All Forum Posts by: Brian Spohr

@Jack Edward Johnson Hey Jack, I can answer this for you if you share the gross income. Do you mind sharing the BP resource that discussed this? I'm familiar with looking at expenses as a percent of gross income but not NOI.

Unless the property is zoned for this use, you likely won't be able to legally accomplish this. I've appraised many MHP/RV parks in the area, and to my knowledge, there hasn't been a MHP/RV park developed in the area in over 30 years. You might want to contact property owners with the land area and work out a lease agreement. Let me know if you need any help with this, I can provide property contacts and market rates. 

I cannot provide much input on the design but I suggest checking with @Adam Mayberry on your options. Retaining your garage and doing the detached ADU should create more value.

Are you looking to purchase the rental property locally? 

I think it would be prudent of you to also account for capital expenditures, which would cut into the cash flow. You identify an interest expense, so can I assume that no principal is being paid down? Also something to eventually account for. 

You definitely achieved some good appreciation out of these in that time, assuming they sell at these prices. In general, I think you can find better investments elsewhere. 

Brian Spohr
Double Crown Realty
DRE #02081921

Cash-flow investments in San Jose and surrounding area are rare, and holding for appreciation is risky, so I agree that selling and redeploying capital into other investments may be the best option. Selling with the tenant in place could help, if sold to an investor, the rent is at market, and there is a good payment track record/tenant has good credit. Otherwise, this could hurt the sales price. Negotiating an early termination may be in your interest, which would open up the buyer pool to owner-users. Reviewing the lease will be important in determining your options. Was anyone consulted in writing it? If so, maybe check with them first. 

Hi Jeremy,

I do not believe the Fed will be hiking rates in 2019. The market is of the same opinion (https://www.bloomberg.com/news/articles/2018-11-21). Take that into consideration, as this impacts mortgage rates. Even so, you almost certainly will have a higher interest rate on a purchase at this time. 

Keeping monthly payments down on the new home would primarily be a matter of using the right down payment. In your case, it sounds like if you used all the equity in you current home ($1.6-1.7 million - $775k = $825-925k), you could get the monthly payments close.

Regarding the custom home, if this is a tract home that you are customizing the finishes of, the sale price may be utilized for the tax base year established by the assessor (not appraiser). In this case, finishing the property with lower-quality finishes and renovating later could help with lowering the base year assessed value. If this is a stand-alone, custom-built home, then the assessor would likely utilize comps to determine the assessed value for the base year. In either scenario, the assessor will not take into consideration who paid directly for finishes, just whether or not they are in place at the time of assessment/sale, if they even have this information. 

Brian Spohr
Double Crown Realty
DRE #02081921

HI Natalie,

Welcome to BP! 

I would suggest you determine market rent for these properties to include in your analysis, rather than utilizing current rents. You can use sites such as Rentometer, look at comparable listings on Zillow, Craigslist, etc., and even find signed lease comparables on MLS.

It's going to be hard to give specific buy/hold/sell advise on these properties with this amount of information, and without considering the tax implications and knowing your parent's investment plans. It seems like getting number 3 leased or sold is a good first step. Again, knowing to lease or sell depends on having more information. 

Best of luck and hope this helps!

Brian Spohr
Double Crown Realty
DRE #02081921

You’re on the right track with this, although I think analyzing the cash flow of the Daly City property is an appropriate first step. That can help inform your buy/hold decision on that. There may be other expenses you haven’t touched on, it’s hard to say definitively, as some are unexpected, property-specific, or part of the negotiation process. I think you’ve accounted for the major ones. Definitely make use of the calculators on here for your current property and any potential deals. I also suggest consulting a tax professional when making this decision. Best of luck to you

Hi Debbie,

Without doing the analysis between these options, you will not be able to determine what the best course of action is. Without solid data or estimates, this analysis will not be of much value. Because you say you do not know how to do this analysis, I suggest you hire a professional, such as an appraiser; or perhaps your agent is able to assist with this. Once you know which course of action is the most profitable, or which best fits your risk tolerance, timing, finances, etc., then you can proceed. 

Brian

Welcome, Alex! Squid Vet here. PM me if you have any questions, always happy to help