All Forum Posts by: Don Pearson

Join us for a fun evening at HH Cottons restaurant - held the first Thursday of every month.

Casual, fun, and focused: grab a drink, introduce yourself, we'll have a brief but relevant real estate topic for discussion, then spend some time getting to know everyone (ahem - networking ;) No selling, no pitches, just people interested and/or invested in real estate getting together with other like-minds to connect, collaborate, and sharpen. This is an open meetup, so feel free to extend the invite to others that may have interest.

This month's topic: AB 1482 (also known as Tenant Protection Act of 2019) went into effect January 1, 2020. Real Estate attorney Anthony Burton will be leading this discussion on what the new law consists of, it's potential impact on deals, and what investors/landlords need to do in order to comply with the new law.

Please DM me with questions.

See you there!

Don

@DawnVu  While I'm not sure of the type of building (institutional vs mom-n-pop), or level or sophistication of the ownership group, I'd be very surprised to hear of a commercial landlord or landlord rep terminating your lease without knowingly having the contractual ability to do so. Since you've been in your space for so long, it would be to your benefit to (i) read back through your Lease, and all subsequent amendments to see which provision the landlord is basing their decision, or (ii) simply ask the landlord (in-writing) which provision they are using to terminate your lease. By reading and understanding your own lease, you'll likely save time and costs with an attorney, as well as having the ability to call BS if the landlord or landlord rep tries to take advantage of an uneducated tenant. As stated in an earlier comment, you may have built-in protections (recourse) in the form of relocation costs, buyout monies, additional time, etc. 

As a BP member and real estate investor, we should always be striving to grow in knowledge and experience. As such I would start by seeking to understand your own Lease. What does it say about what each party can and cannot do in this instance? Like most leases I'm sure it's wordy, but it's not rocket science.

Lastly, if you are going to read your Lease I'd recommend starting with the most recent Amendment, then working your way backward to the original Lease document. This will provide a clear (and quick) understanding of material changes made to the Lease since the original date of execution. 

Good luck!

Looking forward to seeing everyone tonight! Please give some thought to this eve's topic and let's make it a fun and collaborative dialogue:

"Where are we in the RE cycle and is now a good time to invest? Pockets to avoid, pockets of opportunity? Your fears, successes, challenges, and thoughts? What's motivating you to push forward, or stopping you in your tracks?"

I know, I know - not a very catchy headline, but you get the point ;)

See you at 7!

Don

@Brtittany Smith - I agree with Ali. Planning for how to execute on Step 2 prior to Step 1 is premature. Given you're looking to owner-occupy - cashflow is obvi not your primary concern. It should however be considered depending on your Step 1 exit strategy (ie: if you're going to keep the 1st property and use the equity to buy the 2nd property, does the 1st property cashflow?? Likely not for quite some time with such a minimal deposit). Consider purchasing a small multifamily property that needs a little bit of work. You can buy 2-4 units with the same financing options you're looking at with your condo, townhome, or single family home. Additionally, you'll be in a much better position to reduce your net payment (your portion of mortgage, taxes, insurance after accounting for rents received). You're essentially buying a condo or townhouse in a small development/building which you own entirely. Have your realtor run the numbers for you - you'll find quickly that there are numerous options out there which are "net net" cheaper that an owner-occupied condo/townhome/sfr. Additional benefits of such strategy are greater tax benefits, a property that will likely cashlow much quicker than any single unit option, quicker capital appreciation (you're starting from a bigger basis usually), and a robust rental market with seemingly no slowdown in sight...

Welcome to So Cal, BP, and good luck out there! I

Join us for a fun evening at HH Cottons restaurant - held the first Thursday of every month.

Casual, fun, and focused: grab a drink, introduce yourself, we'll have a brief but relevant real estate topic for discussion, then spend some time getting to know everyone (ahem - networking ;) No selling, no pitches, just people interested and/or invested in real estate getting together with other like-minds to connect, collaborate, and sharpen. This is an open meetup, so feel free to extend the invite to others that may have interest.

Please DM me with questions.

See you there!

Don

@Isabel Ortiz-Gelder Welcome to BP! I too got my start by BRRR'ing here in good ole "untouchable" Southern California. If you're in it for near term immediate cashflow, then yes - So Cal is a difficult market to achieve this. If however, you're in it for the long haul, California can still offer opportunities - especially to those looking to owner-occupy and willing to provide their own sweat-equity. Not sure of your individual situation, but let's assume you're paying rent - I can't imagine your Los Angeles rent is an inexpensive commitment... Going owner-occ on small multifamily can STILL offer a great way to participate in tax advantaged RE ownership, mortgage paydown, and the long-term appreciation that California real estate is known for. I'd bet if you did an "after-tax" calc comparing annual rent versus owner-occ multifamily, you may just be surprised to learn the gap is not as significant as it may seem. You may have to sacrifice in the near-term, but isn't that what this game is about - especially early on... If I can ever be a "local" resource to you, please reach out anytime. Happy hunting!!

@Gagan Hurria Welcome! I too am a real estate broker and investor - primarily value-add multifamily and small commercial. A little too far south for you, but I recently started hosting a monthly investor meetup here in my local market of South Orange County, Ca. We had a great turnout for our first event - approx 22 investors from varying backgrounds. I'm not sure what your asset/return criteria is but would look forward to an exploratory conversation. All the best, Don Pearson

@BrandonSarhad Awesome Brandon! Looking forward to meeting you. We've got 12 confirmed with another 9 maybe's - an architect, attorney, a few investors, 2 brokers, a hard money lender, and a few newbs just getting started on their paths. Glad to have you :)

Rosario - congrats on your new duplex! My wife and I have had great success finding and screening for great tenants by hosting an open house. Here's our approach: Make sure the space is impeccable! That said it doesn't have to be brand new and clad with hand-scraped wood floors and italian marble - it SHOULD however show great attention to detail and exude pride of ownership. You increase your chances of attracting a quality tenant when you can offer a well cared for quality space. We even take it a step further and have the unit staged with the basics so that people can better envision the living spaces. Once the unit is ready, advertise for and host a "For Rent" open house with you as hostess - 2-4 hours on a Saturday or Sunday. We advertise on craiglist, local papers, community apps like NextDoor.com, and hang a banner from the building. We typically get 20-30 people through each open house when advertised properly (your market may differ). Also, with you as the host(ess), you can now meet and get to know all prospective tenants. If they're interested in the space, and you are (potentially) interested in having them as tenants, hand them a rental application with instructions to fill it out and submit along with the Rent Screening Fee (we charge $25.00 each person). You'll weed out a lot of tire kickers with this approach and increase your chances of finding someone(s) you like and that's willing to put their money where their mouth is... I like this approach because in 2-4 hours I can meet and pre-screen multiple people in-person. Once you have their application be sure to deep-dive into their ability to pay you your rent. My favorite screening methods (in no particular order): credit report (include add-ons like criminal, eviction, legal actions pending, etc), landlord references, proof of income. Of the 3, pay particular attention to their History of making timely payments, which you can clearly see on their credit report. Who cares if they have the income to pay and can get someone to "recommend" them as good tenants - if their credit report shows a history of paying late, they'll likely continue that trend when it comes to paying your rent... A quick side note: one of my best tenants to-date had a mid 600 FICO (not great at all) and a bankruptcy due to a house lost in foreclosure around 2010. As you can imagine, there were multiple late payments relating to that mortgage. I decided to accept them as tenants after (i) speaking with their previous landlord, (ii) ensuring they had sufficient income, and (iii) after looking at their credit report in detail - the ONLY delinquent payments the tenant had on their report was related to that foreclosed mortgage. A FICO score is only a data point and doesn't always tell the whole story. Dig deeper and you'll see the bigger picture of how prospective tenants handle past and present payment obligations... Good luck!

Join us at HH Cottons restaurant Thursday, November 7th @ 7pm

Very informal: drinks, introductions, a quick/relevant real estate topic, networking. No selling, no pitches, just people interested in real estate getting together with other like-minds. This is an open meetup, so feel free to extend the invite to anyone you know that may have interest.