All Forum Posts by: Jerome Kaidor

My properties are minimally leveraged.   Generally I owe 10% to 30% of a building's worth.  I'm open to refi-ing if there's no prepay.  I refi'd one complex two years ago for cash out - but I kept it within reason, so the monthly payment did not go up very much.  And I threw most of the cash proceeds back into the properties, keeping about a third of it in my "capex fund".  A paintjob, a new roof, an earthquake retrofit.... It goes fast.  

I like doing capex with loan money because I have to depreciate it.   So I don't get to call that new roof an "expense" - and I only get a small fraction of the amount I paid as a yearly tax deduction.

I'm a lot more chary with loans for my personal stuff. My house has a small mortgage, which we are paying off with all deliberate speed.  Expect to zero that one out in about 5 years.  I have never taken a loan to buy a car.

I just applied.  The website did not ask for any uploaded documents.
"COVID-19 ECONOMIC INJURY DISASTER LOAN APPLICATION".   There was a line in the app asking about gross rents, so I guess it applies to landlords.    I suspect this is not the "final" app, but just an information-gathering pre-application.

https://covid19relief.sba.gov/

Since I haven't lost a dime yet, I have to guess what the shortfall in rents will be.  I pulled $300K out of my ear, and asked for that.

I had a tenant in Hayward who gave me no notice - yet. But I got a request for a tenant reference from another landlord.  I called the tenant and told her that I would cheerfully waive the 30-day requirement, and prorate the rent to the number of days she was actually in the apartment.   I only required that she give me the apartment officially, keys and all, and not just disappear.

I've been in this business for many years, and have learned that you can't make people live where they don't want to live.

Originally posted by @Jerome Kaidor:

Originally posted by @Anthony Rosa:

I received emails from two of my banks. [...] do banking electronically and avoid walking in to the bank.

In that case, I'd hope they make electronic banking more usable - first by raising the per-month limits on checks deposited remotely.  

My bank must be reading BiggerPockets!  I posted this yesterday, and just now deposited a few rent checks.  My daily and monthly limits have been raised by a factor of 10.  Good bye, ATM!

Originally posted by @Anthony Rosa:

I received emails from two of my banks. [...] do banking electronically and avoid walking in to the bank.

In that case, I'd hope they make electronic banking more usable - first by raising the per-month limits on checks deposited remotely.  

Let's look at this imaginary $800K duplex: Our purchase price is $800K, our down payment 25% or $200K.  Loan is $600K.  Assuming a 30-year mortgage at 5%, we have a payment of $3220.93.  Add $2K/year of insurance, $2400/year of property tax ( approx 1.2% of purchase price ), say $100/month per door for maintenance & repair.  $200/month water/sewer/garbage, $50/month common electricity.  Total expenses about $4637.  Positive cash flow about $350/month.  Realistically, stuff will happen, and your cash flow will be more like $200/month.  The cash on cash is not so good, at 1.2%, but you have hope of appreciation.

The thing that bites, is that they try to sell that duplex with current rents $2K instead of $5K.  And give out a "pro forma" promise of cash flow.  And people actually buy it!  Never mind that Hayward has rent control, and now the whole state has rent control, and you'll never get there.  We, as careful investors, have to compete with people who apparently Just Don't Care if they make money or not.

I just got an email from an agent who got a MF complex in Oakland sold at a cap rate of 1.69%....

@Eric Peterson - That $800K duplex will surely bring in at least $5K in rents.  Here in Hayward, 2-bedroom apartments are bringing $2400/month.  But your point is still valid.  At this time, Bay Area MF is definitely not a cash flow play.

And I have a building in Hayward with a few Section 8 tenants.  I've found the Alameda County housing authority easy to deal with.  They direct deposit the rent to my bank every month.  They gave me a reasonable rent increase that I asked for without any fuss.  Interestingly, Section 8 apartments are exempt from the current version of Hayward rent control.

At the time of the last government shutdown, I was worried that Section 8 might run out of money, but that didn't happen.

And I'm in the Hayward Hills, with a small apartment building in Hayward, and 65 units in the Valley.  Been in this business since 1996, haven't had a W2 job since 2003.

I have been invested in Fresno since 2003.  I have 52 units there.  It's been a good place to do business.    The first few years were rough, but we got it into shape, and it's made money consistently ever since.    I do have an issue with the new Fresno property inspection ordinance.  To be clear, we passed our first inspection, no problem.    Well, they did demand bug screens on all the windows, $ka-ching!  The problem is that we are now expected to self-certify - that is, inspect all the apartments ourselves every year.

  The problem is that the State of California has a very specific list of the reasons that you can demand to enter a unit.  See Civil code section 1954.  "Accomplish a City-mandated general inspection" is NOT one of the reasons.   If we ask to enter, and the tenant says "no", we really have no recourse.  You can't even evict them for that.

  I remember one case where a landlord opened the tenant's entry door, people were sitting there.  He said "hi" and closed the door.  He not only lost that eviction, but the judge fined him $5K.

So in principle, you're damned if you do, and damned if you don't.