We walked from away from a deal yesterday and it still hurts. This building looked like a winner for us: Huge units, high ceilings, incredibly cheap price, tenants who we thought we could buy out. But there wasn’t any parking and the neighborhood was improving but not great. There’s an art to evaluating these kinds … Continue reading “Walking away”
Category: Due Diligence
Due diligence questions
The due diligence period, also called the contingency period, is the buyer’s chance to learn everything he can about the building before making a decision about whether to buy it. If you don’t ask your questions during the diligence period, and something comes up later, it will be too late to back out. Remember: You’re … Continue reading “Due diligence questions”
Right now, you need soft eyes
There are no perfect deals right now. Think about it: People don’t generally sell perfect buildings where everything is going great. They definitely don’t right now, when the alternative to owning the building is to hold the money in their money-market account earning 0.25%. Does that mean you shouldn’t buy anything? No. There are definitely … Continue reading “Right now, you need soft eyes”
What’s a prelim?
When you buy a property, you want to be pretty damn sure that you’re getting clean title. In other words, you want to be sure that no one else has any claim to the property you are acquiring. During the inspection period described in the purchase agreement, the buyer has the chance to review and … Continue reading “What’s a prelim?”
What an inspection report looks like
Just had an inspection yesterday on a property and realized that most buyers are unfamiliar with the whole concept of an inspection report. An inspection report is a long pdf produced by a professional inspection firm that you hire to help you perform your physical inspection of a property you are considering buying. Depending upon … Continue reading “What an inspection report looks like”
What you do before buying land for development (part 1)
Little known fact: Under federal law, if you buy a parcel of land that’s polluted, you become responsible for cleaning up the pollution, even if you weren’t the one who polluted it. I once was in escrow to buy a huge, sweet parcel on Sunset to develop into apartments. It turned out to be the … Continue reading “What you do before buying land for development (part 1)”
Why you always ask for a detailed rent roll
If you spend a lot of time looking at apartment building listings on the MLS, you will eventually notice an extremely annoying trend: Brokers who list the total amount of rent generated by the building but not providing a detailed, unit by unit breakdown. Why do they do this? It’s probably some combination of laziness … Continue reading “Why you always ask for a detailed rent roll”
Why you need to request estoppels on every apartment deal
Section 9C of the current California Association of Realtors Residential Income Purchase Agreement (“RIPA”) contains a check box which the buyer must check in order to require the seller to provide tenant estoppels as part of the sale process. Make sure you check it. (And if your broker doesn’t check it for you, get a … Continue reading “Why you need to request estoppels on every apartment deal”
How I feel about Frost / Chaddock invading Sunset Junction
I, for one, welcome our new mixed-use overlords. You’d think I’d be pissed about a developer coming into Silver Lake and building 300+ rental units. After all, the rules of supply and demand would seem to indicate that this new competition will drive down the rents on my units in the area. But I’m thrilled … Continue reading “How I feel about Frost / Chaddock invading Sunset Junction”
How to value a building that needs work
Rarely do you come across an apartment building in Los Angeles that’s in truly mint condition. Everything’s got a few dings on it; that’s just part of buying older buildings. For those normal, everyday buildings, you figure out a range for the multiples of annual rent in the neighborhood, multiply the annual rents times the … Continue reading “How to value a building that needs work”