Rookie mistake today. Saw a deal on the MLS priced at $299,000. Looked pretty good, so, without waiting to talk to the listing broker, I threw together an all-cash offer for $260,000 and sent it over, figuring we’d settle at $280,000 or something. Got the following email back from the broker: “Sold for 340k just … Continue reading “Bad miss”
Category: Buying
Wading through crap
Regular readers know I deal mainly in apartment buildings between 2-20 units. In doing so, I run across all kinds of issues, including missing financial records, bad leases, lack of estoppels, un-permitted construction, city violations, etc. Many of these problems just don’t exist when you deal with larger assets. That’s because larger assets tend to … Continue reading “Wading through crap”
Deadlines and documents
When we write offers for apartment buildings, we usually want a 17-21 day loan contingency. The concept is to give us some assurance that we will be able to get the loan we want before we irrevocably commit to doing the deal. Pretty standard. But lately, I’ve been running into the same problem over and over … Continue reading “Deadlines and documents”
Why I don’t love 1031 exchanges
We’ve talked a bit about 1031 exchanges before, but here’s a re-cap: 1031 is a tax loophole designed to allow a seller to avoid paying capital gains tax on a property when he sells To do so, seller sells his property and has escrow transfer his equity to a so-called 1031 facilitator Then, seller has … Continue reading “Why I don’t love 1031 exchanges”
Lessons from the bust
We finished selling the Better Dwellings portfolio in December. I have been dealing with getting all of the cash out to the investors, closing the entities, providing a final accounting, etc. This has, of course, occasioned some thinking about our strategy during 2008-2010, when the world was falling apart. Here are some of the lessons … Continue reading “Lessons from the bust”
FHA deals are still possible (I think)
A very good agent who works with me, Marcus, got a client of ours into an FHA deal on a fourplex last week. Does the property need work? Yes. Is it in the best location in the world? No. Is the buyer going to make a lot of money on the deal? Almost certainly, yes. … Continue reading “FHA deals are still possible (I think)”
Attack of the killer Seller Addendum
Recently, I’ve noticed a new trend rearing its ugly head in apartment deals in LA: the Seller Addendum. What’s a Seller Addendum? It’s an addition to the normal sale and purchase agreement that severely limits Seller’s liability during and after the sale process. For example, the Seller Addendum might limit damages to which Buyer is … Continue reading “Attack of the killer Seller Addendum”
Sacramento learning
Am writing this from the airport in Sacto, waiting to head back to LA to see Lucy and K-Man and then get back to work. Spent a lot of time today touring a very large apartment complex for some clients interested in buying it. We did a very thorough walk-through, which will, I think, result … Continue reading “Sacramento learning”
Going to Sacramento
Jon and I are going to look at a few large apartment complexes up in Sacramento this evening / tomorrow. We’ve never done 100+ unit deals before and we’ve never done anything outside of our little area, so it’s going to be kind of interesting. Here’s the question I keep turning over in my mind: … Continue reading “Going to Sacramento”
Shoot first and ask questions later
There are a lot of buyers chasing deals right now. It feels like everyone woke up after New Year’s, realized they’ve been earning 0.1% in their money market accounts, and decided to buy apartment buildings. Many of them are doing really stupid deals, ones where I can guarantee they will earn basically no return for … Continue reading “Shoot first and ask questions later”