Most people think that the way to get ahead is to get a job and work hard. Their salary goes up a bit. They save a little money. They immediately go buy a house with the biggest mortgage they can get. They think the loan is against the house, but really it’s a loan against … Continue reading “What we’re against”
Category: How to
How we value apartment buildings (part 2)
In my last post, I talked about how our approach to valuing apartment buildings derives from my experience as an investment banker trying to value media and technology companies. Simply put: When you’re trying to get a sense for the value of an asset in an illiquid market, you want to use all of the … Continue reading “How we value apartment buildings (part 2)”
Amnesty for illegals (apartments, that is)
Per the LA Times (and via Curbed): Landlord and tenant groups in LA are uniting around an initiative to allow landlords to legalize non-conforming apartments more easily. Right now, if the Housing Department catches a landlord with an illegal apartment, here’s what happens: LAHD cites landlord for un-permitted unit, orders her to either get it permitted … Continue reading “Amnesty for illegals (apartments, that is)”
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”
How you know it’s time to get out of the house flipping business
Just kill me now…
All yields are not the same
Sometimes I’m guilty of throwing around yield numbers on this blog without providing specifics. I’ll say “we legged into a 9% un-levered yield” or “the cash-on-cash yield on this deal is 6%”. Some of you are probably sitting there thinking that you can compare those yields with, for example, what you can get by lending … Continue reading “All yields are not the same”
How to get started in real estate
Get a sales person license. Join a decent brokerage. Get your personal expenses under control so you can survive for 6 months without earning. Read voraciously to learn about the business. Hustle like crazy to bring in your first deal. Work your first deal as hard as you know how. Ask questions of your broker … Continue reading “How to get started in real estate”
How the price of land affects your income taxes
Yesterday, the Eastsider reported on the proposed sale of a piece of land on Temple entitled for 69 units. That got me thinking about the value of land in Echo Park and how it impacts the income taxes of property owners there. (Warning: This piece is a little heavy on the math, but it’s critically … Continue reading “How the price of land affects your income taxes”
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”