All Forum Posts by: Josh Prince

@Joshua McGinnis

I agree with what you say.  There are a lot of people with strong opinions.  I notice that there are a lot of entrepreneurial folks on BP who have businesses that depend on bringing investors into certain markets.   

In my own investments, I only feel comfortable in markets that I understand very well, which right now is solely Los Angeles. 

With that in mind, I hope everyone else decides to invest out of state!

This is not a gift situation. When two people give each other a gift in exchange, it's a sale and should be reported accordingly for income tax purposes. 

You are selling the property to your grandfather for $63k plus the value of the mortgage he is taking over or paying off.  

Property taxes will be reassessed, you might have a gain or loss on the sale depending on your basis. You also might be able to exclude some or all of the gain if it was your residence. I don't know the intricacies of those rules, however.

@Jeff Greenberg 

 Yes it is rent controlled.  that is why I said "if" you can get the tenants out.  Of course you cannot force them out but perhaps you can negotiate a mutually beneficial arrangement. 

@Ewa Reza 2 of the occupied units look well under market to me - new tenants and rehab could allow for much higher rents.  It's breathtaking what people will pay for a charming unit in that part of town. 

I am interested to see what this sells for, but I would be surprised if it went for under $850k. 

I am sure you are up on recent sales, for example 1506 Sargent at $1.25M for 6 units?

@Ewa Reza - I saw that deal too.  I suspect it will go for $200K+ above listing price.  The listing agent probably had no idea what he had on his hands when he put it on the market. Still, even at that higher price, I think its a good buy if you can get the tenants out!

@Brad J. In my experience everything that is marketed widely in LA is done through MLS or through loopnet which is not part of the MLS at all. Of course there are deals that do not market this way, but I think any agent that does not list on both loopnet or MLS is doing their client a disservice by failing to properly expose it to all potential buyers.

For some reason, offmarket deals seem to happen , although I suspect that the seller doesn't know any better in many cases.

Hi @Sebastia H. - what are you trying to do that that has been a problem for the title companies you talked to?

Hi @Daigo Kurosaki - when it comes to evaluating up and coming areas, there is no computer program that I know of. There is a lot of statistics to parse through and a lot of information and opinions on the internet to read, but at the end of the day, you have to make your own decision about the quality of a neighborhood and why it might get better or worse.  The only way I have been able to do this to my own satisfaction is to spend time in the neighborhood driving around and walking around too.  Also, watching listings come on, sell (or not!), and maybe even be relisted. Why not use redfin to check out recently sold properties in the area and see how they compare to listings - that might give you an idea of what is a good price (or at least what everyone else is willing to pay).  Ask an agent to run comps for you.  They love to do this.

There are lots of people on BP and elsewhere who can give you information, but markets are local, and times change.  In Los Angeles, investing for cash flow over the last however many decades you want to count will leave you trailing behind anyone who bet on appreciation.  However, not everyone is comfortable gambling.  

In  terms of practical steps when making an offer, look at the information you have online - if you think it could be a decent deal, arrange to see the property.  If you like it, make an offer subject to inspection.  Once it is accepted, then you call in the inspector, contractors, etc.  If you find big problems you didn't expect (and that the seller was hiding or didn't know about), then ask for some money off the price. That is the traditional way of doing things. However, that doesn't mean it is always the best way to do it.  But, for your first time it makes sense.  

Get a buyer's agent for your first time. You may want to use the seller's agent or do a deal with no agents sometime, but for the first time, get a buyer's agent and ask the agent lots of questions.  Figure out what the agent recommends.  Find an agent who is familiar with that area, maybe he or she will educate you about the area, and perhaps give you reasons to get in or out.  However, don't trust the agent - they are only loyal to closing the deal - nothing else.

Good luck and let us know what happens!

Hi @Daigo Kurosaki - I don't use any formula like you described in terms of how to make an offer under listing price.  Obviously the property you linked is overpriced as it has been rotting for almost half a year.  Rather than basing your offer on the listing price, I would figure out what price makes sense for you to buy, as an investor, and base your offer on that.  

For example, that duplex is in an area that is still a bit rough, and not necessarily expected to gentrify soon. It is not that close to silverlake, and on the less nice side of koreatown.  It is also on a big street.  I doubt that you will have trouble renting it, but maybe at premium prices.

The listing agent's projected rents seem reasonable for a 2BR, if maybe a little high depending on how much you fix it up.  Let's take them at face value.  $3200/month is $38,400 per year.  Assuming you are comfortable at 12xGRM because you will have low 30 year financing and hopefully not too much hassle with only 2 tenants, that puts you around an offer of $460,000.  Will the seller take that offer?  the only way to find out is to write it.  

I doubt they have been getting any offers near the listing price, but you have no idea the seller's mental state.  Perhaps his or her agent will give you a little information if you are lucky.

If you are looking for non-rent controlled property in LA, expect to pay a huge premium (on top of the premium one pays in Los Angeles, anyway).  Also the supply of non-rent controlled properties is very small compared to rent controlled. 

Anyhow, to answer your question, obviously depending on price and other factors, I will never say never, but generally speaking, I would not purchase anything that had bedbugs.  I also would not purchase anything that had a tenant who was making frequent complaints to the housing department, and finally I would need to do a lot of research to purchase anything that had illegal units on it.  I had one property with a bootleg unit (from decades ago) and it was a real hassle to get it cleared up.