All Forum Posts by: Chung Cam

Hi @Jason Hsiao

That was my initial inclination as well, but after consulting with a few local attorneys and pointing out my status as a real estate broker, they indicated that I did not have a very strong case since the REAP was on the title report.  Although it was not disclosed anywhere else, defense could argue that we should have known so as a result no lawsuit was pursued.

Thankfully, we were able to get some hold backs worked out with escrow so that the REAP would have to be remediated prior to releasing some of the funds.  A quick update is that we recently cleared all of the REAP issues and it should be cleared soon.

Hi Seth,

I did not know that the property was in REAP when it closed, I just found out about the REAP yesterday which is 5 days after closing.

I do plan on getting the repairs done and the items address to resume rents at normal rates.

I do not have the order to comply as I just found out about the REAP yesterday and am currently researching the program.

A partner and I recently closed a purchase of a property in Los Angeles.  In speaking with the tenants we found out that there was a REAP (Rent Escrow Account Program) on the property.  Doing some research, I found out the particulars of the program, the most concerning is that tenants would be paying 50% of their rent and they have the option of paying the city rather than the owners.  In essence, we would not be collecting any rent on the property until the REAP is lifted.  Honestly, I am surprised that the bank didn't catch it.

The REAP was not formally disclosed to us in any of the disclosures, but it was on the preliminary title report.

I wanted to see if anyone has had a similar experience with non-disclosure or REAP properties to help me understand what my options are.

Thank you!

I am interested in both residential and commercial.  Looking forward to the introductions!

Thanks Logan!

I am looking for conventional mortgages for buy and hold investments.

Hello,

I am starting to invest out of state and decided to start in KCMO!  I already have a decent portfolio in Southern California but wanted to get into some investments that can cash flow almost immediately.  I recently completed a cash-out refi and have started making offers in KCMO.  The current mortgage broker that I am working with doesn't have experience with investors and I am have trouble getting approval.

I have an LLC set up for my investments. All of my properties with less than 4 units are personally owned with mortgages in my personal name. The properties that are 5 units and up are owned by the LLC with the loans in the LLC's name. However, all of the rents and expenses are reported under the LLC.

Does anyone else have a similar setup and have a referral for a mortgage broker that can accommodate?

Thank you!

Hi Mallie,

I currently live in Ventura and work in Santa Barbara (Montecito) and saw the aftermath of the Thomas Fire and landslides.  For those homes that are insured, they will get rebuilt with insurance proceeds but the permitting process is very slow in Ventura.  Some homeowners found that they weren't able to get permits as it was deemed no longer safe to built where their home was previous to the disasters.  A lot of the homes that are completely gone are still barren with some where the land is put up for sale.

For homes that were damaged, they ended up demolishing it rather than repairing due to structural integrity being compromised.  In scanning Zillow and Redfin in the weeks after the disaster, I did not see any damaged homes for sale, only land or intact homes.

Hope that helps.

We cashed out just enough to maintain decent monthly cash flow. We're currently at 50% equity.  If I took out all the cash we could be at negative cash flows and didn't want to relive those early years.  Plus, we couldn't find the right investment locally that would cash flow immediately to justify taking more cash than needed. Otherwise it would just sit in the bank while we were paying interest on unused cash.  I think I'm in a sweet spot where I have enough for reserves and to make a decent down payment if we found the right investment.

I think looking out of state is potentially going to open up new ideas.  To this point, would you have any recommendations or seeing hot spots that your clients may be looking at?

Super competitive is an understatement for San Gabriel Valley.  All the properties were purchased between 1994-2006 so it's been a while since my last purchase.  My brothers and I are very frugal, so we saved up and bought properties together.  The first 5 years were negative cash flow, but the appreciation was always decent so us to justify holding.  Some hard lessons were learned along the way, but appreciation has been tremendous and cash flow as been great the last 5 years.  We've always had the intention to purchase more, but it wasn't feasible without positive cash flow.

Never seriously considered out of state until recently discovering BiggerPockets.  Very excited to learn more.

If you would like to purchase investment property and own it personally without transferring to an LLC, I would suggest getting umbrella insurance on top of landlords policy for liability. Umbrella insurance is not that expensive for $2M coverage that kicks in after landlord policy is exhausted. It would be unlikely to incur a $2M liability from tenant claim so your personal assets would be safe within the insurance policy.