If the property is subject to Los Angeles Rent Control, you can't do STR under any circumstances.

2. The guidelines are strict (which was already mentioned).

3. I'm not sure the numbers really work anymore. Every time I have analyzed a short term opportunity, the cash flow tends to be close to the same as a traditional rental. Keep in mind you are responsible for the utilities, internet, upkeep of furniture, bed sheets, etc. Plus there are the Airbnb fees and some areas have an additional tax. For example I have house hacking clients in Malibu doing STR and the city imposes a 15% gross income tax.

The popular areas (Joshua Tree, Big Bear, etc.) from what I am hearing are over saturated. When there are options, unless your place is extremely special, the only way you can compete is on price. That's not exciting. 

Mid-Term Rentals are generally the same concerns as STR, but you could argue less potential vacancy and if the property is subject to rent control, it is a potential legal workaround.

Most of my investor clients are either house hacking, mid-term, student housing, or traditional rental.

 So then offer to pay him and do a profit sharing option. For example, $10K plus 5% profit sharing. 

The problem is every property is different. Some properties are turn key, others are gut jobs.

You need to decide how much money to put aside excluding the down payment and closing costs. That will determine what kind of property you buy.

This sounds like a horrible deal. You are taking on all of the risk and your designer gets 40%! If you lose money on the flip, you lose the money and your designer just doesn't get paid. That's not a good deal at all. Frankly that's ridiculous. If you want, I'll take that deal as the designer and do it for 30%.

Hire the designer to manage the project and come up with the concepts. you retain 100% of the profits. This way if you don't like the work, you can move on.

If the idea is not to pay anything, then that person needs to bring in money as part of the deal. Otherwise there is no incentive for them to work fast and smart.

Also do you trust this designer? What is their reputation and samples? Keep in mind anyone can be a designer and if you make the project too specific then no one will buy it. We have hired designers on projects before and people came through not liking the finishes and look of the home.