All Forum Posts by: Ron B.

@Chad Nagel

Can you please clarify? How are you getting break even in 15 years and 2K/per month. Is that net cash flow? When buying such MF properties, what should be the cash flow target (roughly)?

@Edgar De La Torre

The SLS projects that I have come across were all 12-18 months duration, although it may take longer for the developer to stabilize the property and refinance/sell it. My IRR target depends on a lot of factors and how risky the deal is -e.g. how comfortable I am with the pro-forma numbers, whether I am ahead or behind other lenders, the partner I am working with, etc - but anything that is not at least in the low-mid teens ( with my own estimates) makes me think hard.

@Edgar De La Torre

I will send you a colleague request. I have looked at a few deals that my friends invested in with a local development company. But this was a couple of years back. I have also looked at some deals recently and in that process researched the space. I have not invested in any SLS deals personally yet, just because the return numbers seems to have gotten worse and did not meet my IRR expectation. But I am always open to such deals. I will probably post one such deal that my friend asked me to look at in the deal analysis section to get the thoughts of other investors on BP.

w.r.t is short for with respect to

Hi Edgar,

Welcome to the BP. I am also a new investor here and have learned a lot from experienced folks on BP. You will definitely find this site very rewarding.

Modative, is one of the well known companies in Los Angeles that does a lot of work in small-lot subdivisions. In fact, I have learned quite a bit from their published reports.

I have been trying to invest in that space too and have been talking to some partners. I had a few friends who invested in some SLS development about 1-2 years back( around USC) and are still looking at a few deals there. I know the zoning for these properties need to support these development. Have you been involved with any such development in LA? Which areas do you see the most development in? In your experience how has this space changed in the last few years w.r.t deals, competition, areas of development, prices etc?

Welcome again and all the best in your future endeavors !

I agree with @Henry J.

Please double-check the pro-forma numbers and use your own judgement. Sometimes the pro-forma numbers provided by TK companies can be optimistic and may not account for some of the expenses

Thanks @Jenifer Levini. That was a good explanation. 

Thanks @Jenifer Levini.

I have been considering the same question and that was a great explanation.

Can you please clarify what you meant by 

"Likewise, insurance doesnt protect and partition off your personal assets if someone is injured on your property..."

The GEICO agent that I spoke to a while back referred me to this umbrella insurance page. This is another FAQ I found on umbrella policy

As a RE investor wondering about forming an LLC ( no other partner other than my spouse), I am trying to figure out what sort of lawsuits/claims can one expect that won't be covered by an umbrella policy ( assuming one has enough coverage) ? What sort of lawsuits can an LLC protect me that an umbrella insurance cannot.

Thanks in advance.

Welcome @Bryce Lowe-White. I am a new RE investor from Torrance and getting started in RE too. 

 I also got started with the podcasts and found them to be a great resource to learn about RE.

I think BP has all the resources to get one started and be successful in RE.

Wish you all the very best in your investing journey.

Hi Kaitlyn,

Welcome to BP ! I am also a new RE investor from Torrance and it's always good to see another RE investor from here. Like you, I started with the BP podcasts and have found them to be an invaluable resource in learning about RE. Even though there is an obvious survivorship bias to the podcasts, I have found them to be excellent in shortening that learning curve. 

These days, I find myself spending a lot of time on the BP forums and reading the blogs. In fact, given the range of investors you will find here, there is hardly any topic that is not discussed. I would say that most of what you will find in RE books have been covered in the blogs/forums, although reading books also help as the information is arranged in more digestible format.

As for investments, I have been looking at deals both in CA as well as out-of-state ( your dollar stretches further outside CA). I have been talking to some investors/partners in LA as well as out of state and will probably invest in my first RE deal soon. Even though my ultimate goal is to own cash flow properties, the expected returns on the properties I have looked at until now haven't been that great ( I prefer to own properties in A/B locations and not C/D) , once you dig deep into the numbers ( be careful of pro-forma numbers provided by sellers, brokers or turn-key providers). So for now, I have been considering investing in most flipping/rehab deals.

Good luck with the house-hacking and feel free to reach out anytime.

I agree with JR on this one. This is not a 0% financing deal unless the 35,000 was spread out over 100 months. This is where concepts like Net Present Value or discounted cash flows are useful.

The very fact that one is paying ~40% above the cash offer means there is a built in interest rate. A $500 payment over 100 months is similar  to a loan of 35,000 at a 9% interest rate - a pretty good rate of return on one's money.