New Balance!

New Balance

Every once in a while I get blown away by a new product or service.  As I write this I want to let readers know I am NOT an affiliate or getting paid by New Balance in any way to praise this product.  In real estate I am on my feet a lot so I appreciate any footwear that makes it easier to get through the day.  So I wanted to share my experience with these kicks from New Balance because they ARE crazy good!  A good friend of mine has been loyal to New Balance for some time know as I always preferred Saucony.  But I recently noticed something about my Saucony sneakers.  Over time the sole “caves in” on me and doesn’t hold an even shape.  My first pair of New Balance kicks were purchased last year and I was impressed how well they held up.  I wasn’t even in the market for a pair of sneakers the day I bought these as I was in the store buying baseball cleats for my son when I noticed these gel-comfort sneakers.  I can definitely say after two weeks they haven’t felt uncomfortable once.  Even though I visit properties often I always power walk for at least 45 minutes a day.  I love power walking for the added benefit of just reducing stress from the day and an opportunity to talk with friends and family.  Even with that much time on my feet I don’t feel foot fatigue or any stress on my joints, heel or knees.  I’ll update you in six months but for now these are great sneakers for all us road warriors.


Turning Raw Land into Equity


The internet is full of strategies on how to invest in raw land and why its so important.  Seldom do I see n author breakdown a simple strategy of how to exit land holdings to upgrade to an real estate income or growth opportunity.  Here’s the conundrum:  after paying off all your debts early in life you were finally able to save.  A family member tells you about a great land investment opportunity so you need to act now!  The land is cheap, taxes are minimal, and maintenance nearly nonexistent.  Then a decade goes by.  “What’s happening with your land” your family member asks.  Nothing.  It’s sitting there doing nothing.  Sure maybe it appreciated . . . a little.  So what now?  You decide you would like sell or exchange the land to get a better return on your money.   But how?  It’s not worth much.  HERE’S a solution most experienced investors have shared with me.  Think of your land holding like a checkbook.  But your not done there.  Instead they say, go for the 3 Times Trade.  Here’s what that means.  Let’s say your land property has a value of $25,000.  Next, you find a list of houses selling for $100,000.  Three times the value of the land.  Next, make offers to sellers till you find one that will accept your land as a down payment for the house.  Next, bring your purchase and sale agreement to your banker, mortgage broker or private lender.  Request a mortgage for $75,000 to close on the remaining deal.  Why would the lender be willing to make this loan?  Because the seller is already giving you credit for the land as a $25,000 down payment!  The house is only 75% mortgaged leaving 25% of the house in the clear.  You just turned the land into  $25,000 of equity!

Another way of using this formula if you want a less expensive house si to go for the 2 Times Trade.  In this example your land is worth $25,000.  Next, you make a list of houses worth $50,000.  Next, you find a seller that will accept your land as a down payment.  Next, you bring the purchase and sale agreement to your lender and request a  $25,000 mortgage to close on the house.  The first $25,000 represents half down in this transaction which means you are turning the land into  . . . $25,000 of equity!  Why would the lender do this?  Because you are only mortgaging the house by 50%.  Most lenders will see this as a great deal because when you close you will have 50% equity in the house!

New possibilities now become available with the house that weren’t available with the land.  Renting, house-flipping, Air B&B, home squatting just to name a few!  These are two quick examples of how to exit out of land and step up to another asset class of real estate.

If you know of someone sitting on a piece of land and they aren’t sure what to do Share this article with them!

Garage Conversion Flop


Although the concept of converting an unused garage into a livable dwelling is not a new idea, Gerry Brown signed the Wieckowski bill into law which actually promotes the idea http.  See  However if your conversion is not done right, not only can it be a disaster for your tenant, local laws can sting a homeowner financially.  In Los Angeles there are local housing laws like the Los Angles Rent Stabilization Ordinance that must be  followed in addition to state law.  One garage conversion I remember went so badly for the owner that they ended up paying over $14,000 to the tenant.  The situation was like this:  A new owner bought a property sight unseen in the city of Sylmar California.  The house was a 3 bedroom 2 bathroom with a detached garage in the back yard.  There were tenants living in the front house and the detached garaged which was converted into a 1 bedroom apartment.  The back tenant had a child who was getting very sick living in the back house because the ventilation was very poor in the bathroom.  Add that the front house tenant was also the previous owner who had been foreclosed and had not yet surrendered possession of the property to the new owner.  The previous owner was very upset about losing his house so he would let the 2 pit bull dogs living on the property roam the yard. Unfortunately for the back apartment tenant the dogs were unfriendly towards people so the dogs would intimidate and often try to hurt the back tenants. So now we have a back tenant who has a very sick child because of the ventilation problem and they couldn’t come and go as they pleased, essentially entrapped in the garage. Eventually I was able to negotiate with the owner to leave the front house (since he was living rent free from the resulting foreclosure) but the back tenant wouldn’t leave. As it turned out, she had hired an attorney who hired a professional licensed mold testing company who took samples throughout the garage and verified the existence of black mold spores. It wasn’t short after that the attorney wrote a letter to the owner stating that, under LARSO rules the owner MUST pay the tenant as much as $18,000 to relocate the family and even threatened with an additional $36,000 of health related damages suffered by the tenants child! Although the owners attorneys responded and disagreed with some of the claims, a settlement was quickly reached of over $14,000 in favor of the garage tenant. Although the previous owner had probably never foreseen the potential disaster that ensued, new home owners must be aware of how local laws can impact a planned garage conversion. Had the previous owner used sound building and construction practices, the ventilation issue would most likely not have been an issue and would not only have kept the family safe, but the new owner from having to pay a large settlement to move the tenants out.


Who will forget the week of messages we just experienced!  First the (phony) message that set off innocent Hawaiians about ballistic missiles causing panic when instructed to  to seek immediate shelter!  Then football watchers at this Sunday’s Minnesota Viking game wearing Apple Watches being sent messages by their Apple Watch that they might have a heart issue which was actually caused by the excitement (and resulting increase of blood pressure) from the miracle play that resulted in the Vikings victory over the opposing Saints.  Messages people!!!  These events were one more reminder to me that STICKING TO THE PLAN is the only thing we can ever depend on.  This summer I was managing a single family remodeling project that was in its early stages.  An agent and a painter came over to look over the house and told me that I would be lucky to get around $525,000 when the house was finished.  I disagreed.  I told them that the house would be undergoing several floor plan changes that would re-create how the house could be used, thus giving it greater value.   Eyes would roll as you can imagine.  This didn’t deter me.  I was the one with plans in hand and after s

eeing how several similar remodeling projects had performed in the marketplace my plan was grounded reasonable expectations.  The target future value I held onto was $575k.  At times the project didn’t go well.  Work was slow because of the crushing summer heat and the workers just weren’t as productive as when temperatures were cooler.  Labor costs began to exceed budget.  It severely tried my patience.  But by the time the ‘heavy lifting’  was finished, opinions changed.  Agents and vendors alike remarked that $575k would be a good asking price.  Then, a nice break from the heat helped further advance progress so that hardwood flooring and kitchen cabinets could be installed.  The tide had turned.  In the end we finished over budget, with the house taking three months to sell and earning a $595k sales price at closing.  Sometimes you’ll work a project and you’ll field options that will differ from your plan.  If you’ve done your homework, those options are unqualified and should be disregarded as nothing more than a mixed message.  Mixed messages can cause chaos and confusion because they often lack clarity and grounding in facts!  My job was to maximize the value of the house so that when I finished the house it would have a value of at least $575k, potentially more.  When we sold the house above my target value it was one more reminder that STICKING TO THE PLAN is the only thing you can ever depend on.

PS.  I thought you would appreciate the before and after pictures this house project!

NOT Slowing Down at the Holidays


The holiday season is such a festive time of year.  December is full of events “all-things-social.”  Mix in holiday shopping, traveling, preparing to travel, packing to travel…life gets busy this time of year!  I recently called a good friend in Phoenix who told me three quarters of her real estate office is out of the office.  I asked “is the office having a holiday party?”  Her response was amusing.  “No, they are out.  Everyone’s coming back after the 1st.”  As we continued to talk I mentioned to her that real estate can slow down this time of year.  Without missing a beat she responded, “We slow down, but some of us have to get things done.  I’m having one of my best months right now with customers who need to close before year end.”  She made a really good point.  For some sellers, renters, exchangers the holiday season doesn’t give their obligations a break till after the New Year.  For example, I’m still getting calls from customers who really need a house rental by the 1st of January.  Add that two local agents contacted me recently with two new listings in which the sellers need to close quickly.  Then I was contacted by two loan officers who are featuring special loan deals this month including no money down and no document programs for new home buyers.  So much for taking a break at the in December!  The amazing thing that I have learned over the years about real estate at the holidays is this:  buyers and renters have so little competition they practically control the deal!  If you think about it, where are most people you may know today?  Online shopping?  Traveling?  Running down to the grocery store to pick up holiday food supplies and beverages for the big meal?  Getting ready for tonights party/concert/program?  One example I can share recently was on a new home lease listing in Inglewood.  After speaking with the owner he explained to me, that even with the house only on the market for 3 days he would be willing to drop the asking rent $100/mos.  just to get a renter in by year end.  3 days on market!  It takes AT LEAST one weekend and a full week for the public to find a new listing, let alone set up an appointment for a showing!  This rarely happens in the spring, summer or early fall in my market.  Another example is of a seller that I made an offer on a single family house that needed major remodeling work.  A real fixer upper as you can imagine it.  Needs everything.  I asked the seller for several concessions including a very delayed closing to allow the bank (which FOR SURE will be working slowly at the holidays) to fund the deal into early February if needed.  The seller’s response was very generous and said “this sounds fine to me.”  WHAT OTHER TIME OF YEAR WOULD THIS HAPPEN?!?!?  Ahhh the holidays.  Yes, even with the shopping, the parties, the meals, those oh-so-social events that make the spirit of the season so rich and festive, there is still work to be done and deals to be had.  Except this time of year, it can really feel like a one person audience.  I don’t know about you but I like the odds of getting deals closed at the holidays more than any other time of the year.  Happy Holidays everyone and a joyous New Year!

Need help getting your deal done?  Contact me at!

Paul Krause is a licensed California Realtor #01835890 and General Contractor #1029575 and is based out of Los Angeles, California.


Housing Affordability Trends

Studio Apartment

California’s passing of SB1069 (link here: took the old concept of renting out one’s garage/storage space and made it legal.  Although restrictions exist, the new law is one more sign that housing affordability is just as much a concern for Californians as housing availability.  Homeowners looking to reduce the cost of home ownership have always considered whether to rent out a room or make an illegal garage conversion.  With the law being put into effect it is likely to keep the residential fixer-upper contractors busy for a while.  There are 3 BIG advantages a garage conversion has over renting out a room in your main house.  My top three are:

PRIVACY – There is nothing more odd than sharing a space with a roommate in your home, if its your home and its been years since you have non0family roommates.  The occasional run in at the bathroom or refrigerator can be as meaningless or annoying as you make it out to be, but you have to prepare for it either way.  For some that will feel odd and even find yourself asking “why am I sharing this house with this person?  Oh yeah, that’s right – Because its the only way I can pay the mortgage and have enough money left over to have a life!”  The detached garage/storage space solution eliminates the social complexity of sharing space because everyone has their own space and well defined boundaries.

SCHEDULES NEVER CONFLICT – Come and go as you please in a detached garage/storage space situation but NOT so when you rent out a room.  If you have a renter that keeps off hours, to some extent so will you.  An owner really needs to focus on lifestyle questions in the renter interview process to better understand if a roommate will functionally “work out” or result in a toxic living environment.  Additionally, schedules can change.  A change in a persons job, profession, relationships, etc. can turn a once functional lifestyle arrangement into dysfunctional arrangement if both parties are not willing to make compromises.

PAYING YOUR FAIR SHARE – A detached garage/storage space arrangement makes it easier for the renter and the owner to determine what a fair rent is because the market can be compared much more easily for a converted garage.  Renting a room is almost impossible to find a comparable rent because no two houses are the same.  Additionally some owners do not want renters using in-home laundry facilities and would rather they go to the local laundromat to help keep utility usage down.  Splitting utility billing can also be tricky because renting a room (maybe 100 square feet) is not really renting a room but also the hallway, the living room, the family room, the kitchen, etc.  By going the converted garage/storage space route an owner and renter can agree more easily on what parts of the property will be included in the lease and which ones are not.

Thanks for reading!


NEW LISTING! Downey California!

This is a single family house project which I remodeled in Downey California.  I installed a new 3-ton Central Air Conditioning and forced air heat system, new electrical and sub panel, windows, bathrooms, a fully remodeled kitchen with new cabinets and appliances which features a very open floor plan!  Also includes a studio apartment attached to the 2-car garage which has its own 1-ton Air Conditioning system and forced air heat system so its IDEAL for OWNERSHIP AND INCOME POTENTIAL!  Available IMMEDIATELY, Take a look —->

Front EntraceFront Side yardKitchenKitchen 2Kitchen and Laundry roomDinging Room and living roomMaster BathroomMaster BedroomBedroom 1Bedroom 2Bedroom 3BathroomBathroom ShowerBack YardStudio ApartmentStudio KitchenetteStudio Full BathroomTwo Car Garage