All Forum Posts by: Eric Mcginn

As far as permits and renovations and ADU additions?

We are in Lake Balboa in the City of LA.
I'm considering giving my landlord an offer to buy before we move. I know that’s weird but we’ve been here for over a decade, know the market, and know there’s money to be made if we make the right deal. 

I've never done seller financing, but it's the only way the deal really work for me. I'll want to rent it out to other people and possibly add an ADU and do other renovations is this risky with the deed still in her name?

Also, I’m not into tax evasion necessarily but she’s owned the place forever and has minimal taxes. Any way to delay the official sale to keep taxes low while still maintaining a contract to buy? 

I’m almost hoping she rejects my offer because it’s so complicated, but it kinda seems like it could be a win win.

We pay $2600/month

I’d offer her $3k/month ($600k @5% 30year amortization) plus I handle taxes and insurance. Maybe a 7 year balloon payment and maybe a 3,2,1 prepayment penalty of something. 

The place is worth $700k on the market as is. But she’s in her 80s and recently moved out of state. So she’s really into just collecting her check every month which I’m faithfully sent her ahead of time for 12 years.

Anyways, assuming she accepts, does any of this make sense? 

Rent would be ~$4500 for the new tenants and the ADU could go for $2-3k if we converted the garage.

Thank you for any insight! 
 

Quote from @Alan F.:

Quote from @Eric Mcginn:

Long time BRRRer here, planning on leaving my W2 soon to pursue flips (and raise my babies)   

Ive read the BP book on flipping. I also have a contractors license and I am good at seeing value but I’ve never sold anything. I have taken my real estate agent course work and plan to take the exam and sign on with a low cost broker to handle my own transactions. But I’m wondering if it would be worth working with a local agent for the first one? 
I’m also wondering if there are any wholesalers who focus in this area / NorCal? 

I will be looking within 35 minutes of Chico, CA. And I hope to be ready to buy within 9 months (we are moving from LA) 

 Agents that aren't keeping deals to themselves (or friends) are a rarity. Theres wholesalers everywhere, margins are tight though and that's a challenging area. Some things to be aware of are fire insurance and how it affects your buying pool. Read and understand AB 968. 

Thank you! I checked out ab968, looks like pre / foreclosures might be a good way to go if I can find them. 


thanks everyone for the responses, really great info. 
im actually starting to see more deals on properties in need of renovation so I’m hopeful I’ll be able to find some good flips when I’m ready to pull the trigger 

I bought a pre HUD mobile home on an acre last year and rent it to my handyman. The financing was secured by another property but now I'm trying to pull equity out of the mobile home property to free up equity in my duplex for future deals.

I found a DSCR lender that will probably lend 50% LTV on it so I'm going to try to move forward with that.

But in doing so I found my insurance for the property lapsed!! Apparently it didn’t go on auto renew like the other policies and paperless means I never got a dang notice of cancellation. They won’t reinstate it due to the lapse. So I found a new insurer and got a quote. And in doing so I realized that it’s going to be $2k more per year to insure it for replacement value of $145k vs before it was mostly just liability insurance plus a cap of $15k replacement payout. 

I think it should appraise for around $190k which means I could finance ~$80k @50% LTV.

I don’t have an immediate need for the equity transfer but it seems like the right thing because mobiles are so hard to leverage and I don’t want this new property using up all my equity indefinitely. 

But this added $2k/year expense has thrown a wrench into my equation. Plus the apprasal and origination fees etc it’s starting to feel like an expensive $80k mortgage. 

It’s currently 30 year amortization @8% 

So eventually I should refi I guess but I’m just stuck as to when. 
Do I just leave it as is (of course making sure I’m covered for liability) or do I fully insure and continue applying for the loan? Or do I wait 6 months for rates?  

Thanks for any insight!!!

Quote from @Eric Mcginn:

I wonder what would be involved with putting a walkway on that roof. Ideally I could install a caged ladder from the 3rd floor window but none of this crap is clear. It's a big old cluster F of confusion. If they really wanted to save lives they'd let me just install a permanent ladder. I mean it's only 2' from being ok. Oy, I have to remember to measure the interior sill height, from the pictures it looks like less than 2' probably 23" lol

Did I mention I'm considering installing a 30" deck under the window to make it less than 20'.

But I would still have to deal with the other side. 

So I’ve since blocked off the third floor on one side and rented it as a 1 BR for now. 

but when the other side leaves eventually I’m starting to lean towards raising the ground grade 28” so that the total drop is less than 20’
and then I’ll knock down some walls and make the whole 3rd floor attached only to that last unit so that the whole area can use the stairs and that window as second egress. 

I will run it by the fire marshal before doing it but I don’t see any reason why that wouldn’t solve the problem. It will probably be a really cool space up there all opened up!

Long time BRRRer here, planning on leaving my W2 soon to pursue flips (and raise my babies)   

Ive read the BP book on flipping. I also have a contractors license and I am good at seeing value but I’ve never sold anything. I have taken my real estate agent course work and plan to take the exam and sign on with a low cost broker to handle my own transactions. But I’m wondering if it would be worth working with a local agent for the first one? 
I’m also wondering if there are any wholesalers who focus in this area / NorCal? 

I will be looking within 35 minutes of Chico, CA. And I hope to be ready to buy within 9 months (we are moving from LA) 

Quote from @Don Konipol:

Quote from @Tyler Y.:

Unfortunately, providing low-income housing in a state like New York is not just a thankless job - it is the kind of job where you will get kicked in the teeth, knocked on the ground, stomped on, p*ssed on, and then left for dead afterwards. Nobody will ever respect you for the blood, sweat, and tears you will go through dealing with all of the pain and agony of trying to navigate such a ridiculous system. I say leave and never go back. The state is falling apart, particularly NYC, and until rule of law is restored, it will only get worse.

During the 1977 World Series at Yankee Stadium, fires of building burning could be seen in the background, with Howard Cosell announcing that the Bronx was burning.  This was not the case of vandals burning abandoned buildings, nor the case of landlords burning building to collect insurance.  This was landlords burning their building because the city had obtained a court order REQUIRING landlords to continue to support and operate money losing apartment building.  In other words they were not allowed to terminate the money losing business (apartments) they were it; they were required by a court to continue to run their business and continue to lose money!  So they handed each tenant $500 to leave the building for “48” hours, and arranged to have the building burned down.  Btw, prior, the city and state would NOT foreclose for property tax nor accept the building as a gift; the government just determined that these property owners must become economic “slaves” to the government.  
Another BTW, the state of NY determined in 1947 that a temporary housing crisis existed in NYC.  That designation of “crisis” has been renewed without fail every three years and so the “temporary” crisis has existed continuously for 77 years.  Don’t expect any changes in property” rights anytime soon. 

 I tried googling and can’t find any more info on this, got any links of sources?

I just checked Maine where most of my LTRs are and it’s the same!! 
I think this is going to be in most states. 
good information and we should all (continue to be) careful about this going forward!

Quote from @Matt Devincenzo:

"Source of income" as a protected class (i.e. Sec 8 voucher recipients) is a pretty well known State specific protection. It's a commonly applied local overlay in the 'usual suspects' of States that have restrictive tenant protections, so its unfortunate that you thought you didn't have to accept it...technically you may not have been required to 'accept the voucher', but you have to allow them the opportunity to apply and then allow the housing office to decline the property. 

Out of curiosity I just searched the places that include income protections, there are 17 states, 21 counties, and 85 cities that ban source-of-income discrimination as of September 2022 

 This is waaaaaay too much information. 

Your basement unit is irrelevant to this, and I would just delete that part of your post if I were you.
I just googled “do I have to accept section 8” and sure enough, in NY you do. 

I think that’s complete BS!! Some of these housing authorities are tyrants!! Inspectors on power trips and not picking. Nope not me. 

moral of the story is that you have to either not respond or say yes and don’t mean it. 


the rest of your story is so self incriminating that I’d just delete it all if I were you. 

Quote from @Alex Bekeza:

@Vishal Amin Strong FICO and a loan amount over $75k should put a DSCR loan in the low to mid 7s today. (options to buy down into the 6s but I don't see many people opting to do that).

Can we ask who funded this at 8.625%?  Make sure to shop your next one to the folks in this thread. 

where are we at now with rate? 
looking at a 6 unit in NorCal excellent credit score, solid cash flow 

Quote from @Chris Seveney:

@Eric Mcginn

I would only recommend it if you are ok with also having a strong chance you will have to foreclose at a later date on the borrower and go through that process .

Thank you for this, it’s helping me understand how it would work. I am ok with it as long as I can definitely get my parcel back without excessive cost or complication. I’m ok with it taking a while and some paperwork though and up to a couple grand in legal fees especially if I get to keep my downpayment and my parcel.