All Forum Posts by: Seth Borman

 Gentrification doesn't really work the way that you think it does. The biggest cause of gentrification is a shortage of housing in the most desirable neighborhoods. Want to protect South LA from gentrification? Develop housing in all the golf courses in West LA so people don't have to move to the hood to pay less than 10 years income for a termite ridden fixer upper.

Also, keep in mind that before development happens investors (that would be us) have already bought up all the value add properties and turned them around. Money flows to development when you just can't find apartments anymore and you have to start building them.

 The tax benefit of Prop 13 is capitalized into the value of the property. Repealing Prop 13 will see asset values fall, not rents go up. Even in cases where they do go up the benefits outweigh to costs. So what if a few tire shops and parking lots go under? We will see a whole wave of residential land go up for sale.

 When I dug into it they defined residential as long term rental uses (houses and apartments). As written it is mostly painless for the majority of people, unless those people own parking lots, in which case they are about to realize some capital gains!

The best public policy would be to get rid of Prop 13 altogether. The second best would be to limit it to natural persons in their permanent residence.

 The split roll won't effect any residential real estate. Even the residential portion of a mixed use building will still fall under current law. Size won't change that.

What the prop will do is kick underutilized parcels onto the market. Vacant land, parking lots, low grade retail, etc will kick loose for residential development.

@Owen Schwaegerle

1) AirBnB.

2) Expand existing unit with an additional suite. (One Lease).

3) Rent as a "bedroom" to an existing unit. (Separate Lease).

Depends on your market.

This property is a fourplex that sold, in Los Angeles, for $350,000. I toured the property. It was completely trashed. We estimated that it would take $250,000 to get it refurbished.

That means that someone got this building for $600,000. Rents are going to be about $6,000 (if you care about the 1% rule) expenses will be about 25%, so NOI will be $54,000, for a cap rate of 9%. If the building sells at a 5% cap rate it will sell for $1,000,000.

The barrier to entry is the amount of cash required.

I would expect the greater savings to come from insurance.

Principal pay down is your friend. Basically at these rents and valuations you build equity every month. Eventually you can either sell the building or refinance to get it out.

That said, you absolutely can cash flow a property here, you just need to be very careful and spend a lot of time looking. 

From a cash flow perspective its going to be easiest and most straightforward to make an ADU.

PM me the address and I'll take a look and give you some ideas.

Typically the residual land value won't allow it. Larger homes that sell or rent for more will be required to make the deal pencil.

The exception is in places where you can put a humber of tiny homes on a lot.