All Forum Posts by: Bruce Olsen

Miguel - FIBI (I've only been to Pasadena) and CiA are my two votes. I've been to several others once.

Welcome, Cody. Those are the two I'd suggest, and I've been to most of the rest at least once. Most others are all about selling.

Special assessments and lawsuits are great buying opportunities for individual units. We just missed such an opportunity near San Francisco where we used to live... one large complex had a huge special assessment and a lot of owners bailed out. When the end of the assessment was within sight, buyers started coming back in. At the lower prices they made good rentals, but after prices increased (which was where we became aware of it) there was no real income potential. 

We're looking at owning rental properties out of California, because the revenue per door is so much higher, even allowing for considerable extra risk. Unless you can figure out how to add a lot of value (or you inherit it) it'll be a challenge to make good money on California income property. And repositioning an apartment complex usually takes around 2 years, as you cycle through tenants, and it's capital-intensive.

But it can be very profitable.

Sorry you left Pasadena, Fay, but it sounds like you're better off. Spending too much of your income on housing really does cause problems.

Do you attend and REIAs in your area? If not, start. Real Estate is a contact sport (and a team sport at that). Search on MeetUp.

Your point about underfunded HOAs is really important. We're in one of those now, and we're pressing the HOA to increase fees. Without special assessments (which need to be approved by owners) the board can do emergency increases so we keep pushing. We've gotten them to handle some deferred maintenance on our behalf (but not everything we think is needed).

You may have figured out that investing in condos is generally done for income, not appreciation: they generally don't appreciate unless you can force it with appropriate upgrades (but even then there's not much room). We're living in this one because it suits our investment goals, but the plan is to rent 1 or 2 rooms in it (which will just about offset the mortgage) so we won't worry quite as much about the HOA. And the layout lets us keep the master suite and use it as a place to stay when we're Pasadena.

Best of luck !

If you're rehabbing a multifamily rental property you can get loans about 80% LTV that include a 2-year interest-only construction loan component. They automatically convert to 30-year conventional loans at good rates after the project is complete.

They're government-backed... the Feds are encouraging rehabs of apartments.

Heard about these at our local REIA 2 nights ago. One was in the context of a loan to convert a hotel in Missouri into mixed-use with apartments above.

It does have to do with the type of financing that was used to acquire the property.

There are a lot of lending regulations that have been established to protect typical homeowners. So lending on an owner-occupied property adds a lot of effort/cost (to adhere to the regulations).

Investors are presumed not to need all that protection, and private/hard money lenders are happy not to offer them that protection (thereby avoiding all the compliance costs). But it means that the loans must not be used to finance OO property.

On residential vs. commercial (simplified):

1-4 dwelling units is considered non-commercial, which basically means that the borrower's personal income is used to qualify for a loan.

Five units and above is considered commercial, which means that the income generated by the property being purchased is used to qualify for financing. It doesn't really matter what the buyer's income may be.

There are some private lenders that will lend on a 1-4 unit property (normally non-commercial) using commercial terms, meaning that the income generated by the property will be used to qualify: the buyer's loan... the buyer's income doesn't really matter. But a common restriction on these loans is... the property must not be OO.

Best of luck!

We found an off-market commercial/industrial lot in Southern California's Inland Empire, near San Bernardino and Riverside.

We normally work residential, but naturally want to pursue this if it makes sense. We'd wholesale, not develop.

I'm drawing a blank on locating comps (at least without LoopNet access).

Can anyone offer suggestions?

Mitch, you don't own the property so you can't sell it. You are assigning a purchase contract to the buyer (for a fee), and they will fulfill the purchase contract.

A bank won't lend money on that basis. A bank will need to wait until you take possession, then your buyer would go through normal loan qualification. That obviously requires capital from you and requires you to assume risk you probably don't want.

So even though this kind of arrangement is not uncommon in the investing world, banks won't do it, so there isn't a way to expand your pool of buyers this way.

The recent tragedy might signal a buying opportunity.

When we lived near East Palo Alto, CA, it suffered 1 year of notoriety as the US "murder capital". Surrounding communities helped step up law enforcement, property values increased, IKEA, Home Depot, Best Buy (and others) moved in, and it turned out to have been a great investment. We missed it.

The difference I see is that EPA was a small pocket surrounded by affluent areas, and if Baltimore's fundamentals aren't strong enough this thesis wouldn't work.

2 architects flaked on us mid-flip. Adding 500 sf to a SFR in Santa Clara CA.

Not a complex job, just need basic design.

References gratefully accepted.