See awesome construction pics

Adaptive finally has an Instagram account with tons of pics of our ongoing renovation projects.

The tech-savvy among you can follow @adaptiverealty for on-going updates.

The less tech-savvy (including, for example, me), can check out the pics here: instagram.com/adaptiverealty

Going forward, we’re going to document all of our on-going projects (and there are a ton!) roughly once every three weeks. So, you’ll be able to watch the progress of all of them, which I think will be pretty cool.

Beware of setbacks!

Apologies, in advance, for a fairly technical piece, but this is very important information for anyone doing remodeling in LA.

If you’re rehabbing a property, you need to be extremely careful about touching anything located in any setbacks.

What do I mean by setbacks? They are the parts of any lot in which the city prohibits you from building. Depending on the zoning, they’re typically the areas 3-5′ from the property line on the sides and 15′ from the property line in the back. In the front, the setback varies a lot, but it’s typically 10-15′.

Why is it so important that you take care before touching anything in the setbacks? In a word, “grandfathering”.

There are many properties in LA that have important features that were built prior to the imposition by the city of setbacks. These features include decks and walkways, some of which are essential for accessing parts of properties.

Because these features were built prior to the imposition of setbacks, they are grandfathered in.

The problem is that many of these features, particularly those built in the 1920s, are at the end of there useful life. They are rotted out by moisture, termites, etc. As a rehabber, you will be sorely tempted to rip them out and replace them.

Careful! If you entirely rip out one of these grandfathered features, you will forfeit your grandfathered status. You will then have a hell of a time getting the city to allow you to rebuild it, because the city will hold you modern codes which require you to avoid building in the setback. Getting approval to do so would involve zoning variances, plan approval, etc… not something you want to go through.

So, what’s the solution? Instead of entirely ripping one of these features out, pull a permit for “replacing termite-eaten wood”. Then, replace only the worst areas, leaving the rest, and get the permit finaled. Later, you can repeat the process if you have to.

Side note: Can you see how insane the above situation is? The city is basically incentivizing you NOT to replace potentially dangerous decks, etc… a recipe for unnecessary injuries / death. Instead, they should change the rule to allow you to replace grandfathered features without going through plan-check so long as you do not expand the footprint.

Some stats on our business

Jon and I are hiring a photographer to go back and document all of the buildings we’ve renovated.

She asked for a list, so I went back through my records to produce one.

Thought you would be interested in the results of my research:

  • Completed gut-renovations on 25 buildings totaling 156 units
  • Renovations in progress on 10 buildings totaling 103 units
  • Six buildings totaling 40 units awaiting renovation
  • In escrow on two buildings totaling 16 units

Assuming all goes well, by this time next year, we will have completed 43 buildings comprising 315 units in seven years.

I’ve excluded from the list another 10 properties totaling 61 units which we bought renovated or intend to renovate at some point in the indefinite future.

Not bad for starting in this business in early 2008, huh?

 

My thoughts on the anti-gentrification march on York this weekend

So this weekend a bunch of residents held an anti-gentrification march on York Blvd. in Highland Park.

Here’s a description from the Eastsider: “A group of anti-gentrification protestors – some of them masked and waving banners – paraded down the sidewalks of York Boulevard tonight, taping “Eviction Notices” on new businesses…”

Neither I nor anyone in my immediate family have ever lived anywhere long enough to form an attachment strong enough to cause me to protest if I were forced to move. But I’ve spoken with enough people going through relocation to know that being pushed out of your home can bring feelings of sorrow, powerlessness and, for some, rage.

While I think that posting mock eviction notices on the windows of new businesses along York is obnoxious behavior, it says something quite positive about the people who protested yesterday that they were able, despite their feelings, to keep things more or less under control.

There’s always going to be disagreement about the morality of gentrification. But we should all be proud to live in a society where people can lawfully protest and where that protest can take place without property destruction or loss of life.

Are there any good deals out there?

Well, I’ve written 4-5 offers this week.

And I just stumbled across a deal that’s going to end up being somewhere between an 8.5-9.5% unlevered yield (eg cap).

Of course, these things aren’t just falling off trees.

You need some combination of superior local knowledge, skill / experience, and sufficient capital.

Inventory is definitely tight, but, if you have what it takes to add value, there are good moves to be made.