All Forum Posts by: Christian Johnston

@David Frandsen yes! Interviewing contractors rn to get the permits submitted!

I am looking to increase the cash flow of my Quadplex in North Park, San Diego. The energy bill is quite high and I have been considering installing solar to offset some of the costs. I am going to do the actual bath behind the cost difference to determine ROI but I am looking for general advise. Will this increase the value of the property in terms of appraisal, would you recommend a particular company, etc. Thanks so much !

@Dan H. yes I did a pro forma. My pro forma using the 50% rule and using standard expense percentages for San Diego both created a small negative cashflow. I took the risk on this negative cashflow due to vacancy rates being significantly lower in the area that I purchased, the cap ex % would be lower given that every appliance is new and under warranty. The property proved to fully rent 25 days before my first mortgage payment (so I believe my assumption of lower vacancy rates was a decent one...but time will tell). Additionally, the Airbnb is renting at almost double my projected amount...though this can not be expected in the future. 

At the end of the day I am allocating funds on the basis of the 50% rule. Though so far I am "renting" for free, I am allocating what I would normally pay for rent to cover future costs. That, paired with a healthy amount of reserves, puts me in a good position in the case of a large expense. 

Hey BP! Thanks to BP and numerous books I finally felt confident enough to take the plunge and buy a triplex. Here is the post for context: https://www.biggerpockets.com/forums/850/topics/853758-san-diego-va-house-hack?highlight_post=5014571&page=1#p5014571

Looking forward I am eager to increase the value of the property. It was remodeled prior to purchase so there is not a lot I can do in that realm. I've been looking into solar power installation and it seems that i could increase the value of the property by ~4%. Has anyone had experience with this? Are there other ways I can increase property value?

As a multi-unit property I understand that the value is directly tied to incoming rent. 
Thanks in advance!

 Michael, correct! Here is a spreadsheet I made that might help you: https://docs.google.com/spreadsheets/d/161QumXHxwVO6FeYsc9ASzaSVudfQs054UrAdSc9pMlg/edit#gid=0

I made this to quickly identify if I could afford a property with the given additional income from the units. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $1,140,000
Cash invested: $1

The deal:
-Location: San Diego, North Park/Normal Heights
-Gentrified neightborhood, brand new remodel
-Triplex with an additional detached studio.
-3 Bedroom, 1bath house and backyard (ONE UNIT)
-Duplex, Both One bed on One bath. (Two Units)
-Detached Studio in the back of 2 car garage.
-Electricity individually metered

What made you interested in investing in this type of deal?

Real estate investment books

How did you find this deal and how did you negotiate it?

Via Real Estate Agent Kenneth Donaghy

How did you finance this deal?

VA Loan. 1.14 million with $46,500 seller credit.

How did you add value to the deal?

Original listing price: 1.4 and 1.25. Made a low offer during the beginning of COVID with the knowledge that the sellers had a hard money loan they would want to get out of. Offered substantially lower than listing price but with an aggressive escrow timeline.

What was the outcome?

Rental Income (current rents, not projected):
3 Bed house: 3100
Duplex: 3470
Studio (AirBnB): 1450-1900
PITI: 6350
Income (without expenses): 8020-8470
Property is newly renovated with brand new floors, appliances, roof, etc.

Lessons learned? Challenges?

1)Knowing what the seller wants is critical. The seller wanted profit and to not get buried by a hard money loan interest rate. This allowed us to make a lower offer with a short escrow time. Terms Terms Terms. 2) Don't be impatient. We analyzed the numbers on over 120 deals (from San Diego all the way up to OC...multifamily to SFR). This was one of two properties out of the 120 that I felt "worked" with the numbers I wanted.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Real Estate Agent: Kenneth Donaghy
Mortgage Broker: Nick Lekas

These guys did an absolutely amazing job and have my highest recommendation.

Hi bigger pockets!

I took the plunge and bought my first property! It's a Triplex with 

1) a 3/1 House with enclosed backyard 

2) a duplex with 1/1 for each unit

Additionally, the back of the garage has been made into a standalone studio that is bringing in AirBnB income. 

Long term my goal would be to add a second story to the garage as a permitted unit (turning the property into an official quadplex. I could keep the studio as an AirBNB or make it a downstairs unit. Additionally, I want to expand the horizontal space of the driveway that it takes up slightly more of the front yard but would fit 2 cars side by side. 

Can anyone provide guidance on how difficult this permitting process would be? I have contacted the city by email but have not gotten a response. 

I just opened escrow in San Diego, I purchased a property in North Park with a VA loan, It is a 4 unit property. Using the 50% rule, my portion of "rent" will be around $400 less than what I am currently spending. I understand that a lot of BP members do not like the SD market but I am attempting to grow where I am planted. I am looking to rent out the studio unit on Airbnb. I understand that SD imposes TOT and that I need a certificate to begin the airbnb business. I am wondering if anyone would have time to lend me their short term rental experience. Thank you in advance!

@Joe Villeneuve
if there are holes I’d love to be enlightened, that’s why I’m here :)

Using the lenders amortization schedule with my given interest rate it comes out be around 1700-1800, depending on the exact interest rate on day of closing :)

If I use the numbers that SD usually gets (talking to other 4 unit owner, forums, and prop management company) then I get a net -250 a month. If I use the 50% rule it’s around -700. This combined with living in the unit (and paying myself tenth, comes out to 1800 (using 50% rule) or 1350(using less conservative numbers).

The refi costs are hard to analyze 5 years out, unless you have a method I do not know. As I do not know the exact appreciation or interest rate I’d get in 5 years. The area I’m looking at is being built up very quickly, so I’m hopeful for appreciation but mostly counting on the principal pay down. 

  

@Joe Villeneuve so I’m going to live in California for the next 5 years. Let’s say I rent @2k a month for 5 years. That’s 120k of money I’ve literally thrown away. Now even if the SD properties don’t appreciate at all, which would be incredible in SoCal, then I’d gain 1.7k month in equity. That’s 102k in 5 years. The opportunity cost of renting for me is 222k. Will a property I buy depreciate by 222k? Possibly. However, most SD owners are buy and hold. Will this property permanently lose 222k in value? Very very very low chance in that. Is it a risk? Yes. But so I paying 120k in rent. I have to live here bc I’m on military orders. Making the best of it.