We’re checking out a 4plex we’re in escrow on today. It’s my kind of deal: Cheap on a $/sq ft basis Parking Outdoor space Up-and-coming area Just like everything else we buy, it’s going to be a hard slog to turn it into the kind of place that people will pay a lot of rent … Continue reading “Inspection day”
Category: Buying
Avoid the 5 biggest mistakes LA apartment investors make
Here they are, in no particular order: 1. Misunderstanding rent control – You’d be amazed at how many inquiries I get from people whose big idea is to buy a building with cheap rents, fix it up and raise the rents. Good idea, right? Not if you don’t have a plan for relocating the tenants. … Continue reading “Avoid the 5 biggest mistakes LA apartment investors make”
A plug for Mt. Washington
This blog usually covered apartment buildings. Today, however, I want to say something about single family homes. Generally speaking, I’m not a fan of single family homes as investments. Buying one is really a consumption decision and you really ought to do it only when you’re very confident that you will be able to generate … Continue reading “A plug for Mt. Washington”
A stupid email I get all the time
“Hi, I need a POCKET LISTING for an apartment building. I have a CASH BUYER with $x,xxx,xxx to spend. Need a high cap rate in a good area. Let me know if you have anything. Thanks, XXXXXX XXXXXXXX” So, let me get this straight: You’re looking for an off-market opportunity to buy something in a … Continue reading “A stupid email I get all the time”
What happens when you do a bad deal?
One of the saddest things about my business is watching people do deals which are undeniably stupid. Want an example: How about paying 13x rent for a 5+ unit deal with a bunch of leverage and no plan for removing the tenants / raising the rents? If you do a deal like that, here’s what … Continue reading “What happens when you do a bad deal?”
A thought about the Metro
I think properties near Metro stations are generally undervalued. Why? After all, even if you live near a station, it’s relatively unlikely that you will work near one, too. That fact dramatically limits the Metro’s value to most people in the city. But the trend for Metro is positive: More lines and more stops over the … Continue reading “A thought about the Metro”
The easiest way to make money with apartment buildings
Follow this recipe: 1. Choose an area in Los Angeles which is currently marginal but showing strong signs of improving 2. Find a building in reasonable condition 3. Purchase it at a price which is less than or equal to 11x the total annual rent 4. Keep your leverage reasonable – like 70% LTV maximum … Continue reading “The easiest way to make money with apartment buildings”
What’s the best way to buy with a small downpayment?
Today’s NY Times has an interesting comparison of 5% down FHA and conventional loans. (For more about the basics of FHA loans, read this.) It turns out that the increased mortgage insurance premiums currently demanded by FHA make FHA loans a worse deal than 5% down conventional. If you’re considering buying with little money down … Continue reading “What’s the best way to buy with a small downpayment?”
Know anyone we can help?
Have been mulling over an idea for a few months that I’d like some feedback on. Here goes: I would like Adaptive to help one deserving family which currently rents become owners of a small apartment complex. Here’s how it would work: We identify a family to help We help the family find and offer … Continue reading “Know anyone we can help?”
State of the market
I’ve only been doing this for five years or so. I jumped in in 2008, meaning that I’ve never seen a normal, healthy, strong real estate market in Southern CA. I think I’m seeing one now, and I have to tell you: It’s not pretty for multifamily investors. Go check out the apartment buildings listed … Continue reading “State of the market”