All Forum Posts by: Shiva Bhaskar

Originally posted by @Corry Cuington:

@Shiva Bhaskar Hi, my name is Corry and I’m a Realtor living in Los Angeles and am interested also in any meets up you may have. Do you mind sending some information? Thank you!

Hey Corry, sure, please send me a colleague request, and I will be happy to shoot you the details! 

Originally posted by @Conor Livingston:

My goal is to produce $3k/month profit from rental properties while spending less than 1hr/week on management (e.g. engage a property manager).

I could buy a couple properties in cash, or buy several properties with financing. I'm leaning towards all cash deals right now because:
1. Simplify the buying process

2. Each property puts more $ in my pocket per month (no loans to pay back)

3. Simplify management (less properties to manage)

It seems like I could make more money per month if I buy more properties via financing, but it would require more work.

Am I thinking about this the right way?

 Conor, I think you laid out the benefits and drawbacks pretty well. However, what about this approach: Purchase in cash and then do a cash out refinance? This allows you to realize the benefits of a cash purchase (including more accepted offers, and often, a lower price). This means more long term cash flow and wealth.

Now, you did mention issues of time spent and  ease of management. That can be tougher with more properties, though if you get a system in place, it becomes more and more manageable. 

Hi Mel. We purchase multifamily properties in our local market (Los Angeles) and manage in house. Below are a few things I've found:

1. Have clear tenant screening criteria, and stick by them. We don't deviate from our credit score and income rules.

2. Put in place a system for rent collection (online, checks etc) and use software to automate it as much as possible. If you can get every tenant to pay online, perhaps in exchange for a small reward of some sort, that is ideal. 

3. Have a list of vendors for every situation. Make sure you test out a few of them to see who strikes the best balance of price and quality. Of course, not each vendor is always available (plumbers for example), so make sure you have several on the list. 

4. Be comfortable having uncomfortable conversations and frustrating situations. You'll have to turn down applicants and have them cry or use foul language. You'll have bad tenants (even in good areas this happens). Be ready for this, and manage your emotions accordingly. 

Best of luck on your journey! 

I hate to not take a strong side, but what about both? Stocks, especially with index funds based on S&P 500, have been a historic long-term source of growth and wealth. I am not a fan of much active investing in stocks as I do with real estate, but if you let the market work, over the long run, it does deliver. 

Real estate offers leverage, tax benefits, and better cash flow than most stock dividends. Long term appreciation is strong, although there's not much real estate that is likely to zoom up the way some stocks, especially tech companies, have in recent years. 

I say do both. 

Originally posted by @Peter Trettl:

Hi BP,

First-time investor, new to BP.

I've been searching for a Duplex/Triplex to be my first RE investment in Los Angeles. My plan is to purchase as Owner-Occupant (FHA), rehab and add the max number of ADUs, bring rents to market and hold. I work as an architect, and am very familiar with the value-add process, permitting and construction.

A potential deal fell into my lap and I'm wondering whether it's worth proceeding with.

Brief Summary:
The property was listed and taken off the market after it failed to sell for $720K. The owner informed a real estate professional friend of mine (who's company is managing the property), that he would absolutely sell if my friend could find someone willing to pay $660K. Comps for similarly sized remodeled duplexes with ADUs in the area clock in between $1.2M and $1.4M.

The Catch:
Property is RSO with both units occupied. Currently pulling in $2K rent combined. If the current rents are maintained, I'd be losing about $2400/mo with my mortgage, MI and taxes. I don't currently have the cash reserves for the significant relocation payments that HCIDLA will require. It also seems I'd be on the hook for them anyway, even if I manage to get an Owner-Occupy eviction. Plus...the eviction moratorium right now.

Unless the current owner delivered the units vacant, I really don't see any way this pencils out.
It's a real shame because I'm insulated from the mad bidding wars going on here and could actually pay a fair price.

Am I just in denial of the obvious at this point?
Or is there something I'm missing?

Thanks for your input!

Hi Peter, as @Jon Schwartz said (and you know) the reason this is selling for that discount is that both tenants are in at such low rents. In normal times, you could look at doing an eviction which is not due to tenant's fault (owner occupancy of a unit is grounds to move out a tenant, though you owe relocation fees in most cases). 

Right now, it's tougher. One option is to put it under contract with a contingency that you're able to negotiate a buyout of one unit during escrow. Since in Los Angeles, tenants have a 30 day period to back out of a buyout, you'll need a longer escrow period. Seller may agree to it given the issues he's having with selling. 

You will need a nice chunk of cash though. If you like, having an attorney or tenant buyout specialist negotiate with tenants can help. I know two who are quite good, and have done this many times before. If you want to send a colleague request, can share their information, and you explore your options with them.

We do cash for keys often, but these are on somewhat larger properties, and we have a longer timeframe to reach an agreement. Doing it in a shorter period of time is possible if you're willing to pay.  

I will add another thing: COVID disrupted foreign immigration the past 18 months or so. Now, I'm not going to start a political discussion on immigration, but CA does get a lot of immigrants, and many, given current living costs, are highly skilled and/or wealthy folks. I do think the CA outflow numbers would not look as bad had immigration not been disrupted by COVID. It will be interesting to see how that shifts as things return to normal.  

Anecdotal, but the overpriced fixer upper house across the street from my parents house, here in the LA area, just sold to some folks with Texas plates. Everything in this little area sells for well over a million. '

Another anecdote from today: New guy joined our coworking space when my law office is located. Just moved here from New York City, works in finance and easily makes a few hundred thousand a year. The affluent seem to be moving here from other states, but the less well off are leaving. Good, bad or ugly, that's for you to decide. 

Real estate market here in Los Angeles is nuts. Every house has multiple offers. We haven't had Austin level appreciation this year, but it's very strong. A good deal for a 9 unit apartment complex in a traditionally very challenged area (Watts), across the street from a notorious housing project, was not listed on the MLS, but the brokers got 7 offers off market, most close to asking.  

Do you have a burning question about real estate investing (specifically in Los Angeles) you'd like answered? Perhaps you have more questions about ADU's? Maybe you'd like to know how rent control really works? Or, you're wondering whether refinancing a property and taking out cash really makes sense?

Whatever your questions are, we're here to answer them! The LME Investments team has decades of combined experience in LA real estate, and we want to answer your questions and help you find solutions. Bring your questions and let's have a conversation. We will have networking afterwards. We look forward to seeing you there!

Please note that this event is being held online. 

Originally posted by @Bryan Stocklas:

Hi guys, I recently went to buy a rental property and after inspections were done the house only had a 60amp panel which means I can not get homeowners insurance for it. Since I can’t get homeowners insurance I can’t get a loan for the property. In the contract it says it is contingent upon the buyer obtaining a mortgage, however the seller has already gotten his lawyer involved and has sent a letter to sue me. Has anyone had any similar issues with this? I am obviously going to get a lawyer but just curious on if anyone has dealt with this before. Thanks everyone 

Talk to a lawyer in NJ. I can suggest a good one for this. feel free to reach out 

Originally posted by @Stan Hernandez:

A popular and very expensive place to live for sure!

Reading a six page thread post while sipping on my cold brew inspired me to create my very first post on BP. 

So I have roughly $50k-ish in the bank and waited for 2020 to be over before even thinking about buying property. I have done quite a lot of research and came to the conclusion that using FHA, hacking SFH + ADU OR MFH will work for me. I can entertain the thought of using the BRRRR method but not sure yet.

Fast forward 8 months into 2021, I'm curious to see what people have to say about the market, specifically in Los Angeles. Should we wait until 2021 is over? Will the market crash soon? Will Dogecoin ever hit $1? LOL Would love to hear your input!

My current 9-5 will not allow me to invest OOS so that is out of the picture.

Oh and please keep your "leave Cali" comments to yourself! That joke is getting old :)

So let's hear, what would you do in this situation. 

Best,

Stan

Stan, it's not only possible but very profitable. We buy multifamily properties here, and it's been an incredible experience. I will say it takes patience and capital, but a combination of favorable taxes, strong appreciation and demand makes it worthwhile. I think the costs and complexity eliminates many of the less skilled investors, so it's definitely a tough business, but yes, you can do it!