All Forum Posts by: George Fitz

@Joel Owens 

Very helpful. Thanks for the info.

@Abou C. 

I'd pull the plot plan on file just to do my due diligence and ensure that the it matches what is on the property. If you ever have a building inspector on the property and it does not jive with what the city has on file (i.e. un-permitted construction), then you could have a big problem. It happened to me once. and it was a nightmare, so you live and you learn. But even beyond that, talking with a planner about what the zoning is, and more importantly what it means, can be enlightening. I have a property that I can subdivide, which the previous owner and broker did not know. That makes it more valuable. I also think looking at all the past permits gives you some good insight into the property. All of this probably more important for an older property of course.

@Raymond B. 

I think I may have run into a little BP glitch because I did that and Joel's name even was blue when I hit "Post." But thanks for the tip nonetheless as I didn't notice what happened.

@Joel Owens I was curious if you could elaborate more on the net worth/liquidity requirements that commercial lenders may require? Thanks!

To add to this, I would go to the city and research the property. Pull the plot plan, look at all the permits that have been pulled, confirm the zoning and talk to one of the city planners about the property and the neighborhood. I've learned my lesson and now would never purchase a property without this step.

For a million dollars, you should be able to find properties with more than 15-20 units (depending on the market of course). I personally would start out smaller, however and learn. But to each his own. I'm just now starting to think about larger sized apartment buildings after 10 years of owning 3 and 4 unit properties.

@Joel Owens Are there any rough guidelines as to what commercial lenders look for from borrowers in terms of net worth and liquidity? For example, if you purchase a property for $1,000,000 with $250,000, any idea what the guidelines would be. I've also heard that a primary residence does not count towards net worth in the eyes of most lenders. Do you know if that's usually the case? Thanks!

Best thing to do is to go down to LADBS on Figueroa with a list of questions. You may be there for a while, but they should be able to answer most of what you want to know. I remodeled and added some square footage to a triplex in Venice (City of LA). The remodel was in plan check for about a year. So be prepared for that. But that was longer than normal because it was an older property (1923) and so the setbacks were not up to code, nor was parking and there were a few other issues. I spent a lot of time getting signatures from neighbors and researching the building code so that I could argue proficiently. Also, I received different answers every time I went to LADBS. And you'll get different answers at different offices. Once plans got approved, the remodel went smoothly, but I had the same inspector for the whole job and he was pretty easy going. That's not always the case as I understand. If you decide to do it, hire a good architect who knows multi-family in LA. Otherwise, the whole process will take years off your life.

I also put up two units behind my house in Santa Monica. For that one I knew to get a good architect. Even though Santa Monica is known to be a pain in the butt, it actually went smoother...I think because it was a new building, the architect and because it's a smaller building department. And because I expected the worse.

Rent-o-meter and bestplaces.net have that kind of info. Just not sure if it is terribly accurate. Honestly, you're probably best off just to identify your markets, check Craig's List, Zillow and any other popular listing services and then add the listings into a spreadsheet. 

I wonder if any service out there does data mining on Craigs List ads? That could be interesting on a bunch of levels. 

Some of the larger commercial brokerages publish multi-family market reports which include the top markets and spend a page or two discussing each city and their economic trends. Marcus & Millichap, CBRE, etc. Usually they are free if you sign up on their website. Then there are pay sites like reis.com that have more specific market research reports available. They may have what you're looking for. I'm just investigating all this right now myself.

Welcome to BP Joshua! This place is a treasure trove of information. I absolutely share you love of the Carolinas (even thoughI'm presently stuck in California). Good luck!

I've never filed a return for my LLC. If the LLC is a single member LLC, the IRS considers it a "disregarded entity" for tax purposes, and so it's return is just a part of the single member's personal return. But I'm no accountant, and not sure if they treat it the same for a married couple.