Closed My First Buy & Hold in Los Angeles

[Ryan Rodriguez]

BiggerPockets Family, 

I want to share with you all a quadplex deal I closed back earlier this year in East Los Angeles.

About the Deal:

Property was listed on the MLS for $615k. Each Unit was 700Sqft with 1 bed/bath. The property also had a detached 4-car garage and a laundry room. I initially put in a offer for $630k, but was outbid by another all cash buyer and placed as back-up offer. A week later, the first offer fell through and they accepted my offer! When I first visited the property, I can tell the owner had neglected to keep the property updated and let the tenants run things. The owner was 80 years-old and had the property all paid off(dealing with a very motivated seller). All units were rented well below market rent and I realized this would be a great value-add opportunity. I ended up negotiation the purchase price to $595,000.

The next day, I went knocking on each of the tenants door notifying them I was the new owner and giving them a 60-day notice for an increase in rent. I ended up having one tenant leave one month at a time. This was great for me since it allowed to renovate each unit one at a time without making me pay the entire mortgage payment each month. Overall, I spent about $40k in renovations and have brought all units to market rent. All the tenants now living at the property have been screened by me and are absolutely wonderful. I am now collecting $5k in rents per month ($1350,$1350,$1100,$1200). Currently cash-flowing $1,645 a month with a 20% down payment. My cash-on-cash return is 11.2% (which I believe is great in the LA area). I hope this deal show folks that it is possible to invest LA. I bought this property at 23 years-old working as a full-time financial analyst in Santa Monica. I also have my real estate license. Please reach out to discuss more!

Please see below the property analysis:  

[Ty L.]

Congrats and sounds like a great find.

[Ryan Rodriguez]

@Hardik Patel Thanks Hardik, will do!

[Ryan Rodriguez]

Thanks @Simon Ruiz! Very great for my parents! I plan to repay the favor to them through real estate wealth. 

The first way my license helped was that I had full access to the MLS. Would not have found the deal otherwise. In addition, as a licensee, I am able to see a lot more detail then public remarks. This helps gain a little more information on the property, which positions yourself to better negotiate and present a good offer to the seller. Also, title reps give you access to pull title reports on the properties and IMO a lot easier to compare comps. Lastly, the end commission ain't bad either (2.5%*595000) - Broker fee. Used the that money to reinvest.

[Justin Y.]

I am impressed on your first closing. I am looking to purchase my first property mid next year (2018) and I was hoping if you can share your excel sheet and evaluation. Furthermore, I also have my excel sheet setup and I am happy to share it with you as well.

I notice we have very similar backgrounds - I just recently graduated and I am working full-time in the financial industry. Furthermore, I just started my real estate courses where I am aiming to get my real-estate license.

After reading your post I do have several questions for you:

1. Since you also live in the LA area, did you hire a property management to look after the quadplex?

2. Personally, I don't have anyone in my family who can help me through the process financially. I was wondering if you received help from family financially from the down payment, closing cost, to the cost of fixing the property?

3. Was location a factor to you when purchasing the quadplex?

4. I notice you mention that you got your real estate license since you were 19 and you also found the property through MLS. Did you have to pay a monthly or yearly subscription to the real estate brokerage company to maintain your access to the MLS?

Again, Thank you for sharing your story and I hope we can both accomplish our freedom number soon!!

[Account Closed]

Can you elaborate on how the license helped you in this deal? Congratulations.