All Forum Posts by: Nuo Shi

Currently, looking into a fourplex in Bay Area, the rent is 2100, due to the landlord didn't increase rent for past 6 years. If the rent increase to 2400, I can break even, while the pre-covid market rent is 2450-2500 around. Can I use the strategy to increase rent by (5%+inflation) for continuous two years? I think this is allowed by rent control. The current lease is month to month, so if tenant doesn't want to renew, I can have a small remodel and put that into market. At least, I think for the first year, a 2250 rent is still competitive. Does that sound reasonable?

I read a lot of articles which mentioned cash flow is the king in real estate investing, however, almost impossible in Bay area. Does that make sense to tolerate a negative cash flow for first two years?

Yeah, I don't know whether in the next few years there will be a deflation, but with consideration of fed simulation and QE, there is also a good chance for inflation.

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What is the usual cost to repair termite damage for a 60 year old fourplex in Bay area? I saw different properties varies, e.g. 10k, 20k, even above 60k (sounds crazy to me)

How long can the roof last? I searched google, it can be 20y, 25y, 30y or even 50y. What's the difference? How much will it cost to replace that for a fourplex around 3800 sq ft?

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Thanks Calvin,

Re 3, I noticed the 'lease assignment agreement' is for a tenant to transfer the lease? Probably I need to sign a new lease agreement with tenant.
Also find a great website with all the templates there https://www.rocketlawyer.com/

Originally posted by @Calvin Stewart:

@Nuo Shi purchasing a property with existing tenants certainly has it's risks, but it seems like you are asking a lot of the right questions to mitigate that risk.

As it has been stated many times before, existing leases come with property, so what are the terms of the existing leases? Month to month or fixed terms? And when do the leases expire?

1. You can background check and credit check existing tenants.

2. If each estoppel cert is signed by each of the residents in each unit, then it seems like there should not be too much of a concern there. You should not reach out to the tenants directly unless the seller gives you permission to do so. Likely, this process will be coordinated through your agent and the sellers agent or your attorney and sellers attorney. This blog post will help you confirm all the necessary information is included in the estoppel certs provided by the seller: https://www.biggerpockets.com/...

3. You may ask the tenants to sign a new lease, but they may or may not agree to do so. If they agree to it, then go for it. You do want to have a 'lease assignment agreement' completed to transfer the current lease to you as the new landlord.

4. You can ask, but the tenants may also not provide that if they are under an existing lease. You should ask the seller for the 'current rent roll' for the past 2 years for each unit with existing tenants to understand when the rents were due and when the rents were collected. This will indicate whether or not these existing tenants are paying every month and paying on time. You then should talk to them after you close to understand their personal situations.

If it has not already been provided, then ask for the lease to each unit to compare with the estoppel certs. You can always have your agent or attorney ask the seller if you can talk with each of the tenants before closing, ideally this would without the seller present.

Hope this helps and best of luck during the due diligence process of the 4-plex.

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@John Alosio

Thanks for the suggestion, I'm also tending to keep the existing tenants as long as they pay on time and has no red flag in renting history. I also prepare to accept below market rent for the first year, since I feel buying property and immediately increasing rent will cause unstableness, especially in current rental market plus my limited experience.

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@Calvin Stewart. One unit is in long term lease till June next year, and the other two are month-to-month. I think I will go for a new lease for the month-to-month one, well it's a good idea to transfer the lease using "lease assignment agreement", which I don't know before.

Ya, it's a good idea to ask seller to provide the payment history, thank you everyone for the suggestion!

@Pedro Jean. Thanks for reminding to check the living habit for existing tenant as an indicator! @Pedro Jean @Pedro Jean @Pedro Jean

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Hi everyone,

I'm a newbie to the real estate investing arena, with no rental property management experience before. Currently, I'm considering to purchase a fourplex with existing tenants in 3 units. I'm wondering what should I be cautious?

1. Is that allowed to run a background/credit check on existing tenants? Just in case the seller wants to sell the property to get rid of the headache tenants.

2. If seller includes an estoppel in disclosure, is that trustable? Should I reach out to tenant directly for that?

3. May I sign a new lease with the tenant? I know it's ok for month-to-month lease, what about the long term one? I think it makes sense to put my name on the lease

4. For the COVID situation, is that ok to ask tenant to provide income and job stability proof? I'd like to evaluate the capability for the tenants to continue paying rents.

I'd also like to hear any tips or suggestions for this. As a first time investor, I'm kind of scared to get existing tenants who are under qualifications, or potentially dragging me into some headache process, like eviction.

Thanks for any reply,

Nuo

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Hi everyone,

I'm a Rookie to this real estate investing. Glad to know this forum to get the opportunity to learn from a lot of experienced investors. Currently, I'm thinking about to start with a duplex/fourplex in bay area. My agent provided me some historical data for past 10 years and I analyzed the per SF price trend shown as below.

1. I noticed there is only limited transaction data for du/fourplex, so this might not be representative. Let me know if anyone has a better insights. It looks to me the price has dropped since the 2018 peak.

2. My strategy is to buy-hold-rent for long term (at least 5 - 10 years), so what is the conservative appreciation rate I can expect in next 5 years? From reading some analysis articles, it looks like we are in the peak of the current cycle after 2008, so I kind of not expecting a high appreciation in 1-2 years; but for long term, maybe this is still a good investment?

3. I tend to pick a good location with good school to decrease the vacancy and try to be recession proof. Those currently are expensive with almost impossible cash flow. As for my zero experience case, a foreclosure sale sounds risky and a property with huge improvement also sounds unrealistic. Does that mean I rarely have any chance to get a deal under market value?

4. I'm curious in this SIP state, does anyone know what is the rental vacancy rate in Bay area? If people tend to move out of the central, will this affect the rental market largely?

I'd love to hear any perspectives.

Thank you in advance,

Nuo

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All Forum Posts by: Nuo Shi

Nuo Shi has started 7 posts and replied 17 times.

Post: Buy property in Bay Area with negative cash flow for first 2 year

Post: Property repair cost in Bay Area

Post: Buy a property with existing tenant, what should be cautious?

Post: Buy a property with existing tenant, what should be cautious?

Post: Buy a property with existing tenant, what should be cautious?

Post: Buy a property with existing tenant, what should be cautious?

Post: Start Real Estate Investing from a Duplex/Fourplex in Bay Area