Thought you guys might like to check out this video interview I did with Justin Brown.
Category: Buying
Amateur hour
Just saw a flip deal go up on the MLS that’s driving me crazy right now. The flipper bought it six months ago for $725k. He relocated one tenant, superficially renovated two units, (presumably) fixed a big foundation problem, and painted it. Figure he’s all-in for $825k or so. Now it’s listed for $899,000, presumably … Continue reading “Amateur hour”
When to ignore the cap rate
Have been looking at listings for mid-size apartment buildings today and ignoring the cap rates. Why? Isn’t cap rate the thing you should care about with investment real estate? Not when you’re working with brokers who don’t have a good grasp on calculating cap rates. Here’s an example: Looking at a 10 unit deal priced … Continue reading “When to ignore the cap rate”
Interesting deal
I’m looking at an interesting deal for someone to put out roughly $300k in cash. There’s not enough pop to make it worthwhile for one of our funds. But it’s a reasonable way to get a 6-7% / year return with a bunch of upside as the neighborhood improves (hint: it will). If you’re interested, … Continue reading “Interesting deal”
Housing for the poor
Yesterday’s NY Times Magazine had a really interesting piece on investors who buy and fix up mobile home parks. In a somewhat surprising twist, the reporter seemed genuinely to respect the investors who are, after all, providing pretty decent accommodation to people at absolutely the lowest possible rung of the housing ladder. For investors, I … Continue reading “Housing for the poor”
A deal I can’t do
I’m looking at a deal right now that doesn’t work for my funds because there’s not enough margin in it to flip or to earn the kind of yields that our investors expect. But it’s a reasonable deal for an individual willing to roll his/her sleeves up and do some work. How can this be? … Continue reading “A deal I can’t do”
How I think about LA real estate
A contact just sent me this link to an excerpt from Warren Buffett’s most recent Berkshire Hathaway shareholder letter. Buffett’s approach is pretty much exactly how I think about multifamily real estate in improving parts of LA: Pay a reasonable price, such that the yield in year 1 is acceptable Don’t put yourself in a … Continue reading “How I think about LA real estate”
Surprisingly, there are still deals worth doing
Right now, our agents have three deals in escrow for various clients. Generally speaking, these are deals in emerging neighborhoods where the in-place cashflow is reasonable and there are good reasons to think that rents can be increased dramatically over the coming years. It is not easy to find these kinds of deals, but they … Continue reading “Surprisingly, there are still deals worth doing”
When the previous buyer backed out
We get this a lot: We help a client write on a building. Someone else wins the auction and goes into escrow. The winner cancels during his contingency period. The listing agent comes back to us, offering to go into escrow on the terms we offered previously. Very often, our client gets cold feet at … Continue reading “When the previous buyer backed out”
How to value a vacant building
A friend of mine from college called me late last week with an interesting problem: He wanted to know how to value a vacant building he was considering buying. There are two good ways to think about this problem: The first might be thought of as “price per pound“, where we are looking at the … Continue reading “How to value a vacant building”