All Forum Posts by: Joffrey Long

Wesley,

Thank you. That's very useful. Would you think at average quality, it might fall closer to the 150 to 200 range?

thanks again for the help,

Joffrey

I usually rehab and manage, but rarely add square footage. Now I am. Considering addition of 2 bedrooms and one bath to an existing dwelling in Southern Calif. All one story, will be average quality construction, and is in a section of the municipal City of Los Angeles that does not have architectural committees or anything else outside of normal building codes.

Assuming no major issues with adding to the existing dwelling, trying to get a general idea of per foot cost. Would already have a lower cost architect draw plans, then hand plans to contractors to obtain bids from contractor with them pulling permits and then doing the job.

Would appreciate feedback on this from anyone actually familiar with Southern Calif. building / remodeling costs. Thanks in advance.

Jeff And Ann both gave, in my opinion, very thorough and generous replies, sharing info that cost them years and dollars to learn. I'm humbled.

Where someone might want to add their own additional steps to the process, and realizing that Jeff and Ann both know 500 or 600 times as much as they posted, I can tell that they are hard money lender/arrangers who are ACTUALLY doing this.

Chris, you're lucky.

Joffrey

Deborah,

That's actually how I got wiped out (financially) in the early 80's.

Oddly, I later became a student of the Institute of Real Estate Management (IREM) where they teach apartment management line by line and make you right a comprehensive report about an apartment building.

Those classes are not for everyone, some will learn by trial and error and many, of course, already know everything.

But I just wish I had taken those classes before I bought the "White Oak Apartments." I'd be much wealthier than I am.

Joffrey

Hans,

I agree that you may need the points to pay your overhead.

With 70% of my hard money loans being my own money, I'm more concerned with not having money sit idle. Plus, if we don't make loans we don't get any points anyway. And our loan servicing income covers our overhead.

But neither of us is either wrong or right, just different business models. There are certainly more people working with your business model of charging primarily points and making their money off of points, then there are working with my circumstances, which may be another reason I should pursue this further.

Thanks for the very correct observation.

Joffrey

Interesting to look at the colors used by the large apartment complexes, and colors used in model homes. Might get an idea there. My interior shade of tan is a shade called, and I'm not kidding, "Santa's Beard." (at Home Depot)

Ben,

Your question is great. I know, because it took me 19 years to figure out the answer.

( You will not find any posts anywhere where I ever claim to be a fast learner.)

My 37 years of real estate investing has taught me (first 19 spent figuring out answer to your question) that decisions like the one you're deciding to make have to be made based on a big picture, overall real estate strategy, i.e. buy and hold, buy and sell, etc.

I floundered and didn't accomplish much until I really had a long talk with myself and decided on a big picture, overall strategy. This incorporates many things including but certainly not limited to, your plans for the future, your plans for retirement, your belief in what is going to happen to values, rates, taxes, etc., and your belief as to what you want your role in your investments to be, just to name a few.

Although the other considerations mentioned by you and others are important, I "saw the light" and truly believe that with a big picture, overall plan in your mind (which could certainly be changed from time to time) you will hopefully accomplish as much as I have in the past 16 years, since my "awakening."

Hope that helps,

Joffrey

First, I agree with Ibrahim S that inspecting their present residence is great. And, people get the message when you do that - they know you're a caring, hands-on landlord. (if in fact that's true)

Here's my take: I agree with others that 7 months advance rent doesn't make a bad tenant good and that you must run his credit regardless of what ultimate decision you make. Just for the record, CAREFULLY check this guy's I D and present residence documentation (mail he received) etc. He's a candidate for identity fraud.

But on the ladies, here's my advice: (I mean, on renting to the ladies, other issues with ladies - don't listen to a word I say, or better, listen and do the opposite. )

OK - I've had many of these 2 or 3 adult arrangements, sisters, roomies, woman, Mom and Cousin, and here's the bottom line difference between success and failure, in my humble opinion:

It is, if there is or isn't ONE key person in the group, that "runs" the household, talks with you, requests maintenance, gathers rent from others and forwards all of it to you, and as several of my "key people" if you will call them, have done, re-rented parts of the house when one of their roomies left.

I've got one "key person" that has "run" the house for 8 years, always dealing with the revolving door of roomies - place looks fine, and it's occupied, and all I ever have to do is return his calls when the _ _ _ _ _ isn't working.

Another story that amazed me- Karen - main person with her aunt and cousin as roomies. One day, she called. Aunt had moved out, but she had already replaced aunt and wanted to send me the info. Her cousin (the other roommate) (are you ready for this) was on drugs one night, came home, and stabbed her. Yes, I said stabbed. She (Karen) recovered, kicked the cousin out, and I heard about all this 3 months later, rent always paid, house looked good, new tenant put in to replace the one missing tenant and Karen only wanted to know what the procedure was for the new person to apply, get approved and sign the rental contract.

Karen is a more than perfect example of a "key person."

Whew! Being a "housing provider" can be fun. But, I find that after 37 years of it.........I'm still mainly a student!!!!

Joffrey

Andrew O. and J Scott

Thanks for the feedback. This is exactly what I was looking for.

If we do this on a larger scale, it will have to be a lower overall cost to the borrower, or as Andrew pointed out, it's just baloney. ( I use baloney rather than the other "b" word.)

But I'm thinking that with LTV, if people don't have to take points out of the up front money that's limited by the LTV, then they get more money to work with.

I'm also thinking of doing this with a program where if it's not a purchase, we do no points, then pay all the borrower's escrow, title and recording costs, making it truly a lower cost item.

Anyway, really appreciate the feedback, gentlemen.

Joff

Is a "no points" hard money loan important? I'm getting that suggestion from different brokers who bring me loans. Also, we just did one for a repeat borrower. Had to build in a prepayment penalty to make up for some of the loss, but clearly borrowers want to cut their overall cost.

Your thoughts? Feedback?

Is this a trend or just an isolated request ?

Joffrey