All Forum Posts by: John P.

Glad I saw this thread. Thanks for all your insight and help @Kristi Kautz.

Just wondering, what has your general experience been working directly with the city/county?

Are they generally pretty helpful and pro-development?

Do you recommend having well-developed plans going into an information meeting with the city and county?

Do they advise on utilities, or did you need to contact each utility company separately to get quotes for last-mile installations?

What types of other topics do they advise on?

Thanks again for your help!

Thanks, that's an interesting point. I haven't looked at it that way.

I already have a job that I love. I don't have any desire to flip houses full time. It's not even my goal to have drastically positive cash flows. It is my goal to have enough positive cash flow to hire people to take care of my property for 30 years to end up with an estate worth more than it was paid for. Who knows, the land value alone in this area could double in the next 30 years. Wouldn't that be enough to have an extra $700,000 - $1,000,000 (or whatever it would be) for my retirement?

With that considered, could this be a good deal?

Wow, bold statement. Thanks for the input. I haven't signed the counter offer yet, so hopefully I won't have any trouble backing out of it.

Hey Everyone,

I'm wondering about a duplex I'd like to buy. I've already made an offer of $450k on this place. This is my first deal.

Here is the listing:
http://www.redfin.com/CA/Los-Angeles/2222-Effie-St-90026/home/7057497

And here are the financials for it:
https://docs.google.com/spreadsheet/ccc?key=0AtZBnTCob-0wdGU3NXl2VE9RY0RiMnEzNnk3S2F4X1E&usp=sharing

I realize it's not the best deal in the world (good deals are very hard to find in Los Angeles), but I feel it would still be a pretty good first investment for me if it's still standing in 30 years. Appreciation in this particular area is expected to be and has been high. It's a very hip area (they're building a Whole Foods Market down the road). Regardless of the numbers, there are a few things I'm worried about.

I believe this house was bought at a foreclosure auction for $380k. It was flipped and put on the market for $499k. My realtor thinks the reason it's been on the market for 77 days is because the sellers were asking too much for it from the beginning. It was also previously in escrow, but the buyer dropped out due to nonperformance. Is the reason why there are any offers on this house really because it's been on the market for so long?

This property has an exposed and cracked sewer pipe. Something that I'm assuming can be negotiated to be fixed by the seller. The floor is also slightly slanted in the livingroom of the larger unit. It's enough of a slant to lose your balance if you're not paying attention. I'm not sure of the structural integrity of the retaining wall below that holds the soil level for the entire lot. For $1,000, I'm assuming that a plumber, structural engineer, and a building inspector can assess the property and tell me what the damage is, but is it even worth it? I'm afraid they're just going to tell me what I already suspect.

I fell like it's better to get in the game now that interest rates are creeping up and inventory is low rather than to keep waiting for the perfect opportunity to come along. What do you guys think?

Thanks for your help,
John

Thanks for the invitation! I'll be there.

All great information. Thanks a lot for your help!

Hi Everyone!

I'm looking for a lender to fund my first multi-family investment property in Los Angeles. I've only spoken to a couple lenders so far. I'm pre-qualified for a $400k loan, but multi-family properties in my area worth looking at tend to be priced a little higher ($500k - $600k).

I asked both lenders if I could use potential rental income as a qualifying factor, but unfortunately, they both said I would need two years of rental income history from another property that I currently or previously own.

My question is: Is there anything I can do to help persuade a lender to use potential rental income as a qualifying factor so I can make a slightly more expensive purchase? Would it help if I presented the lender with a solid business plan, a comprehensive cost-benefit analysis that shows a positive ROI / cash flow, and/or historical rental income history from the previous owner?

I'm still new to this, so any advice is appreciated.

Thanks,
John

Lots of great advice. Thanks everyone. Looks like there's a lot missing that I need to account for.

FYI, these are figures from my lender. Seems like conventional is the way to go for my first purchase.

FHA
Principal: $400,000
Interest rate: 4.25%
Percent down: 2-3%
Mortgage insurance: $427/month for the life of the loan

Conventional
Principal: $400,000
Interest rate: 4.50%
Percent down: 5%
Mortgage insurance: $186/month

Hey Joseph,

Thanks for your reply. I'm using a spreadsheet to help me with the numbers. Not sure how accurate it is. I was planning on going with conventional financing with 5% down. The numbers are slightly different as you can see. I'm assuming I would get the place for 380k.