All Forum Posts by: Jason Mak

outside loopnet and the MLS, I would also suggesting to reach out to title companies and brokers and see if they have any clients interested in selling or with buildings fitting your criteria that they are looking to sell. A good broker can call his old clients and setup a deal. This often time gets you a better deal than competing with the masses on the typica listing services

There are a lot of ways to structure this partnership and unfortunately there is no perfect way.

I think as a start, you need to understand how much each person's job responsibility is worth and the best way to do that would be to research how much a 3rd party would charge you for the job. 

Let's start with you, the property manager, if you pay a property manager you would probably pay 4%-10% of monthly collections and a leasing fee.  What do you estimate that to be worth?  Are you a licensed realtor or will you be hiring one when you sell the project?

Your partner, as a general contractor, will be spending a lot of time on the job site supervising the renovation.  This could be quite costly but you could obviously get some estimates and bids to determine how much this job responsibility is worth.

In my opinion, if you are a licensed realtor and you can lease/sell property without charging the partnership a commission, then perhaps a 50/50 split would be fair.  

@Martin Z. certainly takes a lot of discipline to take a back seat in but I agree with you that it may be the most judicious move given where our market is headed.  I was looking at several apartment deals in Glendale in late 2014 and the cap rates were at like 3%-3.5%...hehe

agree with @Jesse T.   - you need to assume market vacancies and even a period of abnormal vacancy after your purchase to convert this to a regularly operated multifamily so make sure you have enough reserves to get you through this period.  Some tenants may moveout when they stop receiving the special treatment from the old landlord they are used to receiving but as @Peter MacKercher said, if your plan is to come in and make some nice repairs, then this would be an eventful situation for everyone.

One thing with an old landlord running the business in a lax manner is that there could be a lot of ambiguity and false assumptions in the lease terms so with that I would make sure to get a estoppel certificate.  Shouldn't be too hard with 10 units.

good luck

@Elizabeth Colegrove  that makes sense - best of luck with that transition.  I heard elsewhere that vacation rentals are becoming nice investments so I'll too dig into this a little more

@Matthew Nixon That's good stuff Matthew, perhaps we'll get to meet at one of the LA county networking meetups.  Are you finding a quality blog helpful for your business?   Or is blogging just something you enjoy doing for personal reasons?

@Elizabeth Colegrove Thanks for sharing!  Good luck on hitting those two more houses.  Out of curiosity, why vacation rentals?  I did take a brief look into vacation rentals and just never thought they cash flowed enough after management fees to make sense economically.  What's your approach?

 @Karen Margrave 

you couldn't have said it any better.  To piggy back on your list of reasons, there's an abundance of international (chinese) money willing to park their money in California real estate that earn inferior returns.  That being said, RE is localized and there may be much better opportunities elsewhere.

Unfortunately, the last crash (and HGTV) also popularized RE investing to such a degree that investors themselves may be the ones preventing another sizeable crash.

Investor from Southern California here and interested in what other BP'ers, particularly those in Southern California are gearing up to accomplish in 2015.  Southern California has been such a ridiculous seller's market and it's a good time to sell due to many investors both local and international (particularly China) so I'm curious what other investors are doing (going out of state?)

Here are some of my goals for the new year:

- Close on an office building i'm in escrow for

- Sell an apartment in Riverside that i'm marketing and recently flipped

- Target land development, rezoning, and commercial rehab opportunities

- More involvement with BP and more in person networking

- Getting to know and building relationships with local investors and developers

- Helping foreign investors find investments in the USA

- Office condo - development and conversion

- Land development

Happy New Year!

@Scott Malkin 

Seems like you have a nice property!

I usually call out the buyer/broker and ensure that they realize that they are buying into a cash flow negative deal to make sure they are serious before proceeding.  I did with a property I recently sold in LA, I simply spoke to the buyer and bank and said "you know you are buying a cash flow negative deal right?" and see how they respond.

Usually, they are banking on appreciation or cash flow down the line or sometimes they are in an exchange and would simply buy into a cash flow negative deal rather than pay the large capital gain taxes.

Don't forget that if you sell your property, that you may would need to pay capital gains unless you can find an exchange which is very difficult in this market.  It's a double edge sword - get a nice price for your building but either buy another expensive property or bite the bullet on the capital gains.

Best of luck!

@J Scott you have the patience of a saint man, I would have given up on this this months ago.  :)