All Forum Posts by: Will F.

https://www.latimes.com/california/story/2019-09-11/california-renters-relief-legislation-gavin-newsom-rent-cap

They passed the Rent Cap today California state-wide 5% + CPI  (currently 2%). In future they may adjust this or make it harsher like the LA city rent control ordinance (RSO)

If I were anyone here sitting on under market rental units I'd raise rents as fast as possible if you can. 

I rarely used to raise rents on tenants who were good. Like I often don't raise them at all.  I kept rents under market, but now I will raise any time I can.  And this will disincentivize me from doing cosmetic improvements.  I guess we'll just have to adjust and adapt.

It's really bad for lending and valuating your properties.  I've raised rents or kept them up, but if you haven't you could devalue your property by hundreds of thousands of dollars keeping low rents.  You simply won't qualify for high loans if you Refi or a future purchaser won't qualify. Therefore your $800k small apartment or house could be worth $600-$650k to a bank

This is bad and huge.  You should find out from local Apartment Associations who to contact. There is stuff you can do:

. Update on the Statewide Rent Control from Attorney Michael Millman OPPOSE AB 1482 ; as amended; Sacramento super Power Players have been meeting at the Governor's Office for many weeks and negotiating a compromise RENT CAP Bill. All amendments must be completed by Friday September 6 2019. Economic Round Table; Blackstone; Realtors; CAA ; Building Industry were at the Table in the Governor Office. Deal is done. This Team was very concerned about possible State Wide Campaign as " Son " of Proposition 10. AID Foundation was considered in the Deal. Weinstein does not have the Signatures and required Money. He has signed off on the Deal. Bill to be printed today. Realtors and others will have the Bill. There are many Housing Issues which address Back Stone problems? Experts believe that David Chiu will consider Exempting New Construction for 25 Years or more ? ADU's must be exempt ? So: The Bill sunsets in 10 Years. VACANCY DECONTROL will be safe for 10 Years. Condo's/Single Family Homes and Duplex's wherein the owner lives on premise will be exempt. The Annual Adjustment will 5 % and regional CPI ? SF/Oakland/Berkeley/LA / West Hollywood and Santa Monica will be carved out and new law will not apply: There are Dozen more provision which you may examine later today. Just Cause Evictions will be installed: Again, like Oregon Tenants Rights will not Vest for First Year. Then relocation Arrangements one month Rent and or Free Rent. Again, the Realtors will have the details of the Bill. This Bill may pass. CAA is Neutral : Realtors Opposed. Vote will be next week. Many should contact your Sacramento Friends to Vote No: The Apartment Industry should be set a Meeting with Federal HUD group in SF which investigates and publish the CPI each month. This Group will design and produce a Special CPI for Apartment Housing Expenses. This will cost $$$; but it will address our true Operating expenses: This is essential Michael Millman 310 431 657 four What to do? 1. Caphnll your Assembly Member at 800-798-659 three ) 2. phn your Senator at 855-215-015 two ) Tell both offices: “Hi, this is (insert your name). I'm a Housing Provider from your district. Please ask the Senator/Assembly Member to Vote No on AB 1482. The bill discourages the creation of rental housing and doesn’t address the real problem – lack of supply.” 3. Share http://housingforcalifornia.com/no-ab-1482/ 4. Tweet: https://www.votervoice.net/CARealtors/campaigns/67361/respond or As a Housing Provider, I urge #caleg to vote NO on #AB1482. The solution to our state’s housing crisis is more supply, not restrictive rentcaps. https://imgur.com/a/ihwAe4S Now is the time to take action. To do nothing is the same as supporting the loss of property rights - don’t let this happen to you! Do what you can to preserve your rights!

So far so good.  We're only charging $1.25 for wash and $1 for dry right now on an 8 unit all 2/1s and we're getting about $100 in quareters a month (estimated)

The income isn't great after costs of maintenance and the increase in utilities.  The benefit is definitely that it's there as an amenity. 

@Dennis Maynard thanks Sherlock. I guess I learn new things every day...

Jk

You can use a cap and NOI on anything that produces income pretty much...

Just to let you know if you do pull a portfolio loan out on a few duplexes or a hand full of houses you will valuate based on cap and NOI. It's how I size up props quickly on napkins and it's my language. So no I'm not saying it's going to sell for that but yeah it paints a picture of the message I'm trying to convey and that's that you can brrr and paint a pic of property quickly and effectively

Plus people pay cash for these... investors come in and want to know what the cap is for the building and compare it to cap of the area. That's what I'd want to know before I buy a property or size it up. What's the GSI, what's the NOI what's the cap of the area so I can actually comp it for myself

EDIT actually I reread my original post my bad. it looks like I'm saying it's 'worth that $930k' that's not what i meant. You can still valuate the property based on cap. I of course understand that's not how a bank would do it... it's common sense. no it's prob worth $800-900k depending on the day based on comps but a person can come valuate it in their own way it's called the 'income approach' of appriasing you can still valuate stuff based on that. And technically a bank can come and appraise it based on NOI, it's just a very low chance they will. But some buyers come with cash and other financing....

It's just a metric. Of course I wouldn't valueate it based on cap...I understand how banks use it to measure properties as I've done dozens of value add. I can take a couple dozen houses and use cap as well for myself. Or I can take a SFR and measure it by cap. I'm just trying to convey how the property operates. I'm not valuating it... What's the matter with calling it a 4.25 cap when commercial developers brokers all talk cap even on triplexes...

I have an empty unit in my triplex.

We bought for $385k highly distressed/ underperforming 2015

Put in $25k initially and $50k over three years

Now it's operating with $61k GSI

Based on the NOI of area 4.25 cap it's worth $936k

It will likely sell for $850k in this market after we put in about $20k more cap imp

If anyone wants to drop by and see the empty unit lett me know 

Hi can someone recommend a Los Angeles lawyer who does debt collections or small judgement on tenant evictions or collects on judgements locally.

Feel free to PM or reply here thanks

So far I'm able to balance 3 STR units on AirBnb without a third party management software. The AirBNB software is pretty user friendly and it's been relatively easy for me and a partner to manage it passively.

We also have 3 local cleaners who do turnover on the units which has helped a lot since we have relationships with them

Good luck

This one was from 6 years ago. I've bought and resold it. I even converted it to acondo before reselling it. The IRR (overall return factoring in time) was pretty high.

It's tricky I would do it if you can't find anything else. But make sure you have good help. Feel free to message me if you'd like some and are in Socal

Just to update you all Condos and OYOs are similar but there's some major differences. Mainly bank and lending differences.  OYOs are very different from one another and depend on the individual management. So you have to really do your due dilligence, but this is the case with condominiums and coo-ops in general