All Forum Posts by: Carla Carvalho

@David Shaw

This is a great question and one I have thought of too. I have a two unit property in NoHo and one unit is RSO, and the other (ADU) is not. I have used Dennis Block, esq and their Concierge service (it's about $400 per year) for questions like this. Their answers are always helpful and have kept me out of trouble.

@Kim Hopkins you have limited options then. You won’t be able to find 30 day tenant every month.

@Kim Hopkins also consider not just credit score but also financials. Do they have a lot of money in the bank as a buffer? Consider their profession too. Are they someone who will likely be without cash flow for months and months with the lockdown? We have 2 tenants who are crushing it despite the pandemic: a wine store owner and someone who owns an online business that sells products in the <$200 price range.

@Kim Hopkins we have a long term tenant in place. If you play your cards right, you will easily get a tenant in a good neighborhood in a nice home. In MAY (mid-lockdown,) we had 25 people come to our Zillow-listed open house.

@Xander Tertychny - Question regarding your comment that an ADU must be part of a property that has the main unit owner occupied.

We just bought a legal SFR with legal ADU on a R1 lot, ADU is new construction. Are you saying that the main SFR must be owner occupied? Our intent was to rent both.

Thanks!

@Account Closed Thank you, good advice. After I posted, we actually decided that the deal is too thin, as you suggest. But I'm definitely looking. This deal would be a lot of work, and a lot of labor for $20K profit each after tax. I'm more interested in a higher price point = higher profit. I'm a little confused about a couple of your points (Which are key!): So, I'm floating the cash, but we both pay the HELOC interest? The contractor (pm) uses his own funds and labor time to do the remodel and we split 50/50 profits? So while he's using his own time and labor and materials costs (which they CAN do,) I separately pay them a salary? It would seem to me that my giving them access to the deal (ie purchasing it) should either give me a premium on profit, or negate the need to pay them salary. Not trying to be greedy, just trying to iron out issues before they arise.

Also, side note, I need to investigate taxation on flips. I know it's ugly....

My property manager (on a luxury vacation rental that I own) was approached by his landlord today and offered to buy a home that he owns for well below market. The landlord is retiring and is off-loading property. We are in red-hot Bay Area. The property is currently worth $350k but the landlord offered my pm $299. My pm called me to see if we want to "do a deal." We have cash via low interest HELOC (3.5%) and could buy the property outright since my pm really can't. He and his Dad do construction and believe that with $20-30k of work, they can flip easily for $400k.

Snice I’d likely be taking title on this property, what are some questions I should be asking? How should we structure this do both my pm and I make $? What are the elements to a deal sheet/Agreement here? 

I’ve never done anything like this but my pm does excellent work so that’s not a concern. 

Thanks! 

@Mike McNeil-Leier welcome to the party! You will do well here. Don't give up on LA- there ARE opportunities. Buying local does have advantages, what you lose in return, you may gain in sanity. I live near SF and seeing no hope around here, looked at LA. In 11/2018, we found a gorgeous SFR in Studio City making 8% CoC with great upside. You need a motivated seller and be ready to pull the trigger on short notice.

@Amit M. Good point about distance. In lieu of my 25% referral fee (I’m a licensed RE,) my LA agent set me up with the whole enchilada of service providers and is comping annual open houses when needed. That’s the only way, I agree. We also ran rentals in Chicago and NY with “the right people” in place. Tricky but possible.

@Amit M. Thanks for the insight.

The numbers in LA have been better for us. I'm getting 9% CoC for a SFR in Studio City. No chance for that anywhere (safe) in Bay Area. San Jose is not cheap either. Approaching $2mil for a nice area.