All Forum Posts by: Andrew Johnson

Andre Turning-Araujo If you're going to live there it's more of a personal choice. If you're investing the HOA monthly fee comes whether the unit is rented or not. You can run into "special assessments" from time to time and there's no choice but to pay them. They generally have rules and could limit your ability to rent to pet owners (not that you'd want to...but it's a limitation). I've looked at buying a group of 4 townhome style condo as a group because then I have at least a little control. Ultimately if you're in a nice area of town it's the HOA that's a killer.

Alan Smith You'd better hoped you had bought a new property or in that 30 years you'll likely need a new roof! But let's say for the sake or argument that that is covered in your scenario. The difference in positive cash-flow is that it's likely tax free (thanks to deprecation, mortgage interest, etc.) and you could use it as a down payment on a second property. At that point you'd have two cash-flowing assets that lead to then third property. At the end of 30 years you could have a portfolio of properties all generating money, all appreciating (hopefully), and all providing tax advantages.

George Genovezos You need to figure out the cost to rehab and after rehab/repair value (ARV) by using comps in the area (sale price, not listing price). The value that the assessor puts on the property improvements is relevant in no/limited rehab depreciation calculations and for property tax purposes. Other than for those two areas I don't put a lot of stock in it. $60K could be a great price or a horrible one, foundation issues are best looked at on a case by case basis.

Brian Twigg If you over-improved, sell. There no guarantee renters will treat your property as well as you. And you might end up with higher repairs because of the better fit and finish. Selling when it looks "freshly" renovated is likely an advantage for you.

Shedrick Archangel You need to build a pro-forma for any purchase. Not to mention you'll want to get an inspection. "As-is" can just be for the ease of the transaction or to mask something serious. The latter can turn $129K purchase price into $150K pretty quickly.

Tereal Wilsonn I don't really think so and I'm not sure how it would help you. They would be worth more as two duplexes, it would limit your exit flexibility, and in order go do it you might have to rezone your property. The more prudent question is why you would want to.

Jesse Kailahi Not to be nitpicky but I usually value multifamily properties based on a pro-forma from a T12 to determine a cap rate. If the units are renting for 1/2 of the market rate is the cap rate competitive at the purchase price? Or do you have to add value through rehab to get market rents which will then make the property pencil out? The reason I ask is that if rehab is the only way to get the value maybe you consider cash-for-keys so you can rehab quicker, re-rent at market rates quicker, and cash-flow quicker. If it pencils out at the current price and current rents you could take a one-by-one approach and raise rents at lease end effectively emptying the unit for your rehab to start.

Jesse Fernandez Personally, I stay out of the storefront deals. I don't know anything about attracting tenants, qualifying those tenants, if they will ask for improvements, etc. I know you can engage a broker to find tenants but it's just a different world. I own multifamily properties and it's difficult enough finding solid deals in what I consider to be my sweet spot. If I cross into a world with storefronts, have to think about foot traffic, tenant improvements, etc. I just think there are people that know way more than me. That being said, if the 3 storefronts are "brands" like Starbucks you can assume they see something very attractive about the space/location/etc.

Brenton Vandenbosch Alternative idea: buy one multifamily out of state. If you buy a 10 unit property and 1 unit is vacant you probably still cash-flow. If you have 1 SFR and it's vacant you're cash-flow negative (and not for a small amount). That being said, I doubt man people would have regretted buying in California 20 years ago due to appreciation and Prop 13. So it's not a cut and dry decision. I personally just like to spread my top-line income risk across multiple units but don't necessarily want to mess around with a bunch of SFRs which may each present their own hiccups. But this is just one investors opinion to be taken with a grain of salt.

Luke Benson I'm with Michael Tierney for many of the same reasons. More value in the improvements mean I get to depreciate a greater portion of the purchase price (tax advantage). You have more shared walls (less exterior per unit) which helps with exterior siding/painting costs. If you have an 8 unit property an 1 unit vacant you still get 7/8ths of your top line and can still easily pay a mortgage along with expenses. If you have an unoccupied SFR you've lost 100% of your rent for that month and will go cash-flow negative. There are plenty of potential advantages for SFRs but I'll let others chime in on that note.