All Forum Posts by: Kunaal Kumar

Hello! I have the potential to lock down a luxury property in LA using a 3 year lease option contract. I have a business partner who wants to rent the propert personally, so I don’t have to worry about the monthly expenses during the hold period. 

I think there’s a massive equity spread here. The option strike price would be around $400k below “market value” based on comps I pulled that sold back when rates were around 7%. My thesis is that rates will definitely be below 7% in 3 years, and it’s in a great neighborhood in LA so I think the long term fundamentals are there.

When I exercise the option, I have the capacity to raise money for the down payment, but I’d prefer not to if possible. I run a debt fund that generates 20% on RE debt, so if I’m raising money I’d much prefer to direct my investors there instead.

Therefore, my question is the following: is it possible to double close on the option contract? That way, I wouldn’t have to raise the funds to close on the property first before selling it, and I’d just be able to directly capture the equity spread.

And if not, are there any other ways to do this? I can imagine that I could assign the contract to another buyer, but ideally I'd want to list this property on the MLS and sell to an end buyer instead of an investor, so I'd imagine that double closing is the way to go.

Any help would be greatly appreciated!

Hello all,

I want to explore strategies to buy and hold luxury real estate, as the title suggests. From my understanding, renting out the properties will always be cash flow negative. In that case, would the only options be to Airbnb the property or put it on something like Peerspace? Or is there another strategy that I'm missing?

As a follow up question, has anyone had success buying properties with the sole purpose of renting out on Peerspace? And if so how do you underwrite that? 

Any help would be greatly appreciated!

I've partnered with a large investor who's interested in converting a small multifamily (5-20 units) into condos in the Seattle area. Is there anyone who has experience doing this? The legal side seems pretty straightforward; what are the potential pitfalls, if any?

I would love to connect if you could provide some insight into this. Thanks!

I'm moving to Seattle soon, and I've started looking for BRRRR properties in the area. I'm currently working with two people with access to off market deals, but the BP podcast frequently talks about increasing the size of your deal funnel. Currently, I only get about one property every 1-2 weeks that matches my criteria, but the numbers haven't worked out on any of them.

What is the best way to expand my funnel so that I can analyze more deals and hopefully close sooner? I don't want to do any direct marketing until I have at least one deal, so it sounds like my best bet would be networking with wholesalers. If so, what's the best way to connect with wholesalers? Thanks in advance!

I don't invest in condos or townhomes, but I figure I can still provide some value anyways. 

In general, condos/townhomes are less expensive compared to SFRs in the same area; the downside to this is that, like you said, they don't appreciate as much as SFRs do. This is because there's more demand for SFRs, which is the reason that they appreciate more in general. Another thing to be aware of is the HOA fees, which could potentially reduce or even kill cash flow. Multifamily homes (I'm assuming you're referring to 2-4 unit properties here) also might not appreciate as much. There's lower demand for those properties, since the majority of people looking for 2-4 units are other investors and not homeowners.

I think the way to approach which type of asset class you want depends on your goals. If you want cash flow, cheaper properties tend to do better. If you want a balance of cash flow and appreciation, maybe buy an SFR and rent it out by the bedroom. If you're mostly looking for appreciation, buy a house close to downtown Seattle and wait.

Here's a link on the pros/cons of a townhome: https://finance.zacks.com/disadvantages-investing-townhouses-2937.htm

And another one for condos: https://www.moneycrashers.com/pros-cons-buying-condo/

Hope this helps!

The basement is already there, it's just a matter of finishing it out. Are you saying that it's a bad idea even if the inspection turns out fine?

I found an interesting property that needs some cosmetic upgrades. In addition, it has a large unfinished basement. How do I figure out how much value I could add to the ARV by finishing out the basement?

I've seen online that a quick rule of thumb is to value the basement square footage by 50% of the above ground square footage. Is this still true in Texas, since basements are relatively uncommon? A house down the street with similar above ground square footage (and no basement) sold for around the price that I would be all in at, so I think that in the absolute worst case where the basement adds 0 value, I can at least break even.

Also, since the main floor plus the basement is a lot of square footage, it seems inefficient to me to rent out the whole thing. Instead, I was  thinking of adding a separate entrance to the basement and adding egress windows so I could add bedrooms down there and rent it out as a basement apartment.

Renting them out separately would allow me to roughly break even on cash flow, which is fine with me since my main objective is to build equity. 

Is this plan feasible? Is there a better way to value the ARV with the basement? Any insight would be greatly appreciated!

I’m considering a fixer upper property in North Dallas. The property has been on the market for more than a year, and the property is currently listed at around 250k. Im relatively new, and would greatly appreciate some tips to negotiate it down to fit my numbers.

It was initially listed at 320k, and over the course of the year, the price has been steadily dropped. In between, a buyer submitted an offer but pulled out, most likely due to the property inspection.

According to my estimates, the ARV will be around 300k, and will require 30-40k of rehab. I'm using the BRRR method, so I want to be at the most all in for 80% of the ARV, which means I would need to convince the seller to 200k to be conservative. The property is already at a slight discount because of its condition. However, the current discount doesn't have enough margin to make the deal profitable, so I need to negotiate it down further.

The seller seems to be very miserly; he refuses to pay the buyers agent commission of 3% , and has instead decided that he’s only willing to pay $300 to the buyers agent at the most.

Given that the seller seems to be particularly cheap, what are some methods I can use to negotiate the price down? My initial thoughts were to leverage the fact that it’s been sitting on the market for so long, and maybe offering more earnest money. Any advice would be greatly appreciated.

Thanks in advance!