All Forum Posts by: Lucas Allmon

I listened to the Bigger Pockets Podcast with @Bob Malecki last week, and it's like a bunch of connections that have been waiting to be made, finally went off in my brain.

I have been looking to get into more active investing of passive income assets for a while (My general BP Introduction is here).

In the past 4-5 days I've read

@Dave Van Horn 's Intro Ebook
Paper Profits
Note Investing Made Easier
Performance Anxiety

And I'm not sure I've ever read material that made so much sense, but the missing pieces now, are the moving parts, the doing.

So my question would be, what is the next actionable step I need to take, to start learning by doing?

Taking in what I do know in my limited knowledge, one route might be to buy a performing junior lien off of FCI Exchange in order to actually get some paper in my possession.

That way I can see how to service a loan, and what a collateral file looks like, with less risk, before more analyzing non-performing notes, or networking for more note opportunities.

All advice is greatly appreciated and will be taken.

6 Votes

I've read both "Paper Profits" and "Note Investing Made Easier" in the last two days, and they were both great.

0 Votes

@Nick G. thanks so much for your detailed analysis of my analysis!

1. I dunno what my lender is doing, but I am under the impression that the FHA limits are higher in LA. Those are the numbers he's giving me.

2. Nice catch, I knew something seemed off so maybe that was my subconscious conservatism. Lol.

3. I'll run with that.

4. Awesome. Last I saw on a property report was 1.19%. So 1.25 is a nice estimate.

5. Currently, but I should put that in the model for when I stop.

6. Yeah that is the assumption.

Rents are supposedly current. Do you have any thoughts about the residential building. On a commercial zone? I feel it's either gonna be a huge opportunity or I'll get burned hard. Lol

0 Votes

Originally posted by @Bob Malecki:

I dunno @Lucas Allmon I've hear that Youngstown is no walk in the park either...........

Painesville is literally "the wrong side of the tracks" and, yeah Youngstown is worse.

I shot a horror movie with some friends in college there in a house on a street that looked like the apocalypse hit. That was 12 years ago, maybe it's better? (Doubt it).

0 Votes

Originally posted by @Adam Adams:

I call it my Pain in Painesville. A duplex that actually looks nice on the outside. Some hoarders lived there and the inside was a disaster. They were "remodelling", but that was just tearing down walls and not really putting anything up. They didn't bother removing the torn down walls either. And they had three kids there too. There were two boilers, but neither one worked. I don't know how they stayed warm in the winter right off the great lake up there. The east side basement wall is caving in. The garage was condemned, so I wound up having to tear it down. The police wouldn't go in to evict the hobos that were breaking in because the property was infested. So I spent money getting the pests removed. I tried to donate it to Home for Our Troops and Home for Our Heroes, but when they went in, they didn't want to tackle that project. I've got a close relationship with Code Enforcement there now. Not by choice. At least they've been nice with me and appreciate any progress.

I'm not done with it yet. I'm getting with a builder/broker. Instead of selling it to him, I'll just make him a partner and we'll split the profits. We just started that conversation and now he has left town and then when he gets back I'll be leaving town. So maybe we'll know if we are going to do anything by the end of the month. After that, I'll spend a month trying to get rid of it on Craigslist. Failing that, I'll donate it to the land bank and take the huge write-off. So that's my worse case situation. I'm in it for about 18k now and I'll be able to write it off for about 50k.

Aside from the condition of the house, the rest of my pain has been coming from the vendors up there. It takes forever to get anything done up there. Today is the day that the house is supposed to finally be cleaned out. That's been taking me 5 months and a couple of vendors. I was trying to fire the second vendor for taking his sweet time about things (and I mean it was taking weeks for hauling trash away from the yard) and I was telling the lady at Code Enforcement about the lack of service I was getting from the guy she recommended. She put me on hold and then the vendor was the phone. He was in the office with her the whole time. I don't know if it is a relation or not, but at that time I no longer felt like it was a good idea to fire him. So he's still on and still taking his time.

What's my lesson from Painesville? Listen to my Cleveland realtor who told me to stay away from Painesville. I wish I did. Two positive BPOs later, I quit listening to her and I am paying for it now.

I've had another lemon. That was in Cleveland. I paid for a company to winterize the house. They did, but didn't turn the water off from the main. Title issues slowed me down on selling it and while getting that cleaned up, the copper thieves came and stripped the house. Since the water was still on, the basement flooded. I thought I was going to loose money on that one, but I wound up making 10% ROI in the end. A lot less that what I was expecting in the beginning, but better than what it could have been.

I'm a lot more thorough now on my purchases. I probably wouldn't be buying that Painesville property again. That was a bad buy that could have been avoided. I have a partner on it. We've been doing business together for years now, so I'll make him whole and give him 10%. I'm making money on my other notes, so for me it's about the big picture and Painesville is just one of dozens. For him, it's about one of two notes he's on.

That Cleveland one though... I might still buy that one. That was just bad luck. Still made a buck though. :)

Oh man, Painesville is the worst. I'm from a small town about 15 miles from there (Chardon), and I dunno if I would ever buy anything there just on principle. At least Cleveland is getting better.

0 Votes

@David Faulkner I'm mostly looking for cashflow positive, or conservative cashflow neutral long term holds.

I'll house hack if I it makes sense, but most of the current numbers I run, don't even make the housing costs less than my rent controlled, downtown Santa Monica apartment. The upside to house hacking, is my housing costs go into equity on my property, not my landlords. But then I just have a mortgage, and it's not really an asset, no?

By budget, do you mean what I can afford as an investment, or what I can afford as a buyer in general? I am pre approved for 1.3million on a multi-unit, and 1million otherwise, and that's just based on my income/assets and not my wife. I think that "affordable" in the 30% realm would be $650 - $700k if I were just a house shopper.

The market is so much a sellers market in LA right now, so when I think about being "fearful when others are greedy, and greedy when others are fearful", I come out fearful right now. Some people say buy no matter what, but that doesn't sound like investment strategy, it sounds like gambling.

0 Votes

Thanks a lot for all your feedback and positive reinforcement! Currently I'm just practicing analysis on everything that even remotely looks like a deal, which they tend to not be when it comes down to it.

@Scott Trench I know I'm making progress, but it's been a long 10 years and I can at least see the light at the end of the tunnel. One big thing that the book (and my wife) helped me with, is viewing my investment accounts as liquid cash. I was viewing them as untouchable because of the tax implications.

@David Faulkner Thanks for your outlook, that really helps. LA is very daunting. Since I live in a desirable neighborhood, and there are lots of desirable places around, do you think it might even be better to mine in my area instead of going inland or southeast? There's even still some B areas in West LA/MidCity.

0 Votes

Hi all, here's a possible deal I have found, and I wonder if there's any glaring errors in this calculation overall.

There are assumptions that they would accept the offer, and I haven't put any forced appreciation in the numbers.

An interesting thing I found about this property doing due diligence, is it's a 4 unit residential, but it's on commercial zoned land. I wonder if that's hidden opportunity, or if it's more of a bomb waiting to drop?

https://dl.dropboxusercontent.com/u/57252/Help%20a...

0 Votes

Hi Pros! I have been on BP here for about a month and I decided to upgrade to pro for some of the tools and calculators there are here.

Here is my intro thread if you want to know a little more about me.

https://www.biggerpockets.com/forums/55/topics/455...

I'm currently looking for a 4plex house hack deal in Los Angeles, and I know this market is hard so I've resigned that it's going to be hard, and I'll have to do more than the average investor.

I am wondering what tools, both paid or otherwise, have you found to be absolutely invaluable for your due diligence?

There won't be a silver bullet for this, but I would like to know what to avoid, or just tools in general that just pay back 10fold in time or effort.

Thanks in advance for any info.

-Lucas

0 Votes

Hello all,

I'm a software engineer in Los Angeles, and have been an aspiring investor for about 10 years, ever since I read Rich Dad Poor Dad and the deal was sealed since I played Cashflow in 2007.

In that time I have gotten my finances in order; repaired my credit, created a cashflow positive (70%+ savings rate, liquid assets) lifestyle, getting rid of 99% of debt (just one car loan left, paying down aggressively) and have close to a top paying job.

My wife and I are starting to look in LA, but it feels insane and overpriced, with mostly speculation driving the market. Most people say cashflow is nearly (but not totally!) impossible, yet long term hold and flips are the play on multiunit residential.

We are looking to house hack, and always appreciate any other LA investors advice and mentorship, and can always offer website/digital content/technology help as a value exchange. :)

Super excited, but sometimes worried I'm not on the right track, and then listen to things like "Set For Life" and I think I'm behind. :D

2 Votes

All Forum Posts by: Lucas Allmon

Lucas Allmon has started 11 posts and replied 49 times.

Post: Learning note investing by investing in notes

Post: Note Investing Books

Post: Rental property analysis in LA

Post: What was your worst Note deal?

Post: What was your worst Note deal?

Post: New investor to the Los Angeles beast.

Post: New investor to the Los Angeles beast.

Post: Rental property analysis in LA

Post: What sources of information and/or tools get you results?

Post: New investor to the Los Angeles beast.