All Forum Posts by: Peter Mckernan

Hey! This is a great problem to have for sure! The challenge is that Oakland is a rent control city so that raising rents will be harder than another city that does not have these restrictions. 

This is what I would do, while assuming that you increased the rents for the two units that went vacate to the current market rents that is a huge plus for this situation. For the month-to-month people in those units, keep them at a month-to-month because in rent control cities when selling/keeping tenants in with a locked in lease gives the buyer/owner less advantage. 

I would keep the month-to-month, increase per the city guidelines as often as you can, I believe 3% once a year. The reason this is, is because once someone comes to buy the place you can sell as it is and that person could be buying as a primary and move one of the units out to live along with 2 units top rent and they can work on getting only one unit up. This is just one example of a plus for going to market and giving the market the ability to see what it is really going to value you the property at with the 2 units newly rented and two having long term existing tenants. 

What I typically tell people.. A couple things:

1. Search 5-10 cities that you may know by visiting, having family/friends there, and/or traveled to

2. After you put those cities on paper start to dive deeper, that is looking demographics, income amounts, industries etc. Also, look at purchase price to rent income as well 

3. Once you do that you will reduce the size to 2-5, and then you can start to contact realtors and PMs in those areas to really dig in even more

4. Interview the agents and PMs and narrow down to 1-2 areas and then you can start to plan to meet in person and develop relationships etc. This is where you will start making offers and getting properties that will be a good fit for your investing

This is a quick high-level of how I suggest you look at areas and find areas/area you want to invest in.

I would review the lease you had with the last tenant, if it talks about tenant covering fees on this then I would ask for them to repay you or take it out of the security deposit check. If not, it is a learning lesson and I would include it on all leases going forward so you do not get left holding the costs for you paying them. 

Side note: I would also check your state policy/local policy for what the tenant could be held liable for when moving out.. I.e. fixing holes in walls, ripped carpet, oil replacement at tenant costs.  

I agree with Bruce, these things like adding ancillary businesses, mortgage, title, etc. are hard to do while running another company. Most real estate agents as I have seen are hard-pressed to just get another deal under their belt, I mean the skills built to follow up, call, and text new clients all while running a transaction is hard for a lot of agents. It takes years to get into the habit of doing this stuff while running multiple transactions. Add a new business and the wheels fall off quickly. This means now you have to do all of the above and start to hire. It is a recipe for disaster. I went to a Tom Ferry event the other day, he shared a slide that last year 968K agents out of 1.5M agents last year did not do a deal, or another stat that is floating around is 71% of agents did not do a deal last year. 

I would have any agent start on a team, get deals under their belt then start to build up a war chest of funds, invest in real estate to reduce their taxes, and do that over and over again while doing active income (selling homes). Once they get to a place of building their own business, anywhere from 7-10 years down the road and they are doing it successfully then they can look at doing an ancillary business.

If you close in the same year, then there is no savings to the seller. But if you can delay it since it is a flip, close later this year, have him/her hold a note for $500K, and fund the rest with a HML/Loan. You can sell next year and he would get hit with the rest of his taxes. It would spread the burden between two years versus one year for the seller. This is not a huge saving for him but could give him relief to not get hit with that amount of taxes all in one year.

Jared! Great question, there are many people out there in the forums and posts looking to do the same! I would say, go to local meetups, go to networking events and keep pounding the pavement to find those partners and deals! 

You can ask for seller financing on the property, he holds the note for you and you bring in cash to close along with a certain amount of money to the seller at closings (i.e. $100K etc). Then you can pace out the sums of money, year two is 50K, year three is 150K, and so on. Then you talk to them about a rate for their interest rate they want and payments they want per month..

If you can do a lengthy escrow, 90 days, then if your rehab is long 3-4 months.. you could do half payment this year for the property, pay them interest/payment on their property and then pay them the second half of their net proceeds when you sell the place which at these timeframes would be into next year. 

The LLC is a little different than adding someone to title for instances. You can form an LLC with a partner and give them a majority stack in the LLC, or form the LLC making you a minority and the other people having majority voting rights. These are just a couple of examples, and it is true the bank needs to see this to agree to change the Mortgage/Title into the LLC. They do not want to add someone to the mortgage/title that could negatively effect the property/loan. The banks interest (no pun intended) is keeping the loan solvent for years to come and putting the loan into an LLC depending how it is structured could jeopardize that position.

You should not have any issues answering this question, it should be found it through a friend/person I know etc. The bank will not stop the deal because of where you found the deal.

Pretty much all the signing services are going to give you a small amount of free signings, 10 signs a year, 20 signings a year, and then they'll want you to sign up for a subscription. I would suggest if you run into this Docusign is pretty easy, reliable, and the most well known. I use Glide and Docusign, those are the only two I use for signing leases, contractors etc.