All Forum Posts by: Alvin Uy

Ive always found these threads about appreciation vs cashflow to be very entertaining.  Personally, i always invested for appreciation over cashflow.  I never minded putting a bigger down payment to offset short term negative cashflow... its always worked out for me.

When I started investing in RE over 16years ago in my home town Eagle Rock ( Los Angeles), a retired gentleman (who owned over 50+ properties ) told me that “real estate values will always double every 10yrs”.    This idea was something that stuck with me and I still believed in that idea to this day.  The crash pf ‘08 caused a huge dip in the value... however, it bounced back pretty quickly.  Some of my assets even tripled in value since I purchased... and all are cash-flowing significantly now.   

Every market is different.  In Los Angeles, there’s a huge housing crisis.  My rental units did amazingly well during the worse recession rent-wise....(I was actually even raising rents during the recession because housing demand was so high). So for me, it’s a no brainer to keep buying even if it is at the top of the market.   I am more actively purchasing and investing more lately than I have ever had the last 10yrs. 

Definitely beneficial.  Unfortunately, Most new investors are too shortsighted when starting out.  Employing the right strategies in the right time of the market cycle is crucial as a RE investor in my opinion. 

Having experience a few RE market cycles myself for the past 16yrs... I know there's never a one size fits all investing strategy.    

I highly recommend a book I just read recently to newbies and experienced investors alike, "Recession Proof Real Estate Investing" by J. Scott.   Its an excellent book and is totally on point with what works in which part of the market cycle.

Its always good to meet another Los Angelino on this site.  Welcome!

Im focused on these areas of NELA as well.  I own 6 rental properties (11 Doors) in Eagle Rock / Mt. Washington/ Glassell Park... and a couple more in the works.  Definitely not easy to find them these days since these are super hot area and lots of competition for the same listings (including wholesale listings).  Far and few in between are good deals these days if you are looking to flip.  If you are going for a long term hold as a rental then you will need to make sure you run your numbers.  Your numbers will be tight for lipstick flips... You will need to build out to create added value but that's a costly endeavor so make sure you have the financial bandwidth to do so.  Im getting into "new construction" for this very reason.  Like what others above have said, start by building your network to find the deals.  Personally, Im starting to look outside of Eagle Rock, Highland Park, Glassell Park. 

Sometimes you have to dig deeper than just walking the site... especially with wholesale deals. Just understand that most wholesalers are inexperienced when it comes to rehab costs. In Los Angeles, NW stopped posting rehab costs and ARV on their listing for this very reason.

Walking the site is my last step before I put any offers. For me, I do a lot of due diligence on property profile upfront. My wife (Realtor) and I run our own comps right away so we have an unbiased ARV. Regarding boundary issues, I always look at city's building and permit first to make sure its all done with permits or not... zoning and to see if there's any open/pending violations. I even do title search to make sure its the right seller (and sometimes get an idea if property is paid off or how much debt/loan service is left). I do this so I know what Im getting into and to look for additional value added play... and if I can find ammunition to negotiate price down.

If you are not experienced walking the site, always bring an experienced GC.  They can spot big ticket items that are not easily seen beyond cosmetic repairs.   Foundation should have been easy to spot.   

Damn.. that sucks!  New Western has a bad reputation in Los Angeles as well. I heard that not just from other investors but from wholesalers who supply them with listings as well. NW typically does a high pressure fast escrow tactics... even have you bid against other investors... often double escrows... and sometimes even delayed possession. 

That said, I have just closed a 4day escrow with New Western as well.  But I am fairly seasoned investor/flipper so I knew what I was getting into... and was able to identify that it was still a fairly good deal ( that is $230K below market price)

Although, my experience went fairly smooth so far... I likely won't deal with them again.  I did not like the delayed possession tactic because it delayed my timeline to get previous owners out.  Plus I found out they made $75k margin, once I got the title recorded and saw the purchase price on record.  This led me to think they have unethical practices and they essentially robbed the previous owners of their home.  Shady Realtors... bad karma!!!  

At any case, Im not entirely sure if you can blame New Western a 100% on your loss ( in my opinion). With every deal...especially wholesale deal, you must always do your due own diligence. Never trust seller's ARV or rehab estimate. Did you buy this property site unseen?

@Brian Burke these units in CA.?

Yes, I believe conventional lenders will likely look at your DTI again when you try to refinance out of hard money loan. Note: since Hard Money lenders usually want property under LLCs... your new property is not seen under your personal name so your DTI wont be affected. However, you will need to quitclaim new properties title to your personal name before you can even refinance it out of Hard Money Loan into a conventional lender... at which point the property being refinance will then affect your DTI unless its fully rented and covers mortgage (Depending on the lender, they may require proof of rental agreement or tax return showing rental income verification.)

Please note: Please use Hard Money wisely. I only use Hard Money when buying distressed properties that don't otherwise qualify for traditional loans.... or if I know the property I buy has enough spread or have a big enough discount at purchase. Also, Hard Money lenders ( HML) may not take you on if you do not have enough experience. If they do, your rates may be on the high side 10-12% plus points. HML may also require 20-30% down payment depending on BPO. So not sure if HML is your best option in such case.

If you have equity in your triplex, try looking into HELOCs instead. East West Bank lends HELOCs on "non-owner occupied" and do not look at DTI.. its also not "full doc" application... but only lend up to 60%LTV. Rates are slightly higher... Prime+2pts... but its a good option which does not necessarily tie down your DTI..

Buy it as a “non-owner” occupied property using hard money if thats your only recourse to compete against other investors... then refinance into conventional loan after acquisition.  You can then do whatever you want from there ( though you may have to pay closing cost 2x)