Got some cash and looking for a strategy? Here’s one I like but don’t do myself: Buy a REO single family home on a 6,000 sq. ft. lot zoned R3 or RD1.5 all cash for maybe $300k Rip it down Build 4,000 sq ft fourplex made up of 4 2 bed / 2 bath units, … Continue reading “Here’s a worthwhile strategy”
Author: Moses Kagan
Rising rents
We’ve just turned over a few units in properties in Silver Lake and Echo Park and, boy, is the rental market heating up. We posted a studio at one property in south Silver Lake right by the border with Echo Park for $1,300 (up from $1,200, I think). The unit and the building are both … Continue reading “Rising rents”
Learning from Larry
On Thursday, Larry R., one of the Kagansblog regulars, taught me a ton about South LA real estate. Larry’s an LA native who grew up on 111th St, which is a hell of a lot farther south than I’ve been in the city (besides going to the airport). Because he grew up down there and because … Continue reading “Learning from Larry”
Who to bring with you to an inspection
Once you get a property under contract, the clock starts on your physical inspection period (also called the “due diligence” or “contingency” period). This is the period, usually 10-14 days, during which you check the physical condition of the property. But most buyers aren’t experts in looking at all of the systems (foundation, roof, electric, … Continue reading “Who to bring with you to an inspection”
Frank McCourt did nothing wrong
Think of the Dodgers like an investment property. McCourt bought the property in 2004 from a bad owner (Fox) and dramatically increased the revenue. As revenue increased, the value of the property increased (cash-generative assets are valued at some multiple of the cashflow they generate; increase the cash, increase the value). The increase in value … Continue reading “Frank McCourt did nothing wrong”
Avoid problems with the Los Angeles Housing Department
Pro tip: You don’t want to buy a building, only to find yourself in the middle of a war with the Los Angeles Housing Department (LAHD). Under the standard California real estate sale contract between seller and buyer, the seller has a duty to disclose any on-going issues that may effect the value of the … Continue reading “Avoid problems with the Los Angeles Housing Department”
How leverage (debt) magnifies outcomes
You heard me say in numerous pieces that leverage (debt) magnifies outcomes. What do I mean by that? Well, let’s examine two identical fourplexes with different capitalization structures. First, here are the operating details: Acquired for $600,000 Annual rents of $60,000 Assume costs of 35% or $21,000 Annual Net operating income (rents minus expenses but … Continue reading “How leverage (debt) magnifies outcomes”
In defense of gentrification
We spent the last 3-4 years on the front lines of gentrification in East Hollywood, Silver Lake and Echo Park. We’ve paid around 65 tenants to move out of rent controlled apartments so that I could renovate and raise the rents. When I tell some people this, I can see from their facial expressions that … Continue reading “In defense of gentrification”
Good reading on zoning and sprawl
Happy Monday! Have recently read two great, short pieces on the effect of terrible zoning on cities, in general, and LA, in particular: David Leonhardt’s interview with Matthew Yglesias in the Times. Yglesias talks about how parking requirements and artificial limits on density conspire to drive up the cost of housing (and, thus, living) in … Continue reading “Good reading on zoning and sprawl”
Why do people hire dumb brokers?
Buying a home or income property is a big deal. You’re committing a chunk of your (or your family’s) hard-earned capital, plus taking on an enormous amount of debt. All kinds of things can go wrong, from structural problems, to tenant issues, to badly structured loans, to city inspection concerns, etc. So why do people … Continue reading “Why do people hire dumb brokers?”