All Forum Posts by: Jonathan Taylor

@Michael Williams the NACA process was hard, not going to sugar coat that. It is an inefficient system that does not communicate very well with its many branches. That said, I closed on a four plex in LA... so you earn the rewards of the program by following their rules and just doing what they say. The approval process depends on your situation and I can't give an absolute answer since I used the program to its absolute full extent. I heard there phrase 'in my years of experience I haven't seen a file quite like yours.' So if you are buying a bit more out of DTLA or further it would be slightly easier. DM me for more details and I can walk you through exactly what I did.

Oh and we bought in Glassell park. 

@Zach Cummins My plan is to rehab, hold, and self manage. The estimated rehab time is 6 months and once we get it up and running we will just practice efficient management and build our systems out so we can move on to the next property by mid 2020. My wife and I are taking the smaller unit and will live there until we need to expand. My advice is to look for the properties that have been sitting for 90 days or more with no movement as this was a deal I found on the MLS. Im not experienced enough to get pocket deals....yet!

@Clifford Paul thanks. The biggest lessons learned just in this process was the mentality of ‘I fix enough problems I can close.’

Thanks for the encouragement!

@Kenny C. Thanks! This property will be at break even point but living for free saves me 24 grand a year. In one it will cash flow but the area is beginning to gentrify so that’s the other bonus.

@Michael Tripp thanks for the encouragement! It was a hard road but will be worth it from the wealth this will generate in years to come. Have you had experience with NACA before? What is your opinion of the program?

I just closed on a fourplex in North East LA and it is in terrible condition. Now before I dive deep into how much work this will be, this deal is the culmination of 16 ish months of hard, persistent work. We went through 9 months of preapproval, 5 months of shopping and getting our offers laughed at (literally) then 114 days of escrow. So just CLOSING on this is a huge deal.

Now, the nitty gritty

Purchase price: $725,00

estimated rehab $150,000

ARV: 925,000-950,000 ( this is a house hack so ARV isn't super important)

unit breakdown

3/2.5 1400 sqft (the money maker)

duplex 2 x 1/1 360 sqft each side (the 'make it nice becuase its small units)

studio 300 sq ft (the casita)

The studio and duplex (both sides) will be down to studs rehab. New roof/plumbing/wiring/windows/kitchens/baths. EVERYTHING

The house is just raised foundation work, new roof, flooring, new baths and painting ext/int.

Also, we need a new sewer line. 

Kinda overwhelming huh? Yeah, thats how it looks. 

My post is two part. First, anyone who has done extensive rehab have any advice on how to stay on schedule (contractor said 4 months work, we budgeted for 6), what do know and what would you advise someone like me before we dive head first into this mad crazy project?

Second, Ill be updating this as we chug along so pictures problems and updates will follow. 

Thanks for reading and lets do this!

JT

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $725,000
Cash invested: $20,000

I used the NACA program to purchase a fourplex house hack in North East LA. I literally just closed and will begin a 6 month rehab to bring it up to market rents.

What made you interested in investing in this type of deal?

It allowed me to get into the market and live for free in a very expensive market

How did you find this deal and how did you negotiate it?

I found this on the MLS, I was targeting multiunit properties that were on the market for more than 90 days

How did you finance this deal?

I used the NACA program to finance the closing costs. I got in with no money down and no closing costs. My 20,000 was to buy points off my mortgage since I will be living in it for awhile.

How did you add value to the deal?

I am rehabbing about 65% of the property and since it only has one tenant, I will be getting market rents for the other units.

What was the outcome?

It is still ongoing. I closed yesterday.

Lessons learned? Challenges?

Persistence is the key to this deal, It took 14 months to get this deal done.

All great points made here. Worst case scenario, if Prop 10 Passes it wont take effect until July 2019. This is from other investors in LA who have ridden out other laws that affect landlords abilities. So basically if you can get something under contract and up to market before then, hopefully you can ride it out. 

Im currently under contract on a four plex and planned rehab will take me until April. Fingers crossed Prop 10 does not pass.

Ill be there, @KJ L. would be great to finally meet you!

UPDATE: After initial inspection, 3 of the 4 units need down to studs rehab due to heavily deferred maintenance. Problems are below:

Rotted out subflooring in both 1/1 bathrooms.

knob and tube wiring in duplex ( needs brand new wiring)

outdated and poorly functioning kitchens

outdated electrical paneling

rotted out support beams in the flooring of main house and duplex

Incorrect legal size of bedrooms, in CA ( not sure about elsewhere) bedrooms need at least 100 sq ft with a closet and window. These are 64 sq ft with no closet.

Studio is the worst of all 4, needing a gutted kitchette, reworking of the floor plan and new wiring/exterior, completely new bathroom. 

Main house has poorly updated external wiring, poorly updated external covering (basically terrible build on an expansion) and a few rotted out wooden structure beams below the house.

GOOD NEWS:

roofing and foundations are solid.

Its in a B- area that is showing signs of improvement by the city and businesses within walking distance.

Big enough lot for off street parking

I can wrap my rehab costs into my loan.

So rough rough estimates are about 100K for rehab, working on contractor bids this week.

Any advice from BP folks better ways to estimate rehab costs? What am I missing since this is a huge project for starting out but from my research it will garner positive cash flow after rehab. I have a mentor who is guiding me along the way and plenty of experienced people whom I am bouncing all ideas off of as I go. 

Cheers

JT

@Jaheel Muss, Can I pm you? I haven't spoken to anyone who actually CLOSED with NACA just people in various steps along the way.

I hired a sewage guy last Saturday personally and he found three full blockages (He snaked most of the 160 feet of the line). So gives us some negotiating power for sure. 

I brought on a NACA inspector who did a fantastic job and report will be out today.