Go buy a 2-4 unit apartment building in reasonable condition, at a reasonable price, with reasonable debt. Don’t sell it, even when the price goes up. Save money. When you’ve saved enough, buy another one. Do this four times, after which you won’t be able to get another 30 year fixed mortgage. Then move on … Continue reading “What do I think you should do?”
Category: Buying
Where is the market going? Who cares?
I have no idea where the market is going? Anyone who says they know definitively and isn’t absolutely rolling in dough is bullshitting you, because, if you are certain the directions of prices in any market, you don’t spend your time talking to people in the media – you go make big bets on Wall Street. … Continue reading “Where is the market going? Who cares?”
Let a small apartment building set you free
Want to pick up on something I wrote a few days ago. I mentioned that one of the attractions for Lucy and me about buying and living in a small apartment building is that it will allow us to get by on one salary for as long as our kids need Lucy to be home. One … Continue reading “Let a small apartment building set you free”
Just missed
I was trying to buy a small office building in East Hollywood. Because it was a former gas station, we were concerned it was contaminated. I spent an enormous amount of time trying to structure a deal that would put the risk on the owner, not me. Eventually, it became clear I couldn’t do it … Continue reading “Just missed”
A testimonial
One of my agents, Bana Haffar, just closed a very difficult deal on a 4plex in Mid City for one of our clients, a very successful, busy guy who was looking to lock in a great interest rate on an income property in a gentrifying part of LA. Thought you might be interested in the … Continue reading “A testimonial”
Is it too late to buy?
A lot of people are wondering whether it’s already too late in the cycle to buy. After all, prices have bounced back up off the floor of 2009-10. For context: I sold a bunch of totally renovated buildings in 2011-12 for 10-10.5x the rents. I would get 11x all day right now, and possibly more. … Continue reading “Is it too late to buy?”
Are you an investor or a speculator?
Market prices are up across the entire city. Where you could once buy stuff for 10x GRM, almost everything is now 12x+. If you’re looking at deals now, it’s important not to get caught up in thinking about buildings relative to each other. At any time, I can tell you what the best thing to … Continue reading “Are you an investor or a speculator?”
The tenants are important
“When you’re buying a rent controlled building,” I said to the buyer during an inspection yesterday, “the tenants are at least as important as the physical condition of the building.” This is kind of counter-intuitive, right? After all, tenants come and go, but you plan to own the building for a long time. But, under … Continue reading “The tenants are important”
How to act in a rising interest rate environment
Over the past few days, we’ve been discussing the rising interest rate environment and how it is changing the real estate market. We spent a bunch of time on a strategy investors should avoid. Today, we’re going to focus on strategies that make sense in an environment where: The economy is improving; and Interest rates are … Continue reading “How to act in a rising interest rate environment”
How not to act in a rising interest rate environment
We’re living in a world of rising interest rates, which are already fundamentally changing the real estate market. As discussed yesterday, as interest rates rise, prices should fall, all other things being equal. That’s because more expensive debt means reduced cashflow and lower returns at a given price. But, all things are not equal. In … Continue reading “How not to act in a rising interest rate environment”