All Forum Posts by: Ben Johnstone

@Karen Margrave

What are you construction costs per sq like in Orange County? Have the changed much in the last year or two?

Hi Everyone,

My name is Ben Johnstone and I live in LA. I moved here from London 4 years ago. My acting career has been going well but work comes and goes. I've always wanted to fill my downtime with real estate but couldn't.. until now - Ive just applied for my Green Card which will allow me to work outside of acting. woohoo

Ive always been obsessed with design and architecture. Im always redesigning the interior of my place, not because it needs it but i love change, and love the process. So I'm naturally drawn to the idea of rehabbing. Im also interested in the business side of finding and structuring deals.

The type of properties I like are usually contemporary with lots of natural materials like wood and stone. Being in LA I'm luckly that there is a big market for Modern architecture and high end interiors. Ultimately Id like to be involved with new construction projects, because as i said I love the design process.

I have a rental in England that brings in $1300/no net profit. I didn't rehab it or anything just bought it at the right time and then the mortgage dropped dramatically when the market crashed. Im looking to sell this property after the summer, so hopefully by then will be in good position experience wise to do some solo projects or decent partnered projects.

Right now I have virtually no experience, lots of ideas and and doing everything i can to meet people in the industry and learn the business. Im keeping my options open with all strategies, researching local properties all the time, mostly just for experience sake, but if the right deal an the right partner(or investor) came along then Id be ready to pull the trigger(after consulting you guys on biggerpockects of course!)

Because of the area I live in (although expensive, at least i know it), the types of rehabs I'm looking at doing for the most part will be high end where I could add value in the 100,000's. I think the market supports this as some 2 bedroom house around me go for 1.5+ and are very hight end, some of them even ultra modern which I love. So I'm looking at places that are usually going to need new kitchens and bathrooms at least, and probably a restructuring of the living area/kitchen floor plan. This may seem a lot to take on at first, but for me personally its where i think i can add value, especially if i get a great deal to begin with!

Great to meet you guys, and so far the response I've had on here has been very welcoming

Take care,

Ben

Does the 70% rule still apply when dealing with million dollar homes? Or as the price gets higher can your MPP as a percentage of the ARV increase?

In most markets, when the price goes up, so does the rehab budget, therefore percentages should stay the same, as any surprise major work like a new roof is going to be more expensive on a more expensive house.

But in the market where I live million dollar houses can be small 2 bedroom bungalows that needs the same amount of work as a $200,000 house a couple of hours away. The location is the biggest influence on the price.

So for example, if the house has a n ARV of 1.5m and needs a rehab of $100,000 the 70% rule would make your MPP = 950,000. This would give the investor a profit of 550,000! Say the ARV is 200,000 off and rehab ends up being double - thats still $250,000. Even if it sits for 6 months one would still make a decent profit. I find it hard to see where using the 70% on a house win this price range could still result in a loss.

Especially in a market where its hard to find a deal would 80% be more approbate. With the same example, 75% would make your MPP = 1.025m.

This would still seem like a safe even once you account for, fees, holding costs, surpasses etc.

P.S Im a newbie so still just trying to wrap my head around everything!

Hi Everyone,

This info kind of came about from my other posting so I thought id start a new thread in the appropriate section.

Theres a multifamily unit I've been looking into as it's a block over from where I live, a bit distressed and is vacant. From some research I've found out its been owned by the same person since 1999. They've refinanced a bunch of times and since 2009 has had 6 foreclosures! However it is still owned by the original owner. Im not sure what this means, whether it didn't sell, or ssa deal was made - 2 of the foreclosure ended up being bought by a LLC owned by the original owner who then later transferred it back(??)

The first foreclosure was for 1.1m then 1.05m then 1.25m then back to 1.1m.

I walk past the house YESTERDAY and a default notice is up. They are being foreclosed on again, date set for 3 weeks with the owed amount now being 1.35m

Don't worry I'm getting to my questions...

1)Im new to foreclosures, being that in LA there rant to many deals to be had and competition is crazy, but I was interested in this place before the foreclosure. Can anyone with expertise deduce anything about their situation from what i've described. How can the same person foreclose and the bank sell it to an LLC owned by that person?

2)The place is worth about 1.1 as is, but obviously I need it at a lot less. Clearly no one bought the foreclosures at 1.1 so my guess is it will be an REO. Is this a decent assumption to make?

3) I really need this house at less than $800,000, so my main question is when it comes to REO'S on million dollar properties, will the bank take such a big loss? If they are owed 1.35m they are going to be making at least a $350,000 loss already as no one will buy it above 1m. What should i expect?

4)What should be my strategy, should I call now and try and see what their thoughts are on a short sale or just wait. The whole history of this property is just so confusing, why so many separate foreclosures and why is it still owned by the same person?!

Any advice would be greatly appreciated.

(Even at 1m this could be a great deal - I just don't have the funds)

Thanks!!

Thats really interesting. Although this particular hues was bought only 2 years ago. Maybe their other houses they've held for a long time. Or they could just be a local investor like you and me know? If was to reach my goals in a few years time i could very well have 5 houses within a few blocks under different llcs. But then why is it just vacant!

Some news on the foreclosure history house. I walked by this morning. Guess what, a default notice is up and its back in foreclosure! Turns out the amount owed now is more than the house is worth. The foreclosure starts at 1.3m and it s only worth 1m(although it had a fir closure a year and half ago for 1m and no one took it so its probably worth less) in its current state. My ideal price would be in the 600,000-800,000. So as i see it i have two options, short sale or REO. my question is, Im not going to be able to get it as a short sale am i, as the bank is not gonna to wanna take that much of a loss preforclosure. Although it should expect it as noone wanted it at 1m.

Thoughts?

@Jon Klaus Thanks!

@Joshua McGinnis Thats the thing. If I actually persuaded them to sell, In their position I would just list it with an agent. Why take the first offer from a stranger especially when its going to be lower than they expect?

The property with the delinquent taxes is an interesting one. Its owned by an LLC named after the street. The owner of the LLC owns about 6 other houses under different LLCs too. Whoever he is, he bought the property almost 2 years ago and hasn't done anything with it. So if the owner is an investor himself i imagine he's be unlikely to sell to me for a decent price but then why is the property just sitting there delinquent on it's taxes?? Maybe he's counting purely on appreciation but seems a waste to me. Its also 100% paid for by a private lender.

The other two properties are owned by couples with one other primary residence. One is owned free and clear and was bought 30 years ago.

The other was purchased 10 years ago with a couple of refinances along the way. Heres the interesting bit - it also says it has been up for foreclosure 6 times since 2009, but somehow it still remains with the same owner, after having gone to the bank and another LLC for a while....?

I know its unlikely any of these houses are likely to sell, to me, for a decent price especially in this neighborhood, but it can't hurt to try!

Hi everyone! This is my first post and I am new to bigger pockets. It goes without saying the advice and content on here is incredibly helpful. I have many questions, but will start with just one.

First all I live in West Hollywood, Los angeles. so starting out is not going to be cheap unless I go quite far out. Anyway, there are a couple of vacant dilapidated house within a few blocks of me. Although even in the state they are in they will still be quote pricey(asking price $500,000-800,000), although the values of all the houses around them are 1m-2m. So its all relative.

My question is, if I want to contact the owners (who I have details for), what the hell do I say!? Most direct mail posts I've read are related to mass campaigns were the copy is written to get the biggest amount of hits and connect with the average person. I am writting initially to three specific owners. So....

1)what do i say in general. What info is important.

2)how specific do I want to be? what specific info about their house can i use(one of them for example is delinquent on their taxes).

3) Im not sending gout 1000, only 3 so i don't mind spending a few bucks on whatever i send them. What physical format is the most appropriate to send and likely to get it looked at?

I know its a long shot as its only 3 houses, but Im still learning so might as well. Any and all advice is appreciated! Cheers