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All Forum Posts by: Bob Ritner

Bob Ritner has started 2 posts and replied 37 times.

California, to my pleasant surprise passed a new law that went into effect January 1 that allows property owners to file a Letter of Agency with local law enforcement which notifies them that the property is vacant. The letter can be valid for up to a year and allows squatters to be treated as trespassers and removed by law enforcement.

Post: Architects Adu fees

Bob RitnerPosted
  • Specialist
  • San Clemente, CA
  • Posts 40
  • Votes 59

@Bruce Woodruff:  I would have probably charged at least 10k, but that is a rough guess. My practice was commercial and institutional architecture and I specifically avoided residential because the those clients typically had no clue how much it actually cost to produce a solid set of plans that gave contractors enough information to give solid bids.

Post: Architects Adu fees

Bob RitnerPosted
  • Specialist
  • San Clemente, CA
  • Posts 40
  • Votes 59

I am a retired architect and current REI investor in Orange County and did an adu at my property in San Clemente recently. Here are the fees I paid:

Architect (me) : $0

Civil Lot line and topographic survey: $6700

Soils Report: $3700

Structural Engineer: $4000

T24 Energy calcs: $500

Plumbing And Electrical design: $1600

Total =$16,500 (engineers only)

These fees are only to get through permitting, as the city required certain field reports from the engineers that was billed to me hourly. Also, mine was a 2nd story ADU so a bit more complicated. You mentioned "architect fees" and not all the others that are frequently required so I am not sure what your quote includes. If it includes all engineers required for permitting, then I would say the fees are pretty reasonable, even if they are plans out of the drawer. You could run one out of the drawer set of plans through 10 different jursdictions and get 10 different sets of plan corrections and each site is different, with each jurisdiction having different site plan requirements. To get plans through my city I ended up with 40 pages of plans including engineers. If you know what you are doing you could save a few bucks and hire a drafter but that is a much more hands on approach. You will find that most cities in OC have pretty extensive plan requirements compared to other areas of the country.

Post: Property With A Fault Line

Bob RitnerPosted
  • Specialist
  • San Clemente, CA
  • Posts 40
  • Votes 59

If you already have the fault line mapped with a fault trench study, then that is one big variable out of the way. The second thing I would do is have a soils report done, where they do some borings to determine the composition and orientation of the underlying soil/bedrock. Based on this, they will opine on the developability of the site and give preliminary foundation recommendations. You do not need them to develop the full report, just preliminary recommendations based on the borings laboratory findings. This prelim report can then be given to a residential contractor that can give some very rough numbers on grading, retaining and foundations. This is where all of the big budget busters usually occur. 

Post: Property With A Fault Line

Bob RitnerPosted
  • Specialist
  • San Clemente, CA
  • Posts 40
  • Votes 59

I second the suggestion of retaining a geotech engineer. In California I have always done this as part of my pre-purchase due diligence. In your case, the city will require a fault trench study to determine the precise location of the fault line. If there are fingers, it may render the property undevelopable after factoring in the 15' setback. In addition, being on a hillside in SoCal, it is critical to determine the makeup of the hillside sub-surface conditions as this will make the difference between a 150k foundation and a 500k foundation. The fault trench study is not cheap, but neither is the land and better to find out now.

Post: Living off rentals

Bob RitnerPosted
  • Specialist
  • San Clemente, CA
  • Posts 40
  • Votes 59
Quote from @V.G Jason:
Quote from @Bob Ritner:

Living off the income is very realistic, I live comfortably off of 7 doors in So Cal but........it is a long game. Bought a beach duplex in 1999 and 5 condos from 2009 through 2014 and fully retired at 52 in 2017 with all units paid off and the rentals as my only source of income. Many would say that I got lucky buying most of my properties during the great recession and that this cannot be duplicated, but I disagree on both counts. 

Real estate is a cyclical industry, though it may not seem that way to the 20 and 30 somethings who have only seen things going up. Sure, you may be able buy high and still be ok long term if not over leveraged, but your hands will be tied by debt and negative equity properties when things go south and thus not be in a position to buy when everyone else wants to sell and there are great opportunities. 

I graduated from college at a time with very high relative valuations and I was sure I would not be able to buy for a long time. I saved and lived frugally, housing prices crashed in the early 90's and all of a sudden I had a house. For the next 5 years real estate valuations stayed relatively low, I saved and saved and before I knew it I had a duplex. The early 2000's were even crazier than now and I did not want to touch anything, as I wanted to have both cash flow and opportunity for appreciation in anything I bought. I saved and saved and the great recession hit and it was the greatest thing that ever happened to me. Prices crashed and I bought  5 condos in 6 years. I retired from my firm after paying everything off in 2017.  The common theme here is that I was patient and bought when prices corrected/crashed, not when they were crazy. I read a lot on this forum about people striking it rich or wanting to in a few years and I am sure it is possible and I am sure that some do it, but I also know many people personally who tried to in the late 80's/early 90's and lost everything and in 2000-2007 and lost everything. Becoming self sufficient slowly, and conservatively is not sexy but it does work. This means saving, saving, saving, and only buying when it makes clear sense and it means having the self control to sit on the sidelines and just save when the numbers are questionable.

As an interesting side note, I did some detailed calculations and I could have achieved a slightly higher net worth by just investing in the S&P500, though I would not currently be enjoying the benefits of depreciation and the resulting lower income taxes that real estate affords. Also, I would have probably gone crazy giving up control and leaving my retirement funds to the whims of corporate CEOs that mainly have their own self interests at heart.

You did get lucky, there's no argument otherwise. I say that to compliment not take away from what you've done, but don't confuse it. None of this kind of luck happens in todays world. You're still missing the fact that median income: household ratio was completely different back then and the overall price of living in all other metrics are significantly and disproportionately higher than the 90s and early 2000s. It's not even a fair comparison. Lending rules then versus now is also in another stratosphere, show me one person in today's W2 world with a solid one($80k) that'd be able to buy 5 condos in 6 years, let alone 2. You literally bottom fed and bought in the great recession, that's the definition of being lucky.

We're literally in an 40-year affordability crisis, you can't tell me what you were able to accomplish is realistic. It's just as discouraging as the 2010-2020 folks saying you can scale and make it all the way to top. Sure, when valuations crash into a third and the rental market skyrockets; that's a feat that may never, ever happen again. The chickens have come home to roost--we are going to sit in a period of higher inflation, higher rates, limited inventory(due to less homebuilding + low rates). It's just not possible to scale like you for the average person out there in todays world.

I totally agree that this cannot be duplicated today, which is why I was suggesting that instead of rushing to invest now, that some should just sit on the sidelines for 5 or 7 years and amass cash so that they can duplicate this when things eventually revert to the mean or below. I sat on the sidelines for almost 9 years saving and saving, having an itch I could not scratch, but knowing that real estate IS cyclical. I only bought my 2nd through 7th properties when the crash happened. You can call this luck, but I feel that this was planning and, above all, patience. The issue I see is that many folks are in a big rush to buy now and don't have the patience to save and wait. Those that had FOMO in 2005 and bought had their capital tied up in upside down properties for 10 years and were thus not in a position to take advantage of the once in a generation opportunity that was teed up in 2009. Or worse yet, had all of their capital taken through foreclosures. 

There are other opportunities now other than buy and hold residential real estate, just not in my market or many others, for real estate folks more creative than me. There is a huge opportunity now and in in the next few years, for instance, for those that buy mall, small and large office and retail properties in default and have a vision for adaptive re-use or re-development. I suspect we will look back at this in 10 or 15 years as a similar once in a generation opportunity.

Post: Living off rentals

Bob RitnerPosted
  • Specialist
  • San Clemente, CA
  • Posts 40
  • Votes 59

Living off the income is very realistic, I live comfortably off of 7 doors in So Cal but........it is a long game. Bought a beach duplex in 1999 and 5 condos from 2009 through 2014 and fully retired at 52 in 2017 with all units paid off and the rentals as my only source of income. Many would say that I got lucky buying most of my properties during the great recession and that this cannot be duplicated, but I disagree on both counts. 

Real estate is a cyclical industry, though it may not seem that way to the 20 and 30 somethings who have only seen things going up. Sure, you may be able buy high and still be ok long term if not over leveraged, but your hands will be tied by debt and negative equity properties when things go south and thus not be in a position to buy when everyone else wants to sell and there are great opportunities. 

I graduated from college at a time with very high relative valuations and I was sure I would not be able to buy for a long time. I saved and lived frugally, housing prices crashed in the early 90's and all of a sudden I had a house. For the next 5 years real estate valuations stayed relatively low, I saved and saved and before I knew it I had a duplex. The early 2000's were even crazier than now and I did not want to touch anything, as I wanted to have both cash flow and opportunity for appreciation in anything I bought. I saved and saved and the great recession hit and it was the greatest thing that ever happened to me. Prices crashed and I bought  5 condos in 6 years. I retired from my firm after paying everything off in 2017.  The common theme here is that I was patient and bought when prices corrected/crashed, not when they were crazy. I read a lot on this forum about people striking it rich or wanting to in a few years and I am sure it is possible and I am sure that some do it, but I also know many people personally who tried to in the late 80's/early 90's and lost everything and in 2000-2007 and lost everything. Becoming self sufficient slowly, and conservatively is not sexy but it does work. This means saving, saving, saving, and only buying when it makes clear sense and it means having the self control to sit on the sidelines and just save when the numbers are questionable.

As an interesting side note, I did some detailed calculations and I could have achieved a slightly higher net worth by just investing in the S&P500, though I would not currently be enjoying the benefits of depreciation and the resulting lower income taxes that real estate affords. Also, I would have probably gone crazy giving up control and leaving my retirement funds to the whims of corporate CEOs that mainly have their own self interests at heart.

Post: Why are real estate agent commissions so high in the US?

Bob RitnerPosted
  • Specialist
  • San Clemente, CA
  • Posts 40
  • Votes 59

The American Institute of Architects used to "recommend" fee structures for different types of architectural services. Two different supreme court cases ruled that this is an anti-trust violation and it it is illegal for architects to even discuss fee structures with each other. There were pros and cons to this, but the biggest outcome is that Architecture, while being very overhead intensive, education intensive and having significant professional liability is one of the lowest paid "professions". As an architect I think it was a blow to our income potential and had some other negative consequences, but as a consumer, it brought fees down and did not really reduce the headcount going into the profession. I am not sure why realtors coordinated fee structure has lasted this long without being challenged.

Post: Switching licensed designer before permit issuance

Bob RitnerPosted
  • Specialist
  • San Clemente, CA
  • Posts 40
  • Votes 59

The short answer that the architect must agree in writing to assigning a new architect or engineer of record and must agree to allow the new architect to take ownership of all work product and this is assuming that you can find a new architect that is willing to accept liability for plans that they did not fully prepare. You will also need to do this for any other engineering professionals that were part of the design team (structural engineer, civil engineer, geotech etc.) unless you can take over their contract from the old architect. This approach is the last resort.

Unless the property purchase agreement included an assignment of the architect's design contract that was signed by the architect, you have little leverage to compel them to perform other than throwing money at them to make it worth their while.

Option 1 (best option): I would highly recommend sitting down with them, getting a new contract in which they are contractually bound to you and throw enough additional money at them to get you to their front burner. This way you have leverage and if (when) there are issues during construction they are obligated to work towards a solution. This is the cleanest and likely the quickest solution.

Option 2: Hire a new designer, keep the original engineers (with a new contract) and have the new designer start over with enough design changes that the old architect does not sue you for copying their design. This will still be quicker than starting over, but you will still need to start from zero with architectural plans and plan check. 

Option 3: Start over with an entirely new design team (if engineers will not play ball).

Option 4: Have your broker contact the seller's broker and get the seller to push the architect since they advertised that the plans were almost ready. This may help wrap up plan check but you will still need the architect and engineers to perform certain services during construction so you will need a contract with them for this portion of the project.

Option 5 (worst option in my opinion): Change designers and get the old architect to release the plans as discussed in the first paragraph. This option is fraught with challenges and lets both the new and old architect off of the hook for design errors. There are other potential issues nuances with this solution that are beyond the scope of this short post.

This is a difficult and frustrating situation and I hope you can resolve it quickly!

Post: New Member, looking to connect and interested in house hacking in SoCal

Bob RitnerPosted
  • Specialist
  • San Clemente, CA
  • Posts 40
  • Votes 59

Welcome to a fellow San Clemente resident! OC investing is definitely a long game but can be very rewarding. San Clemente is still probably the least expensive beach city in OC despite the significant appreciation the last several years and I believe the long term prospects are good because of this. Also, I like it better than most the other OC beach cities because its downtown is not split by PCH, giving it a much more cohesive feel and is a great walking/biking environment. Best of Luck!