All Forum Posts by: Sudeep Jain

Believe it or not, I am in this situation. I dont have the money to buy both. I take your point taken about vacancy, however, the rents in the occupied building are so low, that if tenants were to vacate, it would immediately appreciate, a lot. That, is the dilemma. 

This is my first 'investment prop' and I am buying at what could be a pricey time. So naturally, I keep rethinking, Is there anything else that I need to consider that I am not? Is a GRM of 12 overpaying for the Fruitvale area of Oakland?

Unfortunately, that option is not available to me. My better half will not move! :-) 

Between two properties, one with market rate rents, and another with bmr rents, but both at the same GRM, which one would you prefer? Obviously, with the BMR rents, there is a tremendous potential for appreciation if the existing tenants leave, but as a landlord in Oakland, there is no way I know of, that can make a BMR tenant with several years of tenancy leave.. If I was in their place, I would not leave either!

To flesh out the scenario, one unit is a fourplex with three tenants paying 50% of what market rents are in the area today, and one unit is vacant. The second unit is a duplex that will be delivered vacant and caters to a 'higher end' tenant. The GRMs are the same for both, roughly 12. Both units are expected to have perhaps 20-40K$ worth of deferred maintenance, but the duplex is about 20 years 'younger' than the fourplex. Further, the operating cost of the duplex will be a few thousand dollars less than the fourplex.

So which one would you prefer and why? I would really like to know your thought process behind the preference.  

I am looking for a project partner who can handle redoing electrical, plumbing and windows. I need a general contractor because my day job wont allow me to coordinate different activities on a construction site. Needs to be licensed and insured or make use of someone elses license. 

In my experience of doing a renovation on my primary residence, high-mid end finishes etc. dont really matter towards the final cost of the project, the biggest variable is the labor cost, so you might as well pay for top end finishes and get the most for the top dollar labor. :-) 

Yeah.. I heard that. How about out of area G.Cs? :-) Doesnt help that Sacramento is booming too. 

I have submitted bids on some fixers in the Oakland area, so far I haven't been able to get a rental unit I really liked but I am hopeful. After the fact, I realized that I actually had no clarity on getting the right contractors in a reasonable time frame (2-3 months). If I cant fix the property fast, that just adds to the cash hemorrhage :-) 

I have heard off and on that most good contractors in Oakland area really really busy and booked for years, if not months out. I would like to get to know some contractors on the forum so I have a better handle on this aspect. My goals are the acquire a fixer and rent it out in the shortest time possible. Hoping I can get some references and contacts. 

Thanks Sergey! I visited a few Oakland open houses this weekend and for sure, the deals are out there.. Especially if one can do some OMI evictions and get to market rents. Unfortunately, that phase of my life when I could take such a task on is gone but I am sure enterprising young bp members can make it happen. Hundreds of thousands of dollars on the table if you can.. For a couple of years worth of disruption in your life. :-) 

One interesting thing I saw in Oakland was unpermitted duplex conversions of old Victorians. Basically, an unpermitted apartment has been created under the permitted space, within the footprint of the old house. Unpermitted is unpermitted, and a huge liability if one were to rent it, but a few of the places looked like they were up to code.. Is it possible to get a permit for such a unit after the fact? I supposed inspectors would want to peek behind the walls etc. Just how difficult is such a thing? Is it as simple as taking down the sheetrock at a few places for the inspection, fixing up any issues and putting it back up again? Or more difficult than that? Any interesting stories to share? :-)

I went to a few open houses in Oakland for duplex units this weekend but it turned out that a couple of them were unpermitted basement units. The work appeared professional enough and looked upto code, but unpermitted is unpermitted and a liability. Has anyone gone through the process of getting a permit for unpermitted work?  How difficult is it? 

Hi Ray, Thanks for all the great tips! I am continuing to research more about the area, check out open houses etc. and was surprised to find out that a few murders happened recently, a couple of blocks from a house I was really interested in. Perhaps this is just.. Oakland.. and not a cause for concern? 

apropos investment choices, here is my take on it. The stock market is at a CAPE of nearly 30, and all of Martin's charts apply to that as well. Staying in cash is also a choice..  Going out of bay area is also a choice, but then those areas tend to be hit more than the Bay area by macro events/recessions etc. So far I have looked at Stockton and Sacramento, which to my naive eyes appeared as expensive/cheap as the bay area. 

This being my first investment,  and I dont have any connections with contractors, I did not want to overextend myself and go for fixers. 

Thank you very much Ray! I think you guys might have saved me from a bad deal! :-)