Income Property Los Angeles

Category: Activity

  • I just sold the highest priced L.A. fourplex east of Sunset Blvd.*

    At the time of writing, 3335 Cazador St. is the highest priced fourplex ever to sell in Los Angeles east of Sunset Boulevard, other than one famous Rudolph Schindler architectural sold in 2015. The east side of Los Angeles is changing fast, and it’s important to know just how much you can push the market if you can reposition the right property.

    The seller of 3335 Cazador and I bought it just one year ago for $1,180,000 and sold it last month for $1,855,000.  What changed in a year? We knew that the rents could be much higher than the current rents, and, one-by-one, the seller paid the tenants to move out so he could renovate and capture high market rents. And believe it or not, the new owners did NOT overpay. They bought the property, fully rented, at a low 12.78 GRM!  You better believe the new owners are making good cash flow on that.

    So why did the seller sell? With the equity from the property, he upgraded to a 6-unit building in another under-appreciated area, where he snagged a new deal. We’re currently selling one of his other properties, so he’ll have the equity to renovate his new 6-unit property, and add even more equity to his quickly growing fortune.

  • OFF MARKET 4plex – but not for long!

    If you have $500,000 cash to invest and you want to make $2,000 cash per month after all expenses (5% cash return, 10% equity+cash return), I have an upcoming fourplex that you may be able to snag if you act fast. Please let me know immediately at davidlbrundige [at] gmail [dot] com.

    Here’s the (potential) upcoming MLS description:

    Beautiful four-cottage compound property on a gated, half-acre lot in the desirable hills of Glassell Park. This turnkey investment property is unlike anything you’ve seen in Los Angeles with three parking spots per cottage, private yards, shared gardens…the gem of the neighborhood. Each home has 2 bedrooms and 1 bath with original wood floors, character kitchens, and close to 1,000SF each! Three units are already rented successfully at market rent. The owner’s unit, with two garages and covered work area (it’s crazy how much space there is), is delivered vacant. Well-maintained by owner on property, with mostly copper plumbing and improvements such as new HVAC, water heaters, electric, landscaping, gate system, appliances, and more. Cash flow immediately with a still low 30-year fixed interest rate and watch the neighborhood (and all of the roses) continue to blossom.

  • “Bullish on Drones”

    Los Angeles Magazine wrote a piece on drones which features Yours Truly. The funny thing is, you’d be surprised how many listing agents won’t shell out for drone footage. Of course, all of my listings get drone videos for free, if requested.  Here is the paragraph in the article about real estate:

    Comparatively inexpensive aerial footage is also changing the way real estate agents market properties, whether palatial estates in Beverly Hills, starter homes in Echo Park, or condos in downtown L.A. “It’s not like every buyer needs a drone video, but you don’t want to alienate anybody because they feel you weren’t selling them hard enough,” says Coldwell Banker realtor David Brundige. He’s so bullish on drones that he formed a company last year, DroneMyListing.com, with a former airline pilot.

    Of course he didn’t quote the part of my interview where I describe the value of videos in marketing a property. The truth is, certain properties are served better from drone footage than others, depending on what that drone footage reveals. I’ve even used a drone to scout the roof of a property for a buyer. That could reveal good things or bad things. When you market a property, it’s always about what you want to highlight. Drones provide a special angle, and one that can pay off if used correctly.

    Here’s the article. Here’s a video for my listing that sold for $130,000 over what top agents at my brokerage considered an ambitious listing price:

     

  • Refinancing FHA Loans for Investment Property

    Today I refinanced my triplex in Boyle Heights. I bought it with an FHA-backed loan, which is meant only for primary residences between 1-4 units. It’s quite difficult to use an FHA loan in most good areas of L.A. nowadays, as FHA loans have stricter closing requirements than traditional loans. However, I bought this Boyle Heights triplex in December, 2014 when it was a different world out there.

    One interesting point about this refinance is that I actually refinanced out of primary residency and still saved money. When I bought the apartment building, mortgage insurance was higher and so were interest rates.  So now I’m saving $264/month and I can legally move wherever I want. I recommend it to you investors who still have your FHA loans.

     

     

  • Corporate Achievement = Hooray?

    Dear readers – most of you know I’m quite the practical real estate agent. But corporate marketing compels me to let you know that I’m now a top 2% Coldwell Banker nationwide agent. I’d be much prouder, however, if I could properly calculate the total net worth I’ve helped increase for my clients by selling and buying. Being a top 2% agent doesn’t quite reflect that – most of us in the top 2% sell giant mansions. I wonder how many of us work primarily in income property, and within that number, how many have repeat clients, etc. I think you get my point.

  • Cash vs. Loan on Income Property

    Many clients who read this blog shop for investment properties with the understanding that they will need a loan. The idea of a loan is pretty simple (for a brush up read here), but what you may not know is the actual implications on the real estate transaction, and why on earth there is so much power granted to cash buyers.

    The main issues lie in

    (1) time,
    (2) hassle, and
    (3) the value of going through only one escrow.

    Off the bat, a cash transaction requires no more than a 21-day escrow, whereas a loan requires between 30-45 days or more. No deal is done until escrow is closed, so those extra weeks cause not only expediency problems, but psychological ones, as well. That’s 2-3 extra weeks that everyone has to worry about closing the deal.

    The hassle is real but manageable. Here are the extra steps for closing a loan deal from the Seller’s point of view:

    a) pre-approval process to determine the buyer’s ability to close
    b) initial appraisal of property by bank
    c) loan and appraisal contingency periods
    d) fixing physical issues that the bank finds objectionable (this could be anything from exposed studs to unstrapped water heaters to chipped paint — yes, chipped paint)
    e) re-inspection by appraiser to confirm those fixes are completed
    f) field review by second appraiser to confirm value (this is a new one)

    For example, yesterday and today I went to two different properties my clients have in escrow and personally fixed two last-minute physical issues that the Sellers weren’t willing to fix and for which my Buyers couldn’t get a handyman in time. That wouldn’t happen with a cash deal.

    There are only two reasons why a loan is more likely to fall out of escrow than a cash deal. The first is that the Buyer may not qualify for the loan. The second is that the property does not qualify for the loan if those physical issues above cannot be fixed. If a deal falls out of escrow, the property may lose value because (a) its market momentum slows, (b) it’s tinged with the question of “what’s wrong with it,” or (c) the backup buyer finds another deal in the meantime.

    So what is the real consequence of needing a loan? If there are enough buyers interested in the property, one or two of them are likely to be cash and they have an advantage if your offers come in around $10,000 of each other. That’s why, as a buyer using a loan, you have to be slightly more creative than cash buyers in the types of properties you buy, the terms you elect on your deal, and our approach with the listing agent.

    All that said, 83% of my closed deals have used one kind of loan or another. Don’t count yourself out; just know what you’re up against.

  • Sold! $110,000 above asking and that’s not the full story…

    Closing my recent listing, the Glendale fourplex (1414 Dixon), at $1,305,000 this week answers the age-old question of “why sell.”

    Not only did we negotiate $110,000 above asking, but the property also went into escrow like lightning speed. We had strong interest from several buyers, but ultimately the Seller favored the Buyer with the best financials and was most likely to close. The property went into contract 7 days after it went on the market, and closed in a 47-day escrow.

    The hidden story behind this fourplex is that the Seller bought it with me in late 2014 for $860,000 and made $445,000 difference on the sale in less than 18 months time, minus closing costs and improvements on the property. Now we’re targeting two more properties that he can buy with these proceeds in a 1031 exchange (tax free), and hopefully do the same thing again next year.

    There was no reason to sell 1414 Dixon, except that the landlord knew that he had maximized the property with the resources he had, and could do the same to a different, under-utilized one with new resources from the sale. If you have a property that you are curious about selling, please get in touch.

  • Applying SFR Lessons to Income Property

    Today a listing agent on a hot fourplex said her Seller accepted my Buyer’s offer, which was $25k less than two other offers, because the Seller liked me at the open house. How did my likability become worth $25,000? It’s not my worn-out jeans.

    As a seller, your greatest fear is someone tying up your property through escrow, canceling, and wasting not only your time, but the momentum your property builds when it goes to market. Therefore, any good buyer’s agent builds a reputation of doing what he says he’ll do, and following through on deals. Thankfully, that reputation not only precedes me most of the time, but when it doesn’t I know what’s important to the Seller and make sure she knows that.

    What I learned from selling a $2.5M single family house is that income property agents often take for granted that the person on the other side of the transaction is just that–a person. Most landlords who have properties with 2-10 units often spend a great deal of personal effort caring for their properties and getting to know their tenants. That’s why it’s important not only to understand how income property numbers and laws work, but also how to treat the person on the other side of the transaction like a homeowner.

    [Note: I originally intended to be more detailed in this post, but I realized that I’m not retiring yet, and so describing too much of how to transact as an agent doesn’t make much competitive sense.]

  • Speaking of Single Family Homes

    If anyone knows someone in the market for a mid-century modern classic in Brentwood, 1115 N. Norman Place is on the market for $2,450,000.

    If you ask any Brentwood agents, this property will move fast. Check out 1115Norman.com for details.

    Norman-Sign

  • Single Family Home Agents versus Income Property Agents

    I just closed a beautiful house for a friend on the Pasadena / Eagle Rock border.  One difference, among many, between working a single family home versus an income property is when I close a house, 14 alarm and security companies call me the next day hoping to earn a referral to my client.  I’m polite and then hang up.

    But don’t start feeling sorry for house agents. The process of buying a house is five times simpler than buying an income property. When I dabble in the house world, it’s like the bowling lanes have bumpers. After working SFRs, I realized why so many agents are slow and fumble around during income property escrows. The nuances of tenants, leases, estoppels, rent control, and systems in an apartment building are understandably more complex than in a house.

    So why don’t I start working exclusively in single family homes? When you have an expertise that is rare, even if the work is more difficult, it makes a lot of sense to offer buyers and sellers something special. Smart clients can tell the difference.