All Forum Posts by: Seo Hui Han

Quote from @Russell Brazil:

Look for neighborhoods where there are lots of people with bad hats and bad facial hair. This sub-species of homosapiens is known as Hipsters.  Somehow this invasive species causes property values to increase after an infestation.

 Ha ha ha!

As a former hipster (before the word existed) this actually probably true, but for obvious reasons.  These "hipsters" are young college grads who will live in areas that are (A) relatively inexpensive, (B) low or trending down in crime, (C) close to attractive civic amenities, and (D) are close enough to jobs.  Isn't that what we, as investors, all look for as well?

Hey @Tim Ryan, I am curious:  what happened in the past that got you into this mindset?  Like the original poster, I am a property owner in Los Angeles looking to exit my current assets (and really, my asset class) and get into large multi family.  And I am also leaning heavily towards investing out of state.

Hey @Dave Foster, as someone who plans on selling on a 1031 exchange in the next 12 months, I have a question:  in the scenario for the buyer you outlined above, it doesn't seem particularly beneficial to the seller, because if they keep the note outside the exchange they're paying taxes on a boot that they wouldn't have if they got a different buyer who could meet their price, or they're having to replace with outside cash the note inside the exchange.

If I were the seller (and like I said, I will be in the next 12 months) I wouldn't like either of those outcomes.  Any reason the seller would do this, other than not having other qualified buyers?

What kind of 30 yr fix is it?  I have a 30yr fix on a property that had prepayment penalties, and it is quite a financial annoyance.  Mine are 5% of loan balance if prepaid within 1 year, 3% within 2 years, 1% within 3 years.  I knew it going in, but didn't realize that my holding would appreciate so much that I would want to sell.

Quote from @Caleb Schoepp:

 This is absolute gold!

 I hate to bring this up, but if you ever played Monopoly, well... you don't win the game with Mediterranean or Baltic Avenue.  You win buy buying Park Place or Boardwalk and putting up hotels on them.

Hey Kai, what city is this in?  Have to warn you that construction in LA country is HARD.  I did it, and probably increase the value of my holding 2.5x, or even 3x, but it was a long 7 year process and at times very touch and go.  You're right, it's not popular, and there is a good reason for that.   There were times when my projects were on the verge of failure and I was at risk of losing everything.  Huge reward, huge risk.  Really huge risk.

With that said, regional banks in the area would be best.  They are all different, mostly based on the kind of new construction that you're doing (residential, commercial, and some even more specific than that).  You may have to go creative rather than conventional, but depending on where it is and what you are doing, you may be looking at anywhere between 100K-300K in soft costs (permitting, design, architecture, utility hook ups, etc.) and a construction budget of probably 1 Mil to whatever, once again depending on what you are doing and where.  But even with the smallest of projects, never heard of any new construction going less than 1 mil.

Keep in mind that you are actually going for 2 loan products with new construction, not 1.  The construction loan is only for the actual construction, and you will want to refinance that into a new loan with a longer amoritization, unless you have a couple Mil lying around.  And here's the dirty secret than lenders will not tell you:  the lender who you get the construction loan from DOES NOT have to be the lender you convert with.

Quote from @Todd Anderson:

Almost every day a talk with investors from the west coast.  I am in Florida and I have found off market deals available and moving.  We are still seeing 1000 people a day enter Florida and they all need someplace to live.  if you find the right building situation in the right area it can be a great move.  Cashflow day one and appreciation over the term.  We also have a great renting environment and laws.  

Hi, I am also a California investor and looking into possibly leaving.  But re:  Florida, what about the insurance issues?  Keep hearing horror stories about this.  I'm not one of those super-rich all-cash investors, I would have to leverage and lenders require insurance, no?

Hi Alex,

So I did a new construction in the city of Los Angeles where I did a complete raze (teardown) of an existing structure and built a brand new one.  Doing this increased the value of my holding 2.5x, possibly 3x, I will know for sure when I sell in the coming year or two.

With that said, DON'T DO IT.

Financing, and for the most part the construction, will be the easy part  It is permitting that is the killer.  It took me nearly 7 years, and those were some very difficult years.  There were more times than I can count when there was a crisis where I was pretty much at risk of losing most if not all of my investment.  And while I made it out okay, I know lots of people who didn't.  I've seen someone do a large senior 55+ housing development take 8 years before shovels were in the ground.  There's a multi family project in Korea town that's been in permitting hell for at least 5 years and it's still a barren lot.  And the soft costs can easily pass 100K before your project even starts.  I was lucky and I survived and flourished but there were lots of times during where I thought I was screwed.

While the reward was pretty great, the risk was huge, and I would definitely not do it again unless for some reason I really, really needed the money.  And it better be a damn good reason.

Hmm...okay.  To diversify, for safety's sake.  Okay, that makes sense.  Like I said, I was wondering why everyone was talking about deals where the down payment was well under 50%.  I get that it could be a capital issue as well, but I never realized it was to protect assets.

Hmm...that's a lot to chew on.  I did the math, and I think if I lowered my down payment under 50%, i probably wouldn't be able to cash flow on these expensive California properties.

i have a commercial property that I'm considering unloading.  Equity position currently 70%.   Would like to 1031 into a multifamily in Orange County.  I've done the math and if I go into a property with a 4% cap keeping the same equity/debt ratio, I think I can cashflow pretty well.

My question is:  is this advisable?  I hear about everyone going 20 or 30 percent down and not being able to cashflow.  I'd like to both appreciate and cashflow, and by going with a huge down payment, I think I can do it, even in Southern California.

BTW, I am a newbie, kind of fell *** backwards into my current situation, and would like to grow my inadvertant good fortune.