All Forum Posts by: Arlen Chou

How do they get around Federal or State occupancy limits? This just seems like a lawsuit waiting to happen from so many angles.

@Arya Jackson I have been doing the HELOC to investment property strategy for a few years now and I can definitely say it has been great for me. It really depends on where your current place is located and the area that you are planning to invest in. The spread between the two locations and the forecasted rent rate and appreciation increase will help steer you in the right direction.

But you are right there is risk involved, but a quick exchange on a forum is really not enough to comment on the potential danger vs ROI. This type of strategy really only works in an area that has a strong appreciation for your home.

Good luck to you!

@Seth Tipton I feel you need to take a step back before you even consider selling and moving. The issue you should address first is the fact that it will be extremely difficult for you to get a loan to buy a house anywhere without a W2. Even if you have a large pile of cash in a savings account, DTI is still a thing. I cannot imagine that you are considering selling your place in the BA to buy all cash in Austin. Even if you were to do that and bought multiple rentals in a a different market, lenders will not take your rental income into consideration for a several months to several years. You could inadvertantly put yourself in a really tight financing hole.

Your main concern seems to be the school district, but you did not elaborate on the ages of your children. If they are still very young the schools will not be as important, you just need a longer term plan to get to good schools for 8th grade and up. Make up the difference in the younger years by spending "homework" time at the kitchen table with them and augment with Kumon or other outside tutoring options.

Don't even consider killing the "goose that lays the golden eggs". Things like taxes and school districts are real concerns, but if you cannot get a loan or don't have other sources of funding you will not be able to expand into REI.

@Bryan Dockter you did not say how old your father is and that could play into a strategy moving forward. Since your subject line is about the transferring of wealth, I am assuming that part of your concern is how to efficiently move some assets from your father to your immediate family. I would suggest that you consider selling your father's home and using that money to buy the warehouse under both your father's name and your own, with title under a right of survivorship. This sounds a little macabre, but I believe that once your father passes the title just quietly passes over to you. I am not a tax specialist, so please consult somebody with specific knowledge on this subject.

I would also suggest that you get a HELOC in place on your primary residence. You could use this credit line to purchase additional properties. I personally would not sell the properties you hold because of the advantages of Prop 13. Additionally, if you move out of state you will still be liable for California income tax on the rentals you hold in the state.

As for a location for the warehouse, you should definitely spend some time researching "opportunity zones". There are potentially some serious tax saving benefits to investing in these areas. However, I am not certain if the money from a primary residence qualifies for those benefits.  I am not a specialist in this area either, I have just been doing some cursory research.  Therefore, please seek out the advice of somebody with a deeper understanding of the strategy.

Good luck and let us know what you decided to do!

@Alejandro Arciniega there are many examples of this in the real world of working and not working. The details of your ability to pull this off can only be grasped by you and your wife. All the nuanced details of jobs, spending, personal cost, rehab costs can only be wildly assumed by all of the faceless contributors in the internet world. 

This is a primary property for you and your wife, the calculations are COMPLETELY different. As the saying goes, this is a liability purchase not an investment. Appreciation capture at a later date is a bonus not a guarentee.  With that being said, @Eric Carr is definitely on the right track. The probability of the value of the home increasing over time is extremely high. The bungalow in the back will help in offsetting costs and if you set it up correctly and monthly income should increase with steady rent appreciation. 

Additionally, if there is steady appreciation you will be able to pull a HELOC at a later date to pull equity out and use as a deposit for future rental property acquistions. I have personally done this with great success. My wife and I did something very similar in Northern California 15 years ago. I purchased a home that stretched our single income family thin. We did a full remodel and moved in nearly 12 months after purchase. Things were exteremly tight for a few years, but I KNEW the area was great and appreciation would be my friend. The property is worth over 3x what I purchased it for and I have tapped the appreciation to buy multiple rentals. I was only successful because I knew my market, I was confident in my future earning potential and I controlled our spending. IF you can get these 3 things sorted out, then you a property 4 minutes from the beach in Southern California sounds pretty good!

Good luck and let us know what you decide.

@Jared Palacios first things first, you should do an analysis of the SFR that your landlord is willing to sell you. The $330k price may be good or might be bad, but without knowing the actual location it is hard to comment. Are you saying that the $330k is market price? That is technically an off-market deal and it might be a good one. That is where I would personally start my analysis. You might be able to negotiate good terms since you already live in the place. Maybe he will even seller finance.

Good luck to you!

@Veronica Haniger The strategy has helped me purchase several properties over the past few years. I am glad to hear that my post helped you! Feel free to reach out if you have more questions or you want to discuss the strategy in more detail.

Good luck! 

@Sai Kopacek go to the RAP office and talk to them, not the Oakland Tenants Union. Also, the current relocation allowance is $6875.58. So you would have to pay 2/3 of $6875.58.

Good luck to you!

@Chris Moris just do a search on meetup.com there are a ton in the Bay Area, it just depends on the city you want to attend. @Account Closed are just a couple of guys in the area

@Ryan Reen get out to some meet ups, there are a ton in the South Bay. As a matter of fact there is one tomorrow night in San Jose at a place called elevenfifty, it starts at 7pm. You will probably be the youngest guy there, but the host is a young guy relative to an old fart like me. It's hosted by @Account Closed and you  can find it on meetup.com.