All Forum Posts by: George Azita

 I've been investing in real estate 55+ years and found all my best deals by personally visiting real estate offices and asking for everything they have for sale. Almost every time I walk into a real estate office an agent pulls out a pocket listing and they have always been the best deals. If I don't get a good listing when I walk into an agents office I almost always get telephone calls with hot deals down the road.

I developed some fairly sophisticated software that does every type of marketing including downloading thousands of leads. It does email, SMS, telemarketing and direct mail. The problem with marketing is we real estate investors are bombarded with solicitors wanting to buy our properties every day and there are so many investors wanting to buy our properties the property owners we market to are overwhelmed with solicitors and numb. I sent tens of thousands of advertising pieces through every mode and received near zero responses and the responses I did receive were prospects who were only fishing for the things I was not looking for.

I've been searching for properties on loopnet.com  almost every day since it went online and never found a good deal until two weeks ago where I just put a 6-unit property in escrow for $975,000 in Los Angeles which has the highest prices in the country. The property is also under Los Angeles rent control and I always stood away from rent control, but this property will give me a profit of $1.5 million, or more in the next 10 years and that is the best I've found in the past 3 to 5 years. My point is; don't waste a lot of money looking for properties when because they still pop up in unexpected places and you don't need to cause yourself more stress by wasting money.

The best deals I ever got always came from real estate agents I visited and handed a business card to and you will meet many agents who will scratch your back at real estate clubs.

The most-important factor to be successful is having the ability to analyze a property correctly to determine how much you can squeeze out of it after doing a little cosmetic work, rehabbing, increasing rents, calculating principal paydown, depreciation and then turn over every rock to uncover all the expenses and costs a high percent of investors ignore. It is all about the true numbers!!!  

I would dump the house like a hot potato and use the cash after you sell it for a guaranteed goldmine investment that will give you tons of instant cashflow and make you rich.

You can take the cash you have and earn a guaranteed significant amount of more profit only if you decide to use a business model that you adhere to. If you don't have a business model then you will not achieve what a good business model can reap for you.

The purpose and goal for a good business model is; look for investments where you can double your investment capital every 1 to 2 years. That means, if you have $150k equity in that house then you want to earn $75,000 to $150,000 every year with that cash. If you don't have that business model then you will not seek out that type of profits.

While it may sound difficult to earn a 50% to 100% profit on your investment capital every year, it is quite easy and takes only a few minutes of your time every day. I can write an entire book on this subject, but this is the short version. Suppose, you have $50,000 to invest. Then, to earn 50% to 100% on your money in one year you only need to find a property that is either priced $50,000 under market value and/or you need to find a property where it is both a little priced under market value and where you can do some minor cosmetic work, increase the rents and increase the value of the property by rehabbing and increasing the rents. So, if you purchase a property worth $350k for $325,000 and increase the value of the property by doing a little cosmetic work and increased the rents you will earn the $50,000 you put down on the property in less than 1 to 2 years.

It is virtually impossible to increase the value of single-family homes by increasing the rents and even when you rehab a single-family home and make it the most-beautiful home in the neighborhood it is still difficult to sell the house for more than the comps in the neighborhood. That is where multi-family homes are the most-profitable investments you can make because when you increase the rents for multi-unit properties you automatically increase the value of the property based on the rule-of-thumb Gross Multiplier. The best part of multi-unit properties is you can often purchase 4-plexes for the same price as a single-family home and when you increase the rents you are increasing 4 rents every year at the same time vs. increasing only 1 rent.

As stated in a few recent posts, if you want to go to my profile, I just purchased a 6-unit property in the most expensive city in the country for $975k. I am paying cash for the property and will earn, but the chart I posted indicated that if you put $250,000 down on this very expensive 6-unit property you will earn $155,000 per year and that comes out to a profit of $1,555,000 in 10 years after all expenses, more or less.

The annual cashflow on the top of chart is the cashflow at the time of purchase, only, and does not include rent increases at the time of purchase nor annual rent increases.  The annual totals include the cashflow with rent increases.

 Flipping with today's real estate prices results in low to zero profits, the risks are high and if you can't do the work yourself the chances are you will make bad projections that will totally bankrupt you. It is very difficult to generate a steady flow of income with flipping and when you go to real estate clubs you will find that even the pros lose a lot of money on a high percent of their flips. As stated in my previous post, if you had purchased the 6-unit property I currently have in escrow and put $250k down that this OP has the numbers I posted show that you will earn about $155,000 per year over a 10-year period. That comes out to about $12,900 per month and it is virtually impossible to earn $12,900 per month each and every month for a 10-year, 20-year, or 30-year period when you are flipping. With conventional real estate investing all you need to do is purchase the property, do a little rehabbing as fast or as slow as you want and you can even put get your property into 'Remote Control' and travel the world. Flipping is a 24/7 job, a lot of hard work, a lot of worrying involved, super risky and a hard way to go.

I see a lot of crazy suggestions. Everyone knows that the investment with the greatest potential is 'Bricks and Mortar' real estate investments. When a person has the possibility or desire to teach a child how to invest and manage money there is no other type investment that will produce the safe, risk-free, simple and long-term results that real estate investing offers when choosing to invest in the best type of real estate investments.

Learning a trade is great advice for many reasons i.e. a real estate investor will be much more successful and earn much more money with real estate when the investor has a good stream of income that can be used both for his living expenses and then to have additional cash to invest. The very best thing every real estate investor can have is the knowledge and ability to do his own electrical, plumbing, heating and every other type repair.

I've been a real estate investor for 50+ years and own several apartment buildings and homes, but I've also been a plumbing, heating and general contractor for more than 50 years and I am also licensed for 8 specialty trades. Just yesterday, I replaced a section of 3 inch sewer pipe from the ceiling in a garage, down a wall and replaced 15 feet under the concrete garage floor. I had 3 helpers, saw cut the concrete with my own concrete saw and completed the entire job in 4 hours (not including patching the concrete). If I had to pay a plumbing company for that job the cost would be $4500 to $7000, but my cost was only about $600 for labor and about $100 for materials making my total cost about $700 not including about $250 to patch concrete. Because I am an experienced contractor I can purchase many properties and turn a terrific profit where many other investors cannot.

I have a 22-year old son (born late in my life) who graduated from a 4- year college in 2-1/2 years with a math degree and then this past September he was going to Ohio State for a Phd. I was not happy about his choice for his career, but kept very quiet about my thoughts.

After my son  moved to Ohio and rented an apartment he was put into a math class that was two years too advanced because not enough students signed up for the class he was supposed to be in. So, this past January he left the college and came back to California. I purchased a 6-unit property for him in March 2021 to get him interested in real estate and he got a little excited, crunched the numbers and dealt with all the purchasing tasks, but sort of did not want anything to do with managing the property. When he came home from college I asked him to work with me in my construction business and he was adamant about staying away from the family business. He considered going into the army and even looked into working for other contractors and I never pushed him to do anything in his life because I want every decision he makes to be entirely his own.

About two months ago, my son had finally sorted out his options and decided to give working for my company a try and he has been to work every day on-time and even works every Saturday even though he doesn't have to and he even goes with me on emergency calls on Sundays. He loves the trade and I am teaching him as much as I can so he will be well-prepared to handle the rehabbing and maintenance for rental properties when I leave this world. The scenario with my son is the exact same advice I recommend for every real estate investor.

Teach yourself and your children how to invest in real estate and how do business when you are young and your chances of being successful are many times higher. Learn all the construction trades you can and you will earn great money and have the ability to beat the real estate investing competition. As stated in my previous post, there is still millions of dollars that can be earned in today's market, but you need to listen to the investors who are doing it and anyone saying you can't find great properties in today's market is giving bad advice. There are not as many great opportunities, but there are still many and all you need to do is learn to do the math, correctly and don't listen to the losers who can't or don't want to do the math and the math contains many calculations and other factors that even a high percent of pros do not do, or don't even know how to do.

If you want wealth (to be rich) then hang with the rich people. If you want to earn an average income then hang with average people.

You should focus on multi-unit properties. You will never earn the same profit dollar-for-dollar with single family homes and I am ready to argue with everyone. I've been saying I could not find anything to purchase that made sense for a long time, but just last week I put a property into escrow that would have been perfect for because all you need to make $140,000 per year for the next 10 years is $250k plus some money to kick the tenants out and to a little rehabbing. You cannot get this type of guarantee with single family homes.

While I purchased a 6-unit property in March 2021 for $291,000 per unit in Hawthorne California that is netting about $80,000 per year and will give me a return of about $1.3 million in 10 years, this building I put into escrow last week is a 6-unit property I purchased for  $975,000, or $162,500 per unit. I am guessing that the only reason I was able to purchase this property listed on loopnet.com is because the current rental income is a lousy $74,000 and the property is under Los Angeles rent control with a rent increase cap of about 3% and if you want a tenant to move you have to pay the tenant about $18,000.

Even though the property is currently a dog, one unit will be vacant when I take over the property and I will have to pay 5 tenants $90,000 to move. Then, I will spend another $100,000 to rehab the units and bring them up to market rents of no less than $1600 per month and the following chart shows how I will turn a dog into a great profit.

My point to all this is; you need to be super careful about advice you get from people who don't have a clue regarding what type properties are most-profitable and you should not listen to anyone who cannot do the math.

I am paying cash. So, the first chart shows that I will earn $183,700 per year over a 10-year period. The 2nd chart shows how you would fare if you put $250,000 down on the property with financing and then you can slowly give tenants the boot and increase the rents as you collect rents and get some cash. It looks like you will earn about $155,000 per year with a $250,000 down payment. This is the best investment I've seen in the past 5 years and there are many more to find if you do the math.

Check with an attorney and/or with a public insurance adjustor because I work with insurance companies frequently and they are notorious for lying to customers to deny claims. There may be a loophole, or maybe you are insured and don't need a loophole. I've had many vacant properties in Las Vegas that were in escrow when thieves stole the air conditioner condensors, every appliance and never had an insurance company deny a claim because the property was vacant. I never had an insurance company ask how long a property was vacant.` 

 What I was explaining was the profit (on paper) I would earn by purchasing the 6 units for $950k when the current rents are about $1,000 per month. One tenant is already scheduled to move because there was a leak in the roof and there is damage in the unit.

By using the Gross Multiplier as a rule-of-thumb for the value of the property, if I pay the other 5 tenants $18,000 to move out as required by Los Angeles Rent Control and then increase all 6 rents to $1550 per unit, which is still under the market rent prices, then I will increase the value of the property within a few months by:

6 units x $550 rent increase x 12 months x 13.5 Gross Multiplier = $495,000 increase in the property's resale value plus I will earn the additional cashflow from the increased rents.  

The seller is asking for $1 million and it definitely needs a new roof plus I think one unit is thrashed and has not accepted my offer of $950k, yet.

The chart looks like this and the calculations and this chart includes $150,000 to pay the tenants $50,000 to move and $100,000 to rehab the 6 units. I like the idea that I can earn $140,000 per year over a 10-year period for a small 6-unit property with today's high prices.

No professional real estate investor should say they are not buying properties in this high-priced market because professionals should be in the buying mode every day of their career providing they are doing what they are supposed to be doing and that is they should be constantly looking for great deals and then be ready to pull the trigger regardless of the market prices.

I can say that I have not purchased any properties in the past years because of the prices, but I can't say that I am not or would not buy today if I find a great deal.

Incidentally, I did put an offer on a 6-unit property today in the Athens District in Los Angeles. It is 6 1-bedroom units for $950,000 per unit and that is low compared to the $300k per unit for every the unit for thousands of miles around. 

There are many reasons I would never have purchased in the Athens District due to the Athens gang that is notorious for murdering innocent people, but this property is on a culdesac and is the only apartment building on the block with single-family homes. The rents are $550 under market (currently $1,000 per unit) and the building is under Los Angeles Rent Control where rents can be increased by only 3% per year, or if you want a tenant to move the landlord has to pay the tenant $18,000. One unit will be vacant when I take over the building. So, if I have to pay the other tenants $90,000 to move then I will increase the rents by $550 per month and will earn an immediate 6 x $550 x 12 x 13.5 Gross Multiplier = $534,600, or more than half of what I paid for the property plus the increased rental income plus annual increases over a 10-year period puts me at a $1.3 million in profits.

Yes!!! Every investor should be buying in this market when he (or she) can find the property with numbers that work.

Never turn the laundry room lights off!

For every multi-unit rental property we own, we installed lights that never turn off because we don't want women walking into a dark laundry room, then turn the light switch on, find out, too late, that a rapist removed the light bulb and then rape the women, or young girl.

In every laundry room, we installed a 2nd ceiling light that stays on 24/7. The light has no switch and the bulb os covered with a globe so it is not easy to remove the bulb. If the light is not on then the woman should stay out of the room. Then, we have a 2nd light with a switch that can make the room brighter.

I think it is silly when people complain about how much electric a 13-watt fluorescent light bulb costs to operate. I call the complaining , "Being Penny-Wide and Pound Foolish." The cost for electricity probably does not exceed the cost for a hamburger at a fast-food and the cost for a timer or motion control switch probably costs several years of what it costs to keep one bulb on 24/7 for an entire year.

A few weeks ago, we changed 80 15-watt Exit Sign light bulbs that are required to stay on 24/7 at one apartment building and the cost for electric is very insignificant.

The most-expensive thing our tenants waste is 'water'.