All Forum Posts by: Nick Maugeri

You don't need a partner based on your position

$360K cash for a duplex seems like it may not be the best move for that capital. Your capital could leverage into purchasing a $1M property that generates better returns. Or a $500K property with a rehab budget of $200K and $35K for carrying costs and an ARV of $1M. Or you could purchase several properties with leverage in emerging markets.

For the negotiation - you should go into contract at $370 and get a $10K concession for the repairs needed. 

The easiest way is replacement cost but not the most common - that's an important distinction. If there's plentiful comparable sales near you then you should use those. A system which allows us to research transactions and determine if the property has ADU/JADU would be the MLS. You should consider a local Realtor in your market to advise you and collaborate. Ask them to pull comparable sales for what you are looking at.

I guess I shouldn't speak for all appraisers and it likely depends on the location of the property. They may use different methods to establish value based on market, conditions, and availability. 

To answer generally - yes. Appraisers establishing value for a home with a JADU will compare to other properties with a JADU if they're available, otherwise they will use a different method, i.e., replacement cost. They can adjust the JADU when comparing to an ADU as well but will factor at a percentage for a detached unit versus an attached unit.

If the house is paid for you should talk to a lender and refinance. Those funds won't be taxed and you can use them to buy your food, convert back to an Airbnb for income, and use some of it for a down payment on your dream home. 

You can put your dream home that you've identified under contract now, with a Realtor, and make it contingent on selling your home. 

It sounds like you may have no income which would make it difficult to refinance. You could approach a creative lender or private lender for a type of HELOC. Even at 60% LTV, you would have access to what sounds like $300K. That should be enough to get Airbnb going again, then if you want to sell it - sell it to a proper investor (versus those pulling out and wasting time, i.e. many wholesalers) as a permitted and functioning Airbnb. It would no longer be valued at $500K based on comparable sales. 

Since you're in a unique location, a Realtor is the best way to go for this. You'll need to comply with buyers insurance and defensible fire hardening if there's a lender. Then, you're going to be negotiating with an investor on repair requests and concessions - have you ever read a book on negotiation or taken a class, or negotiated a deal like this? If not, it's probably worth having someone represent you and paying them well to do so. 

It's worth looking at the lease agreement and ensuring they are in compliance. Too often; we, as self managing landlords, allow the tenant to run our business. Give them the required notice to enter their unit for a physical inspection of the property and go in. 

There's a real good chance that the lease requires them to do several things: upkeep on the unit is a big one (damage to property), weeds outside and landscaping (which encourage pests and insects to inhabit the property), pets authorized or not, additional tenants on the property that are not on the lease. Tenants in CA think they have all of the power but they don't, we as the landlord need to understand the lease in place and can then take back an equal position to them. 

Damage to the unit like a doorknob hole in the wall? Make them use their renters insurance or evict for failing to upkeep the unit and lease agreement. If you don't require them to have that then you need to look at asset management and property management a little bit more diligently. 

They are likely in violation of the lease agreement in this moment and you can evict based on one of those issues. 

Do they pay rent on time every month, if not - evict. Often times these kinds of tenants can be equated to a bully on the playground. Once you stand up to them, they'll leave you alone. So I would encourage going through the lease diligently and being a proactive property manager and not a reactive one. 

Get creative, buy a $200 security system and place them facing the common areas and exterior of the property for the tenants safety. There's a chance they'll find that invasive, but just like the government - we are doing it for their safety and well-being. 

Are you close enough to move into the unit that they are occupying? Give them a 60 day notice to vacate and move into the unit. 

There's a lot of ways, just like creative financing - we can be creative landlords.

1. Gateway Storage Solutions 
2. AccessPoint Storage Center
3. SafeHaven Storage Yard
4. Central Valley Storage Depot
5. Bay-to-Valley Storage Solutions

2024 Q1 Wrap-Up

CoStar Summary: Southwest/Bystrom is a very small submarket within the larger Modesto market, with just 616 units of inventory. While it is modestly sized and there have not been any deliveries or demolitions in the past decade, there has been some sales activity. During this period, 14 sales have taken place. Space rated 3 Star is the most dominant subtype, with a total number of 392 units in this category, followed by 224 units of 1 & 2 Star space. There are no units in the 4 & 5 Star classification in this submarket.

Here's insights for 2024 Q1, projections available at your request - hopefully you're using these to value property purchased and it should help determine your list price to minimize DOM!

Vacancy: 6.3%

Vacancy by Bedroom: Studio(5.4%), 1 (9%), 2(6.1%), 3(5.4%)

Rent by Bedroom: 1($696), 2($1,537), 3($1,091)

Production records for as long as they've had them. Expected life of the trees remaining and replacement cost. Management of trees in place or by owner, you should speak with a professional Ag manager who does business in the area. Soil type, adjacent land and what they have on them (spraying chemicals or not). Ag well + domestic well, or just one well and does that require softener (component inspection and well inspection).