All Forum Posts by: Daniel Y.

@Michael Coxen might be able to help you out.

Originally posted by @Jai Reddy:

I am on a mailing list for Newmark Knight Frank who is a brokerage for large apartment complexes. Of late, I’ve been seeing several apartment complexes from the Dallas, TX metropolitan area list for sale. Their owners are probably satisfied at what market value is currently, rather than wait for next year or so.

Could be a leading indicator of prices in a hot marble like Dallas

What kind of cap rates are you seeing and in what class area and building?

I've been seeing a lot of overpriced and poorly analyzed multifamily being marketed in primary, secondary, and even tertiary markets. I reviewed a property in TX that was in a tertiary market a week ago. It was a C class building and maybe in a C+ area (C- or D+ block of a C+/B- general area). Talked to some brokers and the cap rate should be 8-12% give or take. The owners were trying to sell it at the 7.19% pro forma cap rate. That's right, you heard me. They based it on the pro forma NOI and not the actual, and they were treating this like an A class asset.

How do we build more affordable housing in California? I mean we put in ten thousand layers of policies and bureaucracy for "safety reasons" and to "create jobs," but now there's no cost effective way to create/build housing for everyone. Whatever shall the California government do? *insert sad face gif*

WAIT! I KNOW!! BY THE POWER VESTED TO THE GOVERNMENT BY THE GOVERNMENT...I, the government, enact eminent domain.

Los Angeles city officials are considering a plan to force landlords

to sell their buildings in an effort to keep rents low in key
neighborhoods.

Councilman Gil Cedillo last week said he was asking the

Board of Public Works to consider using its eminent domain power to take
over a 124-unit Chinatown apartment building from a landlord who wants
to convert the building into market-rate.

"We will use all of the resources of the city, both legal and fiscal,

to protect these tenants," Cedillo told the Los Angeles Times. "The
city is in crisis … with respect to housing and affordability."

The landlord, Thomas Botz, said that the owners would never have

agreed to make the units affordable had they known the city would do an
about-face.

"If the city goes and expropriates buildings from private developers

like us — who have made their 30-year deal and kept their end of the
deal — just to have the building taken away at the end, no private
developer would build another unit of housing in cooperation with the
city of L.A. ever again," Botz told the newspaper.

The property, dubbed Hillside Villa, was built in 1986 with $5.45

million in loans from the city, in exchange for a commitment from the
landlord to keep the units affordable for 30 years. Since that agreement
lapsed in 2018, Botz is legally permitted to raise the rents to market
rates.

But Cedillo wants the city to intervene to keep 59 units of

affordable housing inside the building after attempts to reach a deal
with Botz’s company, NHP LLC, failed. Residents were informed that the
rents would go by an average of 50 percent starting in September. Rent
in one three-bedroom unit is set to jump from $889 to $2,500.

It's like the state of California is having a pissing contest with itself to see who is worse. Two weeks ago NorCal threw down with this:

"The Oakland City Council on Tuesday approved an ordinance that would prohibit landlords from asking about a potential tenant's criminal history or rejecting them out of hand for having a record"

This week, SoCal said, "Hold my kombucha..." and replied with the above.

Both instructions are approached in different manners, but clear. Measure, in the same timeframe, which you receive the least amount of these kind of calls and choose the lesser of the two evils.

Also, if you have an assistant, or can get/borrow one, then have them screen the calls for you. Will it cost you money? Yes. Is it messed up, or similar to some kind of cruel and unusual action towards that employee that would easily be deemed as a hostile environment? Indeed. Would having someone else do it to prevent you from going to jail for a justifiable respond/action be worth it? Of course.

Originally posted by @Remington Lyman:

@Daniel Y. Yes, it is! Next one is Remington Lyman Rental Company

 Nice! Ron Swanson would feel slightly above indifferent in the positive direction regarding the "Very Good" reference ;)

Originally posted by @Remington Lyman:

@Taylor Eldredge I have all of my LLCs start with the name Very Good. I have Very Good Homes LLC, Very Good Company LLC, Very Good Rodgers Ave LLC. I cannot keep my checks straight, but I think I am hilarious and that is all that matters at the end of the day.

 Does that happen to be a Parks and Rec reference with the "Very Good"?

Hi @Nickolay S.,

Yes, you can be the bank. As people mentioned above, it's called owner, or seller, financing.

This model does work, but it doesn't work everywhere. Do you plan to do this in Los Angeles area or elsewhere?

Also, your corp is going to buy it from you with 20% down and a loan from a third party lender, correct? If so, do you already have a lender and can you share who that lender information? I'm curious because that is a very low interest rate for such a high LTV and lending to a LLC/Corp.

Originally posted by @Philip Devine:

I have mag locks on the doors and I do the cash collection myself. The attendant doesnt have access to the cash or coins. I also have a security system in the safe room to protect it. If I wanted to allow an attendant to pick up cash, my change machine reports the cash inserted so I can easily tell if im being robbed by someone, and the knowledge of this I imagine would be enough to deter sometime from what is a very flexible and convenient job.

the trick is if you can buy the laundromat without a drop off service, meaning it's not factored into the price, then you open one up (which is easy), then you can really make the ROI explode.

Very cool, and thank you for sharing that little added tip. Good luck with everything!

That's awesome, I've looked into a laundromat before. However, the cost is much higher here (welcome to California). So not only entries is higher, something that you mentioned grossing 250k will be ~500k to purchase with a lower net, and this was years ago. I assume all cash business? If so, I guess you are going in once a day to pick up the money? If you are allow the attendant open it up, what's your plan to mitigate theft or is there a percentage that you just plan to write off as a loss due to nature of business?

Keep us updated. I have so many more questions, but I think what I have above is enough so far.

Go multi-family.

As an overall, A-class isn't always better. You might get people with better jobs and seems more stable, but you also might come across people who expect more because they pay more.

So with the A-class you are looking at, you will have to deal with all that. You won't get a PM because based on your numbers. Estimating a 10% fee from the PM, you will at best break even, but overall lose money (taking turnover fees into account).

With the C-class multi, I would put a PM in there, you will probably cashflow ~$200 less per month. However, you can slowly learn from them by asking questions and from the experience, while not having to deal with the tenants directly. If the PM really sucks and/or the tenants are really good then you can always let go of the PM and you can take over from there.

A bit more options is usually better. Plus, my recommendation is based on you mentioning that you like your full time job and this being a side hustle. Being a full time landlord is sporadic and can be time consuming when it's bad. Taking a step back and having a PM is probably better as you are an asset manager or manager. You just have to deal with your accounting and the single fire that the PM has at that time, which you most likely won't have to take time off from work to handle. Not potentially three at the same time, which depending on what it is you might have to be present.