All Forum Posts by: Dan H.

Look at sb897. 

1) bill states that the construction of an ADU on a property does not trigger a requirement for fire sprinklers in the proposed or existing primary dwelling.

There is another ADU law (forget which one) that basically states an ADU Cannot be rejected due to existing unrelated permit issues on items that are not the ADU.

So I see no reason an inspector should ask or be given permission to examine the interior or unrelated units.

Good luck

I have not read Scot trench’s book set for life, but I am familiar with your market, the challenges, and the benefits.  

I will start that rent being more than mortgage does not imply that it is good to buy.   Property tax in your market at purchase is typically over 20% of the rent by itself.  Maintenance and cap ex is more than virtually every inexperienced investor believes.  Insurance adds some more costs.

The reality is in riverside it is initially cheaper to rent than purchase move-in ready homes on the mls.  This is true in virtually all markets, but very true in the non extreme Southern California markets.  I include riverside in these areas.

So does this mean I do not recommend purchasing?   Not necessarily. 

If you plan to hold long term, you will do great.  A hold of a riverside home 10 years is virtually certain to produce a good/great return.  A hold over 5 years in recent times produced a good return but I fear with the current rates this might not hold true on a purchase today.

Or you can exert the effort of a value add.  This could accelerate the early returns which could allow shorter holds to produce good returns.

As for financing, make sure you do what you can to achieve high credit scores. There are many alternate finance sources for owner occupied. The first I would look into is NACA. It has various hurdles, but it is designed exactly for people like you and your fiancee. If you go this route I recommend either your lender or re agent to have experience with the program. Next to consider is assumable loans that originated prior to q2 2022. These assumptions usually require owner occupancy. Assumable is not the same as sub to and I do NOT recommend you pursue sub to (too risky).

Educate, be patient on the buy but be prepared to act if the right deal presents itself, recognize the easiest way to achieve a good return is by having a long hold (different form of patience).   Recognize value adds are work and the first value add will likely have unexpected hurdles.

Good luck

I am assuming a $1.2m price is a luxury home (in the area I live it would be a starter home).   In my market luxury homes are harder to sell and sit on market longer than more median homes or starter homes.  The open houses have lower rate of attenance.

Using your terminology, So I question if you are comparing Gucci criteria (DOM, attendees yo open house, inquiries, viewings) to Walmart criteria?  An acquaintance recently sold a beautiful home.   It took 9 months.   Entry level homes were selling in about 2 months.   But she ended up getting close to her $3.5m asking price.   There are less buyers qualified to buy Gucci than Walmart.

it is possible that your biggest issue is your expectations.  I would try to determine what is average and median DOM for a $1.2m property in your market.  See if you expectations are accurate.

good luck

 I never do cash for keys. I do not desire to reward tenants for poor behavior.

I explain the consequences of an eviction to the tenant. I explain they will have difficulty Renting a quality unit if evicted.  I explain they will pay for any legal fees. They believe I will do what I state because I have always done what I told them I would do.

My market has a low vacancy rate. Poor tenants cannot obtain quality housing. My tenant requirements includes no evictions, ever. No excuses accepted

So far with a combination of good screening and good luck, I have never needed to evict a tenant.

When the time comes to evict our first tenant, I will hire the best lawyer and let the expert take care of it. I will add the cost of the eviction to what tenant owes, and if the cost is not recovered I will consider it a cost of doing business.

What I will not do is pay a bad tenant to leave so that another landlord gets stuck with having to deal with a bad tenant that I have rewarded for their poor behavior.

In addition if I paid a tenant to $crew me, it may cause me to lose sleep. Sleep is precious. I would rather not pay the tenant, pay a lawyer, lose some rent but not lose one wink of sleep allowing the bad tenant to get money from me.

Do not do cash for keys.

Good luck

Was it ever a good location?

My ideal location can generate the largest value add for the cost.   A year ago I added a half bathroom out of existing space in a high housing cost market.  Comps showed the half bathroom added ~$50k of value.  What do you think it would add in Cleveland?  My guess is less than $10k.  What do you think the cost difference of adding the half bathroom is.  Even if my cost was double the cost of the halfbathroom addition in Cleveland, I got at least 5x the value of the Cleveland addition for virtually the same effort,

A brrrr is a long strategy.   This implies appreciation and rent growth are important (versus flipping they have little importance).  Neighborhood scout shows Cleveland’s appreciation for this century as being 1 out of 10 (so in the bottom 10%). https://www.neighborhoodscout.com/oh/cleveland/real-estate

Long term Rent growth has a strong correlation to the appreciation.

The question is why do you think Cleveland was a good brrrr market?  What brrrr trait do you think Cleveland is above average?

Good luck

 I have no experience with section 8 so do not know their process, but I suspect there are many on this forum that can describe the process for returning a section 8 deposit.

good luck

In ca we have 17 days to return the deposit (and many other requirements), but if the tenant has not provided he keys has the clock started?   I use landlord locks and would swap the cylinders on day 1 if the tenant has indicated they have moved out.

If they have not indicated that they have moved out then they get billed for hold over days that are 2x daily rate as they put placing a tenant by the 1st in jeopardy. 

The 17 days start the day after the day the tenant indicates that they have moved out.

Regardless, they get their deposit returned as dictated by the law (no later than day 17 in my area), not when the tenant dictates.   

Because I have landlord locks, they can keep the keys but will be charged for the new keys and the time to get the new keys (the labor to get the keys).  They will be charged at least $25, so they should return the keys but if they want the keys, they get to pay for new keys.  I do not care and if they whine about being charged at least $25 for keys, I point out that if they did not want to be charged for the keys they should have returned the keys.  

Good luck

I have STRs in mission beach and pt Loma.   I have a pm (licensed, insured) and a co-host.

I like both of them but the co-host seems to be better at occupancy and possibly guest relations. It is the co-host and her VA. The pm is better at maintenance. The Pm is more costly. the pm team is much larger with employees as maintenance staff (maybe a dozen employees). They also have a lot more units. Both contract out cleaning services.

The co-host is a bit rough on the edges.   I also do not know if she is taking new clients.

If you IM me I can give you the contact for either one or both. I also have a list of questions for interviewing STR managers. If you desire the questions, provide an email.

Good luck

Asset manager.   This applies to my various holdings but also applies to RE where I use a professional PM and the units we self manage.

In addition I am CTO of our LLC, wife is ceo (she is so much more but ceo sounds good).

Also you never know when someone will be interested in partnering with you on some investment.

Good luck

 Are you stating a property with a value below $1m is getting $120k rent?  Something seems off in these numbers.   If they are accurate, I would be interested in where this is.

Now for your question, have you considered a lease to purchase of seller financing?   On seller financing, an option just above money market could be good for both of you.  In addition seller financing can minimize the cap gains your mom would be stuck with.  

Good luck