All Forum Posts by: Steve Karp

@MarkNolan   I believe they do.   I apologize for the delayed response. 

I'll spare you the Being Prepared clichés  :)    First thing that came to my mind was, I would have either used my cell phone or tablet and quickly downloaded a contract and had her sign that in lieu of any other documentation.     However, it sounds like what you may not have been prepared for was the seller being wiser than you gave her credit for.  Chances are, even if you got a signed contract, for the difference of money the other buyer offered, she would have found a way to wiggle out of your deal for the higher dollars. 

I own a few out of state income properties that generate healthy monthly revenue.  I'd love to buy in LA where I live and have spent the last year or so in search of a property.  In general, I look at it as, elsewhere, you get to find monthly income properties.  While my goals are long term hold on those, their appreciation will be slow and low.  LA is kind of the opposite, low and slow monthly revenue with a more generous reward of appreciation down the road.  I'm not a SouthBay expert but I would say its hard to go wrong there. If the monthly net revenue is on the skinnier side, I'd go for it.  Its going to pay off in the long run.  A neutral or small positive number is really more based on geography.   In So Cal?  totally.  If you're in a situation where the building is self sufficient/funding itself, I'd do it.   I would also consider the value of the education you're getting through the experience.  The added bonus is you'll be working with contractors and vendors and building those contacts and relationships that set you up for properties down the road.  :)

HOAs are notoriously coy, secretive and uncooperative to buyers. Ultimately its up to you to be informed on what you're purchasing. I'm big on TEAM. I can be difficult and demanding, but I have been fortunate to align myself with people who get me and we have great chemistry. My agent and loan resources know what I want and need and we work incredibly well together. While I value and put great trust in my RE Agent, I still look over all the paperwork. There's always something that slips through I get corrected. Typically in escrow is when you finally get to see the HOA details and CCRs. That's required and the law. I would first look through your closing paperwork to see when and if you got the CCRs and or signed off on them. Even if you did, I agree, the language of "rental enterprise" I interpret as more of a business engaged in rentals as opposed to "leasing" out your property. While some HOAs are overbearing and have restrictions on Leasing of units under their control (See what I did there?) it would be highly unusual for Leasing to an individual would be specifically prohibited. If so, you may be able to claim a hardship and get a waiver? You should have also received through the escrow or closing a statement that tells you what the percentage of units in the development are owner occupied. There may be a cap on what the HOA allows, which ultimately means it IS allowed. There's an HOA questionnaire you can grab off the HUD site that covers all those items which you would want to know which the HOA Should provide the answers to.

To each their own. I did my research and found RealTrust IRA Alternatives, Amy Holmes. They're in Washington state and have a fair amount of info in terms of explaining SDIRAs. They fit what I wanted and Amy has been awesome and responsive.

Best of luck!   Nothing new really to add. You'll find resistance and negativity all the way to the bank. :-)   It comes from agents (no offense), lenders, sellers, tenants, relatives, co workers, contractors, strangers       Overcoming all that is part of the fun and satisfaction.  

Kory, much of the math in the 1st year or so is perspective. Whether it's hacking/owner occupied or a more traditional non owner occupied multi unit property, the cash flow, at least to me, is a long term equation. Look at the 3 year and 5 year estimates. There's going to be costs when taking on a property, occupied by you or not. There's a variety of scenarios that support a negative or neutral cash flow for the first year. In your case, or lets say like an FHA situation, you're committing to living in one unit for 1 year. To determine the real long term worthiness, consider that you're effectively a tenant to yourself. Short of it is, if you take your 1 year as a short term situation and evaluate the property based more on long term occupancy (which will be a real money paying tenant) then you can make a more informed decision on the merits of the property. I own several non owner occupieds at the moment. When I evaluated them, I still factored in the short term costs that made the initial return slightly lower. The bigger picture becomes much brighter as you forecast for a few years. Now I'm looking to do an FHA owner occupied and I see similar negative initial cash flow numbers. That's a gut instinct call to some degree. I look at it as, I'll live in 1 unit and do the rehab, fulfill the FHA requirement, then lease it out at market rate. I wouldn't buy where the negative is excessive. I would buy if I like the property, the location is good and all the other points are positive. On a side note, I think that's one of the biggest deterrents for someone getting started. They fear pulling the trigger on a deal because they do not have enough info to feel comfortable. The deals that pop sweet cash flow day one are a needle in the haystack. Most deals are ones that squeak by the threshold of one's standards for saying yes. Even getting to that point takes a fair amount of manipulating the numbers to make it work. If your plan is only holding the property for 5 years, consider the full term revenue stream and see how you feel about the property based on that.

You can check a property's rent control status at http://zimas.lacity.org/      For what its worth, if I understand the Code and the status of the property in question, even if it's rent controlled (a lot of North Hollywood is) the units are vacant so at least your starting point for rents can be at market rate.  If the units are occupied, its becomes more complex and limited as to the rate increases and you're dealing with rates likely under market.

I completely agree with Greg S.  This is a business.  You have two tenants who have been fortunate to rent from someone who apparently was more interested in collecting checks than operating a sound business.  The reality is, maintaining the building has costs.  The building is being sold. You will be the owner. There's no shame in being professional and running the building that way.   There's a benefit to being diplomatic, but the bottom line is, its now your building, your business.  If the current tenants are not on board with that, so be it.  Whether they know it or not, they've spent less on rent the last few years than what should have been charged. If they can no longer afford the neighborhood, they'll need to move on.  In addition, you'll ultimately want your own screened, credit check'd tenants with signed leases that you govern.  If you have to bite the bullet with a vacancy, that goes with the territory.  Its a long term business venture. 

Lime Away!  its magic.  :0    Remove the shower head and soak it in some Lime Away.  That will clean and have it looking like new and streaming water full force.   Even if you want to stick with the vinegar solution, you should remove the head so it can soak.  Then reattach it and run the water a little bit for the junk to clear out.