You know how California is, it is so amazing we have more people than housing. And instead of building up, which is starting to happen more, we think of a way to make existing square footage and street house more people. In January of 2020, ADU (Additional Dwelling Unit) and JADU (Junior Additional Dwelling Unit) became more mandated and allowed by the government for the cities to figure out. What does this mean and what does this look like? Let's break this down one by one: Additional Dwelling Unit - Detached The simplest way to separate them is Detached versus Attached. For this example, we will use a decent sized lot with a house in front and a small back house in the back. The back house would be the ADU. If you were leasing both homes out, you would receive two rents as the owner. Junior Additional Dwelling Unit - Attached A JADU is usually smaller than an ADU and attached to the home in question. For this example, imagine you have a 3 bedroom 2 bath home with a large ...

We recently talked about "Breaking The Rental Log Jam", where we went into an overall glimpse of how the market was fighting back during "COVID-19" or "Fragile" Market. You can read that blog here, but as we have closed all leases currently in our pipeline-I wanted to take a moment to go in depth about each type of unit and how it did in said market. Rental A is a 3 Story Townhome in Yorba Linda. It became available just before the shut down started, and you can see how the shock to not only the market, but the world in general, reflects itself in our numbers. Funny enough, we have leased this out before and did not get as much inquiries as we did this time around leasing it. So the needed numbers were there, but fear is a powerful disabler. After week 5 during COVID-19, it went to a lovely group with plenty of "really interested" people ready to submit an application if it fell through. This unit is the front unit in a recently purchased...

Today I wanted to offer a play-by-play on just one of our investment clients: 2013: Purchased a 3 bed condo in South Coast Metro for $128,000. There were 27 cats that lived in this property, all without litter boxes, the smell from the nitrogen in the urine permeated everything, along the top of all the walls had 8 inches of mold, floors were all warped. Funny thing was, they had a $2,000 Viking stainless steel range stove, nearly brand new. 2013: Spend $23,000 to fix it up, including new everything. Little to no repair work for 7 years afterwards because we did it right to begin with. Instant equity as price was $175,000. 2013: Rented for $1,700 2014: Rent increase to $1,750 2015: Rent increase to $1,800 2016: Rent increase to $1,850 2017: Rent increase to $1,950 2018: New tenant, rented for $2,000 2019: New tenant, rent for $2,300 2020: SOLD during the Coronavirus for $360,000, under contract with the proceeds for most of the downpayment for a $1.367M 4plex purchase in...

Things are getting expensive. I was thinking, I just paid $9,000 for 1 set of kitchen cabinets/counters and one bathroom set of cabinets and counters. This would have cost me closer to $6,000 just 4 years ago, less than $4,000 10 years ago. There are three possible reasons for this: 1. US Dollar is worth less 2. Trade War/Tariffs are making manufactured imports more expensive 3. Labor is more expensive I wonder how this will extrapolate out. In theory, when times are tough the US dollar goes up, it and gold are the "last man standing" in a downturn, anything denominated in dollars will do better. Source: Bullionstar.com Essentially, non-US friendly countries have been moving their reserves of gold up recently. Personally, I believe it is possible that we are seeing a country such as China making a move against the US dollar for world reserve currency status. This is based on the fact that the 1944 Bretton Woods Agreement which established th...

The stay at home initiative, or quarantine, began on 3/20/20. At that time we only had one active lease, we are going to call that: Rental A. We gather leads during the week and send out a showing text on Friday, for a showing - Open House Style - on Saturday (Sundays as needed). As you can guess, or lived with us, everything was sluggish as no one knew what to make of our hopefully temporary circumstances Week 1 of Quarantine: 3/28/30 Rental A - 3 Bedroom Townhome Yorba Linda: 7 Inquiries | 0 people attended showing | 0 groups attended showing | 0 Apps Makes sense right? Everyone was told to Stay At Home, not look for home, so they stayed home. Week 2 of Quarantine: 4/4/20 Rental A - 3 Bedroom Townhome Yorba Linda: 4 Inquires | 0 people attended showing | 0 groups attended showing | 0 Apps Less inquiries and similar attendance. But the show must go on right, so we kept at it. To make things even more interesting, Rental B and Rental C went live on the market between W...

Greetings, Today I would like to do a continuation of observations I had about our Coronavirus lives: - Cash is Trash . The Fed has decided to monetize not only government debt, but had a "special purpose vehicle", or "SPV" to purchase corporate debt. The reason they had to do this is because their charter does not allow them to purchase these types of (risky) assets, the SPV is housed at the Treasury, meaning with the executive branch. - This is sinister as it bypasses the need for the executive branch to ask Congress to loosen the purse-strings, Mnuchin, and by extension, Trump, can buy what he wants at will.  - Debasing the currency means that you should consider hard assets, either gold ($GLD, $IAU) or real estate. I have closed, or will close (removed contingencies) on 4 properties since this started, two of which are units. - Seriously, in case you missed it, go buy gold and real estate , when you debase a currency, assets denominated in that curre...

Greetings, Today I wanted to simply jot down some thoughts I had about this novel coronavirus (COVID-19) that the news cycle seems to love to talk about: - Will real estate values be affected? The answer is the same as every real estate question, it depends. I believe luxury will be impacted, I think more modest dwellings will not, and for a very simple reason, there is not more inventory and people have to live somewhere. - Is this our 1987 moment? In 1987 we had Black Monday, the biggest one day stock market drop in history, afterwards, real estate prices went up in a straight line for 18 months. Just like any good investor, when there is a shock to the system, you have to recalibrate, you either go to safety (or even relative safety, like houses versus paper ownership in a company), or you go to what has been undervalued. I suspect there is a good chance this is our 1987 moment for real estate. The 80's are dead, long live the 80's. - The drop in stock price...