All Forum Posts by: Houston Garcia

@Satima Flaherty I'd highly recommend speaking with @Chris Mason - he should be able to present you with some options to tap into your equity for a multifamily purchase.

@Lynette P. - I highly recommend Eckhoff & Company. Let me know if you need any introductions.

@Alexander Canha - As @Account Closed mentioned, owner Move-In Evictions are allowed, but there is currently a moratorium on them. In a pre-COVID world, you'd give a 60 notice, and pay relocation fees. A sure-fire way to move into your property as an owner-occupant.

Currently, tenants cannot be evicted except for limited circumstances. For example: 1) Ellis Act - removing rental units off the market or 2) A health & safety issue that poses an imminent threat to tenants or neighboring residents. A tenant buyout agreement (which is NOT cash for keys) is the closest thing you can get to an OMI nowadays. 

A problem arises with tenant-occupied properties (say a tenant-occupied SFH) that you want to move into: you can only discuss a tenancy buyout AFTER close of escrow. You cannot discuss buyouts or evictions with tenants before or during escrow - that could be construed as constructive eviction and land you in legal hot water. Since the OMI is temporarily off the table, you have no sure way of moving into a tenant-occupied property as an owner once you take possession. You can only offer a tenancy buyout after closing (and you should do it properly through an attorney). So be very careful, especially if you have an owner-occupant loan that requires you to move into the property within a certain amount of days (usually 60 or 90).

Eventually, the eviction moratorium will be lifted, bringing us into a whole new landlord-tenant landscape. For the better or worse, the pandemic has fundamentally changed the dynamics of landlord-tenant relationship.

Disclaimer: I am not a licensed real estate attorney, consult with a legal professional (happy to make referrals).

@Shopitha Kumar - I did some digging and found the property you mentioned. It has fantastic potential - especially for the location, but see my notes below:

1) Definitely do your research with permitting & entitlements. It would be a great idea to get in touch with a permit specialist, architect, & contractor who can analyze the property and be upfront & honest about what it would take to build those 4 townhomes. The entitlement & planning stages alone for a project like this could easily be north of a year - especially with pandemic-related delays. 

2) Yes - but with caveats. There are lenders that will loan on such construction projects, but they will want a comfortable cushion of cash reserves. Ground-up real estate development (even if building your own residence) is an extremely cash & time-intensive process, so lenders will be on the more conservative side - especially if its your first time being involved in such a project. 

As @Dustin Allen mentioned, the listing agents (who I actually dealt with before on a similar project in Oakland) should be able to give more insight on why the property has fallen out of contract multiple times. My guess is the reasons above (time, cost), but there could be disclosure items that would raise red flags. Regardless, I doubt it'll sell for the current asking price.

If you want referrals to any of the aforementioned specialists (permit expeditor, architect, contractor, or lender) who can share their insight, let me know and I'll send you a PM. 

@Doug Bielecki Normally commissions in the Bay Area ae 2.5% for each side. I typically only see 3% for properties that are difficult to sell (as an extra incentive for buyers agents), or for properties under $1M (on either side) - and even then, it's fairly uncommon to see 3%. What extra value to go above and beyond is the listing agent providing you for the extra .5%? Buyers agents usually aren't happy seeing 2%, but its not the end of the world. Personally, I would stick to 2.5% for each side.

In the large majority of listings in the Bay Area, staging is paid for by the Seller - it is not considered a marketing expense provided by agents. In my experience, if the agent pays for staging, it is usually staging that you don't want in your property. This is because the agent offering it will likely pick the cheapest company around, where pieces are not thoughtfully curated to highlight your property's selling points. Staging is an investment, and good stagers (usually with interior design backgrounds), are well worth the cost and provide a great ROI.

@Nemat Waseem PM'ed you a recommendation! 

@Sanjay Sinha For the amount of money you are investing on a project like this (a personal home no less), I would recommend hiring a GC and a project manager who knows the ins and outs of the build process, permitting process, and project management. Their job is to not leave any stone unturned during the process, since they do this for a living. I believe @Josh Cuthbertson sums up the situation very well. 

If you opt to take the route of GC'ing this project, I'd at least highly recommend speaking with and/or hiring a project manager, as well as a permit expeditor (oftentimes they are the same person). Permitting and going through the ins and outs of planning & building review can be daunting without the right experience and knowing how to best navigate those depts. The right PM & project expeditors can shave off project time, and thus money. 

In the long run, the cost of a good GC will pay for itself. As @Chad Hale mentioned, finding good subs is difficult. Contractors are typically in pretty high demand, and finding one that can deliver on 2 out of the 3 (quality workmanship, price, and on-time) will be a decision you'll have to find the right balance on. Usually, good contractors keep their subs busy on a few jobs at the same time, and spread out the work, so the subs are always busy. So finding a good quality sub to do work that is not managed by one of their usual GC's will be very difficult without existing relationships. Not a risk I'd feel comfortable taking. 

Happy to refer a project manager if you'd like to learn more about what the process would entail.

Co-hosted by @Brenda Chen and myself, we're bringing our monthly coffee meetup to a virtual platform. 

Bring your coffee and let's get to know each other! This is an opportunity to mingle with fellow local investors in an informal setting. 

We'll be back to Sightglass on 7th in the future!

New link for today: https://zoom.us/j/91147159075