All Forum Posts by: Phil Hong

Hi Alan Sue

You might be able to find a little bit of cash flow in San Pedro but you will need to focus on the less desirable neighborhoods. Torrance, RB, and RPV are highly desirable beach cities and have the real estate prices to match.

Hi @Tim Chen

Is there a way to find out which Los Angeles properties are required to perform seismic retrofitting?

Hi @Jacqua Le Fleur

Congratulations on your new duplex! You're smart to be doing your research before you sign your first lease. Once a tenant is in place there are many tenant-friendly laws that limit your options for dealing with less-than-ideal tenants. I suggest getting familiar with LA RSO's website. They have a good overview here:

http://hcidla.lacity.org/rso-overview

Thanks @Dave Foster and @Adam Nishikawa. I will consult with my CPA and make sure your suggestions apply to my situation.

Hi BP!

I am considering selling a property owned in my name and buying a bigger property. I would like to have a single-member LLC own the new property. I read that the name on title for the upleg and downleg need to be the same. Is this possible?

Thanks!

Phil

Hi Mario  

I own a few properties in Southern California and have only come across a foundation issue once during inspection. It was a serious problem that didn't have a simple fix. I passed on the property. Keep plugging away and you will eventually find a property that has no, or manageable, foundation issues. Good luck!

@Ronin Crimmons I don't know either area but these look like similar deals. The two areas look adjacent to each other so the difference in appreciation likely won't be much unless one area has superior public schools. Assuming all things are equal, I would go with the more expensive property since I will likely be 200k wealthier after 30 years.

@Minh Nguyen Have you tried plugging your primary residence numbers into a rent vs buy calculator? NY Times has a good one: http://www.nytimes.com/interactive/2014/upshot/buy...

I used this in 2005-2007 to avoid buying during the real estate mania. It helps to understand that housing is at its core a commodity. It is shelter. If you can live in the same place for 30% less by renting even with historically low interest rates then this is pretty good indicator that housing is overheated and you are better off renting. 

As for investment properties in LA:

1) Yes you need to dig deeper to find workable deals in LA. LA is popular with buyers for a reason so the deals you find on MLS are going to reflect that popularity.

2) You could assume that rents will rise at the rate of inflation. Choosing to accept lower investment returns is a question only you can answer. If it meets your goals then don't be afraid to pull the trigger. As a buy and hold investor with cashflowing assets, time becomes your friend. 

@Mario F.

If cash flow is your goal and you can handle the extra demands of C neighborhoods then this is a valid strategy. I suggest looking for value-add opportunities such as disrepair, low rents, and other signs of poor management. You can usually fix these issues and these will provide an immediate boost to the property's value.

Also, I would say chances are good you can find some motivated sellers in these areas. Looking for obvious disrepair is one way. Another is to check on recent evictions. These owners will likely be receptive to offers.

Good luck!

Phil

@Edward P. Most of my properties are rent-control and your options are very limited regarding existing tenants. You should be valuing this property using current income and assume you will be inheriting the existing tenant base. Your opportunity as the investor will be to run the building better and unlock additional value.

Here are some strategies I use to maximize revenue and expose turn-over opportunities.

- Begin raising the rent like clockwork on the 1st of the year

- Look for violations in the existing lease including pets, people, etc. Issue 3-day notices on these violations and you can act if these are not corrected.

- Be diligent about collecting all fees including late, RSO, and SCEP.

- See if cash for keys is an option and then calculate if it makes sense.