All Forum Posts by: Hans Christopher Struzyna

@Paul Dickinson Im sorry it didn't work out. Feel free to DM me if you ever want to chat about those strategies further. 

The first thing to think about here is that you will want to identify is what kind of property are you purchasing. If its a single family home vs small multifamily have different down payment requirements for nonowner occupied typically. I generally tell people to underwrite for 25% down unless your loan advisor tells you otherwise. So you will need around 300k (not including closing costs). 

The fact that you have so much equity in your primary residence is great. You might consider doing a HELOC on it to access some of that equity. I'm not sure of the rates but I bet it will be less than cap gains on your investments. The nice thing about a HELOC is you don't pay interest on it until you use it. In contrast, you could do a cash-out refi but you start paying the interest on the cash out on day one.

Another thing to consider is do you have any friends or family that have some cash sitting around? IF so, you might consider approaching them and offering a reasonable but fixed return on their cash if you secure it to the investment property. There are a ton of professionals around our area who have 100-500k sitting and they don't know what to do with it. 

I've done this with some people in my network to fund a flip and it worked out well. DM me and we can chat about it further. I hope some of this helps. 

Best,

Hans

You will find that most landlords want to sell their 2-4 units with tenants in place. If you find one that is vacant, expect to compete and pay a bit of a premium. So if you are willing to take on an existing tenant, you can find a deal that many others pass over. 

I agree with KT above saying that you should consult an eviction attorney and read through the City of Oakland rental ordinances. I have a great recommendation for an attorney if you want to DM me for that. Also, you might consider getting on these guys newsletter: http://edringtonandassociates.com They put out great landlord specific content that might help you educate yourself. 

I hope all this helps.

@Jonathan Roberts Call Amanda at http://www.keystonecpa.com

She is fantastic and can go really deep in real estate and other forms of investment taxation as well as the formation of corps/llcs.

@Sharon Whipkey you are so right. I work in Alameda and lots of the "mom and pop" landlords are doing the same as you. Since the passage of rent control, we have seen the available inventory of rental units on the island shrink. Plus there are a lot of folks who are buying multi-family to move in and offset the cost to own with rental income. Those people underwrite in a different way so the effect rent control has on their bottom line is very different than traditional landlords. 

We bought a duplex that needed a ton of work in East Tacoma. Really love that area for its convenient location to I-5 and downtown as well as the up and coming feel of it. Hilltop is a killer location and as well what has already started to "arrive". The port, proximity to UPS and UW - Tacoma plus a growing downtown business district as well as the promise of the light rail extension, are driving much of that so you will likely pay more per door/sqft down there but you can also ask for a higher rent. We have also started looking at locations that are in southern Tacoma down towards the base which look like solid, long term investments and can pencil well. 

I'm happy chat further if you want to hit me up via DM.

Hey, @Amit M. thanks for your question. In Alameda specifically, the ADU or extra units are very normal and in many cases ideal. There are many young buyers who want to have their parents stay with them long term and are open to house hacking to offset the PITI. There is another fairly large segment of young parents with busy schedules who want an au pair suite (likely not renters though). So for that buyer segment, an official ADU isn't necessarily required but a suite with a separate entrance on a different level is ideal.

Generally, you will also find that having three bedrooms on a single level is an ideal floorplan, particularly for families with multiple children who want to live in it as a single family home. 

I have found that even many high-end homes have ADUs or au pair suites that people like to rent to traveling nurses, professors on sabbatical, grad students, their kids who come back from college or aging parents (likely no rent in that scenario). That said, true multi-family units or homes with ADUs don't sell for as high of $/sqft compared to true single family homes for a variety of reasons. Rent control and privacy being two. If your goal is to rent and be flexible, I'd go with an ADU that has an internal staircase that can be closed off. If you want to get top dollar per sqft, maybe a 4/2 is better, but that is really neighborhood dependent.

I hope this answers your question. 

Hi @Bang O. sounds like a cool project. Alameda is really diverse in its renter population as there are so many large homes and Victorians that have been converted into multi-family units on the island (due to Measure A that restricts density per parcel - http://www.saveourcityalameda.org/alameda-measure-... ). That said, due to the housing shortage in the Bay Area (particularly affordable housing), there has been a big movement to allow for ADU additions and conversions of spaces like what you are talking about.

Having seen hundreds of homes in Alameda and Oakland alike, so many are converted poorly and renters know that. If you are able to add two bedrooms and a bathroom downstairs with some kind of internal staircase that can also be closed off to allow you to rent each floor separately, that will maximize your rental pool and your value. The big thing you will be contending with on the West End is the base redevelopment project that will bring hundreds of units to the island. Though you will benefit from the ferry proximity and the 2nd ferry terminal (once its opened). 

I will also say there is a big trend for folks looking to buy (and rent) a space that allows for multi-generational living. Depending on what your cost to develop the downstairs area is, it may or may not pencil though. Plus you need to consider the impact that Alameda's Rent Control plays on your long term cash flow. Id say the biggest bang for your buck right now creating a space where multi-generational families can live but can be rented out two independent spaces if need be. Perhaps you could do a small kitchenette downstairs and look into short term rentals there. Flexibility in this market is key because we are so transient with all the tech companies coming and going as well as many of the baby boomers downsizing. 

I hope this helps. DM me if you have other questions. 

I would talk to Amanda Han at http://www.keystonecpa.com

They aren't based in Oakland but they are great real estate tax resources and can really help you leverage your investment into tax savings. I use them personally and they have helped me save a ton of money on my taxes. 

Hey @Louis W. there are a few questions you should answer before you embark on a project like this. The first being, what part of Oakland are you in? Price per sqft varies wildly from one neighborhood to the next. Second, what are your goals with the property? Flip, live in and enjoy, refi/equity line to access the equity? Lastly, What is the existing configuration of the house and what is the existing footprint and lot size? This is important because the sqft you add to the property will be more valuable if the house is at or under 1200 sqft than if its already 1600+. People really tend to value the first 1200 sqft the most then the prices go down from there. As well, you may be restricted with setbacks, parking requirements and lot size/sqft ratios depending on the specifics of your property and the goal of your project. 

What you are suggesting is a very popular strategy that many investors are using these days. I'm seeing this all the time now. Labor and materials are definitely expensive at the moment and the key is to find a reputable contractor. I have a few to recommend should you want that referral. Depending on the footprint of the house, you could possibly cut the slab and leave 12-18 inches (I'm not exactly sure what code would require) from the foundation, and pour a new foundation inside the new cut that would help you meet the required ceiling height. You end up with really thick walls and deep window wells but this could be a much less expensive option than lifting the house. 

Another thing to consider is creating an ADU out fo the ground floor unit. This can add substantial value and you may be able to do that job for less than you might imagine (because you don't need an internal staircase necessarily).

I hope this helps. Feel free to DM me if you want to chat further! 

Good luck,

Hans