All Forum Posts by: Victor Ong

Investment Info:

Small multi-family (2-4 units) other investment in Los Angeles.

Purchase price: $618,000
Cash invested: $1,000,000

Ground up development in Ktown. 3 Unit townhome.

How did you find this deal and how did you negotiate it?

Found it on Redfin

I rehabbed MFR and SFR in LA city and able to cashout refi 95%~100% plus each time. I am sitting on free cashflow. You gotta get your hands dirty and willing to do semi development, and complete gut out rehabs. Things are tough for value add/rehab deals now. However, developments are still lucrative if you know what you are doing.

It's a tear down that we bought. Vacant lot is more riskier as you won't get banks financing upfront. In our case, it doesn't matter. 

Probably takes about 2 years from start to finish. Best to see it when frames are up. We are still in entitlement phase. 

You can try hard money loans. They are willing to go up to 85% LTC.

What happened to East LA and South Central? I thought we should have ranked at least top 5. 

Most developers/contractors are cash strapped. They are usually loaded with tons of debt and have high monthly overhead to balance. At the sane time getting into a partnership might be challenging. Who is going to be the manager? How do we know the developer is quoting at the best cost? Is the incentive aligned with both parties? Most real estate partnership ended badly due to poor structuring and lack of governance. 

Since you already owned the land, I would suggest investing into entitlement and sell it at a higher price since you don’t have carrying cost concerns.

Investment Info:

Large multi-family (5+ units) other investment.

Purchase price: $580,000
Cash invested: $1,200,000

Ground up 7 unit apartment complex in LA

What made you interested in investing in this type of deal?

We been in the area since 2015 and very familiar with the market. The project’s number makes sense for development.

How did you find this deal and how did you negotiate it?

Wholesaler

How did you finance this deal?

Cash

How did you add value to the deal?

Ground up development

What was the outcome?

Still working on it

@Ellie Perlman

My 2cent on #2 (Appreciation) is only count on it when you are performing value add. The ARV would be the key factor of extracting your CAPEX thru refi to boost your CoC or ROE.

@Greg Barrett

Where did you get the data? Do you have more detail ones such as YoY and volumes? Would be interesting to compare it by the regions.

your ROE is 1.2% based on your $300/m free cashflow, which is equivalent to a CD rate.  Appreciation won't come in the next few years as we are struggling through the pandemic. I would say free up the equity and looks elsewhere. Plus $300 a month of FCF doesn't offer that much cushion and buffer against any tenants skipping rent.