All Forum Posts by: Wiley Strahan

@Chester Stoney

You should also see if the college has an "approved" list of housing providers and try to get on that list. That is the first thing that college students look to for housing.

As far as the property itself, my suggestion would be to install wear resistant materials as units turn because with students you get more wear and tear than normal tenants.

@Nancy Mascorro

 As you may have read, not many properties in LA cash flow right off the bat. That doesn't mean that they don't exist but with rent control throughout the city, many units have lower than market rents while the asking price is taking into consideration market rents. If you are a new investor, I suggest reading up on all things real estate.

We would need to know more about your goals, financial situation, and area of Los Angeles to give more advice.

@Allan Foote

From my perspective, going to college is not only an opportunity to learn but also make connections to both people who are like you and others who are not. A lot of college is also about growing up and learning how to do things on your own which I think is an invaluable skill. At the same time, paying for college is definitely a very large disincentive to attend. It is a lot of money without any guarantee of getting a job afterwards.

At the end of the day, I think college provides a great opportunity to learn and meet people who may one day become your business partner. Personally, I would say try to get as involved with college clubs, organizations, and societies as possible to really take advantage of the networking side of things. As far as the real estate interest goes, now is the time to seek out people well known in the industry as I guarantee you that they are much more willing to talk to a bright college student versus some guy off the street.

Also what is stopping you from pursuing real estate while you attend college - if you dont take advtange of the clubs and orgs, then you can put all of your free time towards real estate and maybe make your college tuition up in investments (highly difficult but possible).

I do have a BS and an MBA so I may be a little jaded...

@Candace Price - you have received good advice here as far as the PM and realtors go.

I would also suggest using a website like rentometer.com

Justin,

These are all great questions to be asking. 

1) Fair is a very subjective word - the answer is whatever you think the value of the building is based on your analysis - this may be very different from what others think the value of the building is. You can use the cap rate and GRM as a litmus test and compare it to other buildings in the area. Keep in mind that the cap rate may be distorted due to the self management and long periods of vacancy. That's why I suggest you do your own calculations.

2) Vacancy rate is very dependent on area - for example in Southern California, we can assume 5% due to the demand for housing. Conversely, in another area, units may take months to lease up. I think 10% is a fair assumption.

3) I generally don't screw around with water damage - that is something that should be covered in your inspection but I would also suggest you get a contractor our there during the inspection to also take a look. Inspectors aren't generally liable for much when it comes to misses during an inspection.

4) Hire a property inspector, they will look at everything from the foundation to the roof and give you an assessment. Now what you do with that assessment is up to you. Remember that a good inspector will point out everything wrong with your property - some of these things should be fixed (large code violations), while other fixes you could potentially put off.

Let me know if I can help in any other way.

@Brian Leung

For a fourplex in LA/OC - you should in the 6.5-8% of monthly rent range.

As a next step, I would suggest asking these companies for referrals to existing clients. Additionally, I would suggest asking to speak with the person that will be your daily contact.

Finally, company 4 is interesting given you don't see a ton of property management companies offering flat rates but at the same time they aren't incentivized to get higher rental rates due to the flat rate.

In the end, I would go with who you feel the most comfortable with.

@John Hartley

It all depends on your long-term strategy - if you want to flip this property in 3 months, that's going to be a different discussion than wanting to live in it for 5 years and then sell.

You will also hear this over and over on here - the money is made on the buy. If you are able to get a property that is a "deal" (deal is relative) and are able to add value (fix deferred maintenance, renovate bathrooms or kitchen), you may set yourself up for forced appreciation which you can then use (via sale, refinancing, HELOC) to purchase another property. Conversely, if you buy it right, you could have immediate equity if the houses in the area are selling for more (single family sales are all done based off the comps).

I dont work in the single family home space, but the tenants remain the same between single family homes and multi-family. 

@Aaron Moayed - @Mitch Messer had some good advice with his assumptions. To go even further, your capex and repair assumptions are going to be based on a few things.

1) Age of the building - the older the building, generally the higher the repair expenses

2) What repairs are you doing to the building - if you are renovating the entire building from top to bottom, you may want to be less conservative on the repair assumptions as everything will be brand new

3) How conservative are you as an investor - some people will model properties out with zero room for error and they may assume a lower repair cost that you will

4) What is your end game - if you are going to hold the property long term, I would assume higher repair costs as compared to a fix and flip that you will dispose of in a few months.

Let me know if you have questions.

@Sache Tolliver I definitely agree with @Nick Ruffini but I would also say that it doesn't hurt to read and learn about investing at the same time. There are a number of great resources out there (including some of the books from BP). It also wouldn't hurt (once you have your license) to find a real estate brokerage that focuses on investors. That way you can start to better understand what investors look for in properties. If you have any other questions, feel free to PM me.

@Lance Lvovsky thanks for responding. Would love to set up some time to speak. I’ll send you a DM. Thanks.