All Forum Posts by: Sam M.

Dear bigger pockets. Has anyone had a deal for a single-family home that was burned and was pending the insurance claim? The owner wants to retire and get out but he has been waiting for the payout from insurance for a year. Can a new owner assume the property and assume the insurance claim?

Hi BiggerPockets members,

I am in the process of a rent increase for a multi-plex in Riverside County, California. The lease ends on June 30. I have done some homework on the CPI for Riverside County. According to the latest data on the California Department of Industrial Relations website, the data for Riverside County is only available through February 2021. From that data, I calculate the annual CPI in Riverside to be around 2% (Feb 2020 to Feb 2021).

However, if you look at the Bureau of Labor Statistics website, they published a report that came out on April 13, 2021 which states that the annual CPI for Riverside County as of March 2021 is 3.6%.

AB-1482 states that you must use the CPI data from April 1 of the prior year to April 1 of the current year from the United States Bureau of Labor Statistics. For Riverside, the data goes from March to March. My intent is to use the 3.6% CPI for rent increases this year based on the report from BLS. To find that report, search Google for "Consumer Price Index, Riverside Area – March 2021".

If you are raising rent in Riverside County, please share your thoughts on the CPI that you are using. What have you found?

I am not a lawyer, nor do I have any kind of license. Do not interpret what I write as advice or fact. 

Alex, How many square feet? Construction cost will run between $100-250 per sq-ft depending on how basic (or nice) the design and whether you act as general contractor. If your budget is $830K, then you can expect to build 1,000 sq ft units (small 2-bedroom units). I don't really know for sure; these are just rough numbers. What is the expected rental income for each unit? If you spend $830K on a 4-plex you need about $2000-3000 per month per unit (roughly). You have to do all that math and calculate your ROI or Cap Rate. Don't forget to bake in the cost of utility connections and meters (water, sewer, gas, electric) as well as permits. In So-Cal you have to have energy efficiency calculations and there are other costs that you don't realize until you get into it. Also, the construction in So-Cal will take a really long time so you have to figure out your cash flow during that period. Menifee is mostly retirement community - is there a market for small, cheap apartments? Below is a contact that might be able to help you but he's in Palm Desert - not sure if he does work in your area. Search for Anthony Araiza at Studios-2007

You have a bunch of total dead-beats on your hands and they all have to go. No mercy! Contact Anthony Shamrell on Tiverton Ct in Moreno Valley. He has helped me with these situations before. He is not a lawyer but he does a super job. Another good option is Dennis P. Block at evict 123 .com. He is a lawyer and well known in So Cal, but they are in LA. It's going to cost you roughly $1K to do an unlawful detainer lawsuit and you might have to give 60 days notice. It could be a difficult one from what you describe... the best thing to do is get on the phone with some eviction people and understand your options and get the process started ASAP. 

I am purchasing a home and the seller wants seller financing to defer the capital gains tax. However, I may sell the house a few months later. How do I keep the seller-finances mortgage active even after I resell the house?

I have a 3-plex in Riverside. I purchased it at the right time (2010) so the cash flow is good. I wanted to reply just to comment on your concern about getting tenants. My property is not in the best area of Riverside - it’s a  place that I would not send my family members at night time. Still I have never had trouble finding good tenants with decent credit scores and good income. Finding tenants will not be a problem in my experience. I believe the challenge will be finding a property that has an acceptable cap-rate. Thanks for your post - it makes me want to loo in Riverside for more properties too :-)  

If you pay $175K per unit and get $1175 rent per unit, I am not surprised that it does not cash flow after considering financing, insurance, taxes, repairs, vacancies, etc. You can use the 1% rule as a rough guideline (monthly rent must be around 1% of purchase price). Of the units that I own in SoCal, I have a 3-plex that takes in 1.5% of the purchase price and it's profitable. I have other units just under 1% and they are pretty much break-even. The 1% rule is just a rule of thumb. You are doing the right thing by calculating your net income and considering all costs. All I'm saying without going through your numbers in detail is that since the rent is at 0.67% of purchase price, it's not surprising that it doesn't cash flow. What is the cap rate and how does it compare to the going cap-rate in the area? 

Hi BP... I am seeking advice regarding title transfer when buying out a partner. I have a partnership with another investor where we own a 3-plex in Riverside County, California. I want to buy him out and we agreed on a price. Should I do this with a quitclaim deed? Is it okay to avoid escrow? Can I avoid reassessment by the county? We bought it in 2010 with cash and it went through escrow with title insurance at that time. Since then, we put a mortgage on it which I plan to keep in place. Is title insurance necessary? I am thinking we can simply use a quitclaim deed in exchange for cash. I am being cautious because I don't want to have title problems later and I don't want the county to reassess. Your advice would be appreciated. 

You could see the number of apartments, SFR's, Condos, etc by zip-code in ListSource. You can also see if they are owner-occupied or not.

@Radhika M., Welcome to BP. 

I live in Diamond Bar too. The two R.E. clubs I like because they are the closest are: 

http://www.meetup.com/Los-Angeles-Asian-Real-Estat...

and
http://www.meetup.com/Inland-Empire-Real-Estate-In...

Both are excellent clubs. The one in Arcadia is a little more established and well-attended than the one in Riverside. The one in Riverside is at the Mission Inn which is a really cool venue. You can meet and network with a lot of other like-minded people in these clubs. They meet about once a month and the fee is $20.

Maybe we'll see you there.

Sam