All Forum Posts by: Sam Yin

 I guess we better stay in that top 2%...

I loved the 90s. Best decade,  at least for me. Gas was under $1, food was cheap, tech was booming, and music was evolving. Got out of the Army end of 99, it still felt good, but only for a minute. It's been a rollercoaster since the 2000s started. 

I think there is some truth to your assessment. I feel like the Lower middle class got push lower and the upper middle class enjoyed most of the prosperity. A few were able to step put of the norm and move upward.

Politics is tricky. The worse part is that they now have so many streams of media to manipulate people with. The uninformed and inexperienced will fold after a few clicks and lies. 

Gotta keep digging. Gotta keep questioning thing, now more than ever. 

Great post. Covid sucks. But there is no need to stop the world in its tracks because of it... or shall it be said better... there is not need for us to allow politicians to use it as an excuse to destroy our lives.  just saying..

I am hoping more people feel similar social/economic pressures and have the comprehension to foresee such political futures. May then there can be a break away from this trend and we vote in better leaders. 

In the end, as heads of our respective households,  we should always do what we can, with what we have, to keep keep our families/loved ones safe guarded from such bad possibilities.  

Not everyone will agree or will have the intestinal fortitude to do so. But then again, not everyone has been exposed to the various governments. A lot of people read about such things and watch movies/documentaries about it. Believe me, it not the same as experiencing it. I lived it and got lucky enough to escape from communism and totalitarianism.  It was brutal... compared to the USA. For those that want a better glimpse,  try extended vacations in 3rd world countries,  away from tourist hot spots. Then you may understand that there is a chance America might begin to slip into that path if things keep going the way they do. 

Fight to keep Capitalism alive!!!

Just my .02.

That might be worth it, as long as you can afford to keep it as is until you can get to market rents. There are many factors... since this is in a very desirable area and new construction, breaking even at the start may be OK. However, unless you have some MAJOR upside, I would still NOT buy anything that is negative on the cash flow. Based on what you described, I would personally be willing to buy at a price where COE will yield at least 2% COC.

I personally do not put all my eggs in appreciation.  Some people may disagree, but it's just my personal criteria. 

The simplest answer is to adjust the price until it fits your criteria.  If it's not accepted,  move on. Do not change your core criteria fit the price, that's a fail. 

back in Feb, there was an ON MARKET deal 6-units listed for $850K. For it to work based on current rents, the best I can do would be 770K. To the seller, that was absurd. Remember, to other investors, they would chase it at 700 to 780, but NOT at 850. Price dropped to 825K and it sat on Zillow for 177 days. So I made an offer for 770K. Seller scoffed. Seller came back a few weeks later at 790K. I said NO and moved on. About a month later, Seller asked if I was willing to put 770k in writing. I did, but I also asked the Seller to raise the rent on half if the units during escrow. And before we closed, I got another 5k credit. In April, it closed escrow, cash flowed, and I was able to get fixed debt of about 75% LTV at 5.85%.

Fast forward a few months, there was an OFF MARKET deal of 10 units, consisting of a 6plex, 2plex, and 2 SFRs next to each other on separate lots. The owner wanted out of the business and the numbers were decent. Rates had crept to almost 7%. As I walked the property, I noticed a vacant lot next to them, which would cover the entire block. So I made a deal on that. As I was a bout to leave, I got wind that there was a 4 plex on the next block for sale too, but the numbers were not quit there... because it was a 4plex obviously. I had just about enough in my savings and if I 1031x to purchase all of them as they were. But it would be tight and I was not about to put that kinda stress on me. To combine total was 2M. It could still work, but numbers were tight. I negotiated all of them to a combined 1.85M, with a verbal promise of no trades. Then I shopped Freddy Mac for a 6.81% loan at 80%LTV. In this case, Freddie Mac got stretchy due to the vacant lot. Long story short, I ended up with a local credit union with 75%LTV at 6.61% for 10 year, amortized 30 years, due in 20 years, with a rate cap of about 9% and a PPP of 3, 2, 1. It should close in 6 days.

Biggest hurdle for both was insurance!!!

Easiest hurdle for both was making them cash flow at COE. Stick to your criteria. If it doesnt fit, move on. No deal is better than a bad deal. Do not bank on appreciation... account for it, but it's no guarantee. 

Final thoughts, the 1 to 4 units are generally going to be much more inefficient for pricing because they are so accessible to people. In the about case, I combined all to blend the income in order to make the deal worth while.

There are still deals to be had in SoCal. I have seen it. I just do not have the capital to take them all down, nor do I have the time since I'm a solo operator. It's ok to send in a low ball offer, they the seller can just say No. Do not change your underwriting, if anything, increase your expenses. For the above deal, I underwrote $6K for my insurance. Best I could get was $11K. Luckily, I'm still at 1.34 DCR, so there is plenty of room.

Keep searching. Keep making offers. Keep in your buy box. You will find it and you will score. Long Beach is a cool community.  I lived there twice and owned a house in Bixby Knolls... my biggest regret was selling it. I bought it in 2002 for 250K...
 

@Chris Seveney

Ditto... what Chris said.

@Noah Bacon

Insurance rates

Taxes rates

Tighter rent control

In that order!

@Bruce Woodruff

Good morning Bruce. Lots of great points and opinions already. But I'll chime in... from a SoCal perspective...

I think the market is still hot! It's predominately a sellers market still. Although I mainly concentrate on small multifamily, I can tell you that it is HOT!!! It flies off the shelf if it gets listed at any reasonable price. However, most times it never gets listed because the demand is so hot that the agents get it sold with only a few calls.

The last 5 out of 7 deals I closed were all off market. And I had to jump on it because I knew if people got wind, I would lose them. They were all small multifamily, 6 to 20 unit buildings.

My most recent deal, to be closed next week, is also off market. It has a blended COC of 7.5, CAP of about 7.5, and GRM of about 8. Total price was originally about 2M, but I negotiated to 1.85M with a promise of no trades. Its 14 homes and one vacant lot, spans 1.5 blocks, and unit mix from studios to 4 bedrooms.

I am always looking and negotiating and I can tell you that the market here is so competitive that you better have funding at a moments notice. There is no sign os slowing down, only limited inventory. I was negotiating a 32 unit and was almost there when the word got out. Suddenly all kinds of investors jumped it to snatch it up.

I feel that the market will vary from region to region. However, the major markets might have seen their bottom, or close to bottom... with the stagnant prices. Now, there may be a good possibility that it will begin another in up in 2024. I do not have any concrete evidence, just a gutt feeling based on experience.

@Bruce Woodruff

There is absolutely nothing wrong with a beer or two. A really COLD beer. I have not graduated into wine... yet. I have in only on rare occasions.

As much as I try NOT TO drink, I have volunteered as Commander of the local American Legion, and currently I am the Vice Commander. Im in charge of the bar and the bar tenders. So you see how difficult it is. But I usually try to limit is to 2 beers... on our general meeting nights.

Nothing wrong with a few beers... nothing at all.

@Joe S.

Great topic to remind people of priorities.

I feel that REI is just like other parts of society, you will have those that chose to focus on personal fitness, and those that do not. I'm sure that with a forum this large, we represent society well and have the same ratios of fit and fat people investing as those that are in other jobs.

I personally have always believed in perso al fitness since I was a teen. I broke my HS pull up record, cranking out 43 pull ups in 10th grade. I maxed out all my PT tests in the Army. I kept it up life ever since.

When I was still working W2, I'm up at 340, bike the to train bu 415, hit the gym from 5am to 6am, and then start my work day. I hit the gym with my wife at 445pm to 530pm and we go get the kids from after. We were both in Track/Cross County in HS. She did soccer in H/S and college as well.

Reality is, it has to be a part of you. These days, I have cut back alot because of kids and other adventures. I'm still up by 530, hit the basement gym for an hour before I start cooking breakfast for kids. I try to hit the gym in the evening as well. In the last 30 years, I have put on about 20 lbs... most of it came on this last decade.

You cannot beat age. Your body will change. But it doesn't mean you stop or give up, just make small adjustments along the way. I do more cardio and less weights these days. I've done several marathons and mud runs and can still hit the mile sub 6:30. It just hurts more.

I ride motorcycles, street and dirt, and RV camp alot. I sleep about 5 hrs a day, on average. As a kid, running from war in the jungles of Cambodia, I never slept much eother. With that said, there is only such time to devote to all the things that are important.

I love reading everyone's responses. They are so varied, as much as the diverse members of this BP forum is. I pick up little nuggets everywhere and always add some spice to my routines with what I see others do.

Thanks for a great thread.