All Forum Posts by: Tony Mai

I am in the middle of this deal in Houston TX and I'm purchasing the property through a turnkey provider. The agreed purchase price was 300k. However the property was appraised for 260k which I believe is the true value of the home currently. The seller wants 282k, should I pay more out of pocket? And if yes, is there a way to do some creative finance for the difference? The current rent rates for the area for a similar property is 1800, however the main reason why I am purchasing is there is a corporation lease on the home for 2700 for an additional 4 yrs (lease includes maintenance and property management already paid) Should I proceed with the deal and pay more?

Thanks for the info Steve! I do have a appraisal contingency so I can pull out if needed at this point. I just don't know if it's worth throwing 20k at the situation or chase for another deal.

I am in the middle of this deal in Houston TX and I'm purchasing the property through a turnkey provider. The agreed purchase price was 300k. However the property was appraised for 260k which I believe is the true value of the home currently. The seller wants 282k, should I pay more out of pocket? And if yes, is there a way to do some creative finance for the difference? The current rent rates for the area for a similar property is 1800, however the main reason why I am purchasing is there is a corporation lease on the home for 2700 for an additional 4 yrs (lease includes maintenance and property management already paid) Should I proceed with the deal and pay more?

I would be interested too Just let me know when and where and I'll see if I can make it

Hi Aaron! Welcome to BP I have a very similar situation as you. I work a full time corp job and looking to invest in the LA market so I'll share my experiences so far for 4 unit multifamily. I haven't invested in 4+ units so I could not help you there. For 4 units or less, sellers in LA know it's a good time to sell so it is hard now to find a great deal where the numbers makes sense(positive cash flow/above 5% cap rates). Also when you do find a deal, there seems to be more foreign investors that are willing to pay cash and there are multiple offers. Eventually the final offer is high and doesn't make sense to buy unless you want to pay more. In the current market conditions (last 3 months), most of the properties that I've looked at in the LA typically will negative cash or get close to breaking even. So to invest in LA you will need to be ok with a negative cash flow and hope/wait for appreciation. During my searches, I did see some potential properties in Long Beach that had better numbers and there is a large supply of MF out there. Overall keep looking and invest when the numbers makes sense for you and your partners. Feel free to add me. Would love to see what you eventually do or buy.

Is Southern California a bad place to invest right now? Should investors buy out of state for cash flow or stay in California and hope for appreciation?

Originally posted by @Tim Ryan:

Wow, I don't know where to start. This is so far from being a deal. Well, I'll be nice and leave it there.

I own lots of multifamily and can help you figure this out. You do need training. Having funds to invest and good credit for loans is NOT enough on this business.

Want to grab a coffee sometime and discuss? I'm in the Pasadena area.

Hi Tim,

I would LOVE to sit down and chat.  You are right I'm a little new so having another set of eyes and ears makes sense.  I'm going to message you. 

Originally posted by @Eldar M.:

Southern CA properties with low CAP would most likely generate a better return in the long run as appreciation.

yes that's what I'm thinking.  the numbers are low but the appreciation is high especially in orange county

Originally posted by @Wei Xie:

First of all, I see you have $375k as capital, which leaves only $25k after downpay. Do you have additional cash reserve? Otherwise, the liquidity is a little too tight, particular as house is old.

Secondly, do you care to share which city is in? Based on the rent, it seems like in a big metro. You probably want to ensure the house in a place with steady supply of good tenants.

Just my 2c.

I don't have more.  And yes its metro.  there are long term tenents in there already

Originally posted by @Jeff B.:

Built in the '50s will be producing more maintenance AND 3% vacancy is way low unless you have documented rent rolls - - the lender will hit you with min 8% up to 12%

(I too am in SoCal as my profile shows).

Hmm; 4 units @ 1million?  Seems hi.  I sold 6 units for 775k

Take 1500/mo x 4 x 12 is a GSI of 72k so that's a GRM of 13.9; that's hi too

Thanks Jeff,

I don't know if it is me but the so cal market in general has poor numbers.  Out of all the multi family units currently available, these were the best numbers in the best neighborhood that I could find.  I could get better numbers in Riverside County or less affluent areas of Los Angeles, but the vacancy rate might be higher and the problem of collecting rent with high turnover.  I'm just wondering if so cal a bad place to invest in at the moment?