All Forum Posts by: Allan Glass

Hi @Eric Coury sounds like you've found a fun project.

@Tyler Flagg thanks for the mention, but I'm sure your pay grade and knowledge base is well within the limits to tackle this type of project...

To begin, Eric you should check with the city planning department if it's also located in Cumberland you'd likely want to call Kathy Morris or Joshua O'Neill.  When you call make sure to have all the parcel information (address / assesor parcel number) available so they can properly identify the site.

You'll want to know what the current zoning is for the property and what uses will be allowed "as of right."  Next, I always ask if the city has any special conditions for that parcel or the area (sometimes called overly zones) that may limit what you can do on the site, or in some cases may allow for special uses not typically allowed in other areas.

Once you have a general understanding of what the planning department would consider acceptable it's time to assemble a team that can help you sort through a plan of attack.  The first person should be an architect that is versed in the type of project you'd like to build (eg, adaptive re-use of an existing building, new construction apartment or commercial, or mixed use).

...all this to say you've got to figure out what you can do and what you'd like to do, before you can financially analyze what would make sense to do.

This should keep you busy for the time being.  Keep us posted as you make progress.

Best of luck

A

@Felipe Diaz,

I'd strongly advise you to read what @matt slakey 

@Matt Slakey suggests above twice, and let that sink in.  You can accomplish your goal without locking yourself into a 15 year note by making extra principal payments on your current note.  This allows you to payoff the note faster and gives you the ability to scale back should you find the need to do so in the future.

Play with this calculator to find out how much faster you can pay down your note with extra principal payments.  

Borrowing the money in a HELOC to purchase a second investment property would get you to your second goal. Just make sure to invest wisely and anticipate the costs of ownership so your investment doesn't become a nightmare..

Good luck!

A

Nothing has to be done a particular way, paying buyer fees for a good deal can make your offer more competitive. 

Good luck!

Hi @Anthony E Russell

There are several small lot comps to give us direction, none I can think of in Hancock Park, but several in areas surrounding that should give you some direction.

My position is that they will sell somewhere between the condo values and SFR values for the area.

Good luck!

A

Hi Everyone,

10-20 properties per month is our maximum capacity, need more inventory and buy multiple properties per month.

All real estate fees will be protected and purchases will be either cash or credit line acquisitions.  

Please do not send us listed properties on the MLS, thanks.

Properties MUST be in City of Los Angeles only and have multifamily zoning of R2 or greater.  

Specific target areas are:

• South of Pico Boulevard
• North of the 91 freeway
• East of La Cienega Boulevard
• West use city Boundary

Specific Property Characteristics:

• dilapidated properties , the worse condition the better
• undersized properties a plus (eg. under 1,000 SF existing building)
• any multifamily zoning ok, minimum R2 lots
• minimum lot size 5,000 SF
• poor / small unit mixes a plus for us (eg. studios, 1br, or 2br units)
• rent control ok
• any type of distressed property ok
• boarded shut / burned buildings ok

Buyers have 20+ years experience in the Los Angeles market in this same market and product type.

Please PM, email or phone me with any potential leads.

Appreciated!  

Best of luck to everyone,

A

@Joseph M.

We have sold one project pre-development to an affordable housing developer.  The site is right on a transit stop and better suited for higher densite.  64 apartment units vs. the 13 townhomes we could have built.

Second project is currently under design in the mid cities / West Adams area of Los Angeles.  We expect to build 8 units on the site.  Expect to break ground by end of 2015.

We are under contract for out third project in the Melrose area, and if all goes well expect to close within 60 days and begin design for 2 side by side live/work townhomes.

Good luck to the rest of you!

A

Hi again @Gustave Stroes,

I understand your points and agree selling can be an option. I understand your position more clearly now that I know this is not your only asset and not your whole "nest egg."

I also understand your point about finding more return on the money invested in the BH house by moving that equity into units that generate more cash flow, and agree that would be a smart move on your part, especially since your income driven at this point in your life.

However, the point I'm trying to make is that you don't have to sell your "blue chip" asset to access the equity.  If you can qualify for a cash out refi, you can avoid two things - the tax obligation you'd get on sale and/or the pressure of finding a replacement property (1031) in short order in a very tight market.

By speculation in the comment I mention above, I mean chasing return into more speculative markets.  I agree residential rental properties are one of the least speculative segments of the RE market, but where I've seen investors go wrong is to sell A area assets towards the top of the market and replace them under pressure in B or C markets in order to chase income.

If you can borrow the equity and have your BH tenants pay for that borrowed equity in the form of rent, you can use that free leveraged equity to find return elsewhere (B and C markets).  If a market were to collapse like it did in 2007/2008 you wouldn't be fully exposed to the larger swings of the B and C markets and could use the BH property as a hedge.

I'm not a fan of selling A assets, particularly when your basis is low (which I assume is your case...).  If you can achieve the same goal with leverage, especially cheap leverage like we have now, it seems to me the better choice.

Again, best of luck on decision.

A

@Gustave Stroes I understand your answer but still question your strategy.  You're chasing upside without concern for mitigating your downside.

A single family home in an upscale and strong demand neighborhood like Beverly Hills is like a blue chip stock in your retirement portfolio.

I understand that it does not appreciate as rapidly as a growth stock and I also understand it does not yield dividends equal to a more speculative growth investment, but, when the markets turn, which they always do, It's more likely to retain it's value and provide you a hedge against the risk of more speculative investments.

I'm suggesting that by abandoning a solid and less risky investment in order to put all your eggs in a more speculative basket you're giving yourself a better chance of a larger income stream and perhaps better short term appreciation, but you are also risking all of your equity in a more speculative market by buying in less solid markets.

To me a smarter, safer move would be to retain a solid blue chip asset that pays for itself and perhaps also pays for the additional equity you could borrow against the asset (new loan or credit line), and then re-invest that borrowed equity in more speculative investments if you wish to generate additional cashflow.

If you've outspent yourself and need to generate cashflow quickly for another reason we haven't discussed here I understand that sometimes decisions must be made on a shorter time horizon.  However you mentioned your wife views this purchase as her/your retirement nest egg.  I would be less willing to cash in the blue chip investments in my retirement portfolio to speculate for short term cash flow.  I would however be willing to use them as collateral, borrow my seed money (especially if it was non recourse debt) and take leveraged risks for additional cash flow. 

@Gustave Stroes

Another thought to consider...

Why wouldn't you refi your current asset in the 90210 and use the cash out proceeds (or credit line) to reinvest into another property.  That money would not create a taxable event and you wouldn't be under the gun to replace a good asset in a strong market.

One of the big mistakes I see investors make is selling one good asset to chase cash flow. Another of the more commonly heard regrets, "I should have never sold...."

Best of luck and keep us posted on your progress.

A

@anthony caleca

If you add 20% contractor profit and 10% contingency to your hard costs they feel more in the ballpark. This still does not address your soft costs. 

Regarding your end values I have no way of knowing without knowing where the property is located.