Back in the 1980s, Japanese companies flush with cash acquired a ton of office buildings (and maybe hotels, too?) in LA at very high prices. In the recession of the early-to-mid-1990s, they got their asses handed to them. Now, there is a wave of Chinese developers flush with cash buying up office buildings, hotels, and … Continue reading “History repeating?”
Category: Buying
The math behind discovering a new neighborhood
As prices continue to rise for the kind of beat-up, badly managed assets that are our bread-and-butter, we are spending more time looking at new neighborhoods. Am I going to tell you which ones I’m focusing on? No, because a bunch of people who compete with me read this blog. But I will share with … Continue reading “The math behind discovering a new neighborhood”
An effective wealth building strategy
One couple, two incomes. Live on one, save the other. Buy first 4plex FHA. Live in one unit, accelerating savings. Accumulate downpayment for building #2. Buy building #2 with 25% down. Resist temptation to increase spending; saving accelerates due to income from building #2. Buy building #3. Rinse. Repeat. Assuming we’re talking about 4plexes that … Continue reading “An effective wealth building strategy”
On being aggressive
I spend a lot of time on this blog talking about preventing bad things from happening on deals. That’s what due diligence is all about: Trying to identify all of the things that could potentially go wrong on a deal and then either ensuring they do not or else planning to mitigate the negative consequences. … Continue reading “On being aggressive”
Why I (almost) always ask for retrofit
In Los Angeles, the law requires that every building that changes hands needs to have low-flow toilets and shower-heads installed in the bathrooms (to preserve water). The law is enforced by means of a single form that is required to be completed prior to close wherein a contractor, licensed plumber or real estate agent attests … Continue reading “Why I (almost) always ask for retrofit”
Creating an arts space
Recently, I’ve been mulling the idea of buying an industrial building and cutting it up into affordable artist studios. I have observed that these kinds of deals can work pretty well if you get the property very cheaply and keep your renovation costs low. You obviously also have to be in an interesting area… but we … Continue reading “Creating an arts space”
The difference between a loan broker and a direct lender
In our business, we frequently have clients come to us with pre-approvals from direct lenders like Bank of America, Wells, etc. The clients love the banks because they promise high loan amounts and low interest rates. And, on simple deals where there are no real issues with the borrower or the property, the direct lenders … Continue reading “The difference between a loan broker and a direct lender”
How to negotiate a price reduction
I really, really hate chipping price during escrow. Do you know what I mean by “chipping price”? It’s when the buyer, after doing his diligence, comes back and requests a price reduction from the seller in exchange for removing contingencies and moving forward with the deal. Why do I hate it? I do an enormous … Continue reading “How to negotiate a price reduction”
Rent vs. buy
This article in the Times is worth reading. The argument is basically that we’re entering bubble territory in single family home pricing in the main coastal cities. I think the rent estimates they’re using may not reflect the rents that are actually getting paid. That said, when I see small houses on small lots in … Continue reading “Rent vs. buy”
When a foot isn’t a foot
I’m mostly a price per sq foot buyer. Because I always renovate, I’m not very interested in the income of the building prior to acquisition. I am, however, extremely interests in the structure I am buying, since that structure is the raw material we will work with to produce the eventual product we are selling: … Continue reading “When a foot isn’t a foot”