All Forum Posts by: Antonio Scerra

Good Day All,

I have been dormant on here for a long time now and regretfully so. A couple years ago I created a post regarding a property I was interested in and I received some great information by many of the members of this community. I am once again looking to get some information regarding a purchase and I look forward to the responses from members of this community. So without further ado, here's the current situation.....

There are 2 adjacent properties located in San Pedro, CA that are being sold as 1. The only value of the properties is in the land. Both structures on the property need major repairs. My intention is to live on the property while making the necessary repairs. I was informed by a loan officer that I might be able to use an FHA 203K loan in order to make the purchase. The 203K loan seems like a good option but I have a few questions that have yet to be answered and I figured I could reach out to the BP community and see what response I get.

What I want to know is this:

1) Can I live on the property while the repairs are being made?

2) Is it possible to live in the structure that is being repaired? 

3) Is it possible to purchase a small Prefabricated home and have it built on the property so that the main structure can be repaired?

4) Is there a timeline for the repairs? 

5) Where can I get the most up to date information regarding 203K loans?

This property will be my home and it is not for investment/ rental income. Any and all information regarding this topic will be greatly appreciated. My intention is to purchase this property and live on the property while the repairs are being made. Even if that means living in a temporary structure (prefab home, mobile home, RV, etc…). 

Thanks in advance! 

Just like @Jennifer Stutland said, the financing aspect is HUGE, along with the type of property. 

Is she willing and able to put down enough on a property in order for it to provide positive income on a monthly basis? Is she looking to "house hack" a SFR or does she want a 2-4 unit type property? What type of budget is she working with and how much of a loan would work in her favor?

I will agree with @Phil Hong in regards to finding a property in SP that can POSSIBLY provide some cash flow, BUT it is likely to be located in the less desirable part of town. With that being said, most of those properties are above 450k and the options are few and far in between.

As is common for most of the coastal LA area (including Torrance), appreciation has a greater impact in these areas compared to other areas further inland.

Home prices in these areas today, in most cases, are higher than they've been in the past decade or so.

Hope this helps!

@Jack Gibson thanks for the response. I feel that my situation would be better suited for long term gains as opposed to cash flow. I am interested in multifamily properties in the Los Angeles area and to start off I would live in one unit and rent the others. I've seen an average CAP of 4-6% with the properties I've looked at, and that's with 0% down (va loan). Anyway, thanks again.

This information seems to be nice and simple. Pretty straight forward. So in this case, are these numbers good? If not, what would good numbers be considered? Is there a recommended CAP Rate and annual COC percentage that an investor should try to strive for?

I know it has been a while since this thread was last updated, but maybe someone here can help me out.....

I'm looking to purchase a triplex that falls under LA rent control laws. It has a SFR in the front and a duplex in the back. The duplex consisted of 2 units that were 1 bed/1 bath each. At some point the duplex was converted into a single 2 bed/ 2 bath unit. All of the documents show that the property was a triplex and all of the plumbing and electrical is still set up in the rear unit so that it can be converted back to 2 units.

My question is this...... is there anything that says I cant evict the tenants so that I can convert the single unit back to 2 units? Doing this will increase the monthly income substantially as well as increase the properties value.

Do the same relocation rules apply?

Also, what types of fees should I expect if I am able to do the conversion? Any legal document fees or penalties?

Thank you in advance. I hope I wasn't too vague and if I need to clarify anything please feel free to let me know.

Thank you for your input @Chris Mason. One thing I told the selller was that if he was interested in learning about subject to transactions, that I could gather up any information needed or he could  ask his agent about it. 

I think he asked his agent about it  and his agent felt.....threatened? I don't know. Just the agents response to our conversation didn't seem to make sense. 

Thank you for the blunt and honest response. It is truly appreciated. 

Can you please clarify when it is ok to speak to the seller? I have listened to many podcasts and read many posts about contacting the owners of properties in order to find and acquire good deals.

When does it become a violation of a standard practice?

As an aspiring agent and investor, should I expect more lessons like this to occur via trial and error?

I am very motivated to learn everything I need to in order to pursue this career and investing path.

Hello BP!! I am writing today in regards to a listing agent that got upset because I contacted the seller directly about their property. I apologize in advance for the long winded post, but I want to paint a clear picture.

The backstory goes as follows.... I was recently in escrow with the seller and I decided to cancel because of a few things that the seller was trying to change in our contract. This involved delivering the property with tenants in place at close of escrow (instead of it being vacant), and not paying for relocation fees. After consulting with the BP community, an attorney, and my agent, I decided that it would be best to walk away from the "deal."

From the time that we canceled escrow I've been thinking about how I could possibly make this deal work. The original idea was to move into 1 of the 3 units and use my VA loan in order to acquire the property. We canceled escrow mainly because the seller was not going to be able to perform as stated in the original contract, and given that the tenants weren't necessarily cooperating, we decided not to risk it. I've read a lot about seller carryback or "subject to" purchases and I decided to give it a shot.

I had previously spoken with the seller regarding the fact that HE wanted to cancel escrow because of what he had learned about rent control and relocation fees for his current tenants. I still had his number saved and I consulted with my agent (who is also a relative of mine) about whether there was a problem with me calling the seller regarding possibly doing a "subject to" transaction (I wanted to keep my agent in the loop and not overstep any boundaries). At this point there were no contracts in place and it had been about 2 weeks since we cancelled escrow. He had no problem with it and so I contacted the seller.

The text message I sent the seller goes as follows, "Good afternoon Joe (fake name). This is Antonio S. We recently cancelled escrow with you regarding the property on S.C. I am still interested in your property and I would like to ask you a couple questions. Please call me at your earliest convenience. Thank you for your time.

He called me shortly afterwards and we talked about possibly conducting a "subject to" transaction. He mentioned that he was more interested in a traditional sale and after speaking for about 20 minutes we left off with me wishing him luck on his sale and him saying that he will keep my offer in mind. It was a very polite and professional conversation. We left off on a good note.

A couple hrs later his agent writes a pretty nasty message to my agent saying to tell me to never call his seller again (he called me), and that the seller is very unhappy at this point, and that I should submit another offer if I'm still interest and follow the proper protocol.    

So, was I wrong for reaching out to the seller?

Is there a protocol that wasn't followed?

Might the agent be upset about possibly not making a commission on selling the house if it is a "subject to" transaction?

Might the seller actually be upset (very hard to believe given the conversation we had)?

I am just starting out in Real Estate Investing and I do not want to get off on a bad start.  

I want to text the seller back with an apology stating," I apologize for upsetting you during our conversation. Your agent made it clear that you are both very upset."

I truly feel that the agent is reacting this way because he wants to make the sale, but now the seller is inquiring about this other possible route. I almost feel like the listing agent is lying about the sellers reaction. If only you could've heard how polite and professional our conversation was you might understand why I feel this way.

Any help? Advise? Similar situations?

Thanks!!!

I did factor everything into the total monthly cost. The rental property calculator helped a lot and I was able to make a better decision based off of it. Initially I was basing my numbers off of PITI and a total of 266$ per month for utilities and maintenance. The 266$ came from multiplying the livable square footage of the house by 14%. Whatever that equals should be a good estimate of monthly cost for utilities and maintenance (according to VA guidelines). When I calculated everything else that was available on the bigger pockets rental property calculator I came up with worse numbers than I wanted to see. It helped me make my final decision to cancel the purchase (as well as all of the possible and likely issues I would've had because of the tenants and rent control laws).

Yeah, San Pedro isn't for everybody. But some of us call it home. You have some very valid points, and thank you for input. I am very familiar with the fireworks and the longshoremen, and the rest of how San Pedro operates. It's not like many other LA towns/ cities. I'm just glad that I was able to walk away from a potentially catastrophic 1st home purchase. But, I will continue to look for what I want in San Pedro because I am confident that I can find it with some persistence and dedication.