All Forum Posts by: Arlen Chou

@Amit M. as you own a few buildings likes this, maybe you can lend some advice on this issue that @Thor M. is dealing with...

@Victor Lau locally speaking, you can find stuff in the 1% range across the bay. It really depends on the level of involvement and stabilization you want to do, but it can be done within a 1 hour drive of SF. These deals are typically multifamily deals. I think it would be VERY hard to do this with a single family home focused strategy. The key is to understand that to get to a 1% number you will have to do some stabilization on the property to get rents up. But if you can put together a plan for that, you can definitely reach that number, get the cash flow and also reap the benefits of appreciation. 

@Joseph Conti there is one tomorrow night in Milpitas hosted by @Johnson H. check it out on meetup.com

@Kelly Nolan listen to the advice from the guys who actually live and invest in the market. They are basing everything they say on true experience, every other comment about your situation is just based upon assumptions. I personally don't comment on investing in other cities, unless I know the market first hand.  

As for the BA, also take into consideration the property tax difference on the value of a home today vs what IT WILL BE in the future. I am sure that a ton of people will jump on me about saying that property prices will go up as being gambling, but look at the chart @Amit M. posted... it is straight up accurate. A real life example would be my own residence, the difference in my taxes on a yearly basis between buying my home 15 years ago and now literally is the price of a Honda Civic every year! 

If I wanted to rent out my home right now, I would NET cash flow THOUSANDS of dollars a month. The average rent for my size home is nearly $8000/month! Once my kids are grown and out of the house, I plan to downsize and rent this property out. Buying a primary residence in a non-appreciating market might never make sense. However, buying my home in this particular market has been a winner.

Good luck to you!

-Arlen

@Yulyana Karpava $100/month of cash flow straight up sucks... You could make that selling junk you have in your house on Craigslist or doing retail arbitrage with much less risk and investment. People on BP are broken up into 2 basic camps cash flow vs appreciation. I personally believe that to truly create wealth you need to have both sides of the equation. You can 100% get both in the SF Bay Area you just need to look.  There are many people here on BP from the BA that doing this. Get out to some local meet ups and maybe you will get some ideas.

Good luck to you!

Arlen

@Shari Theodozio sorry to hear that you got taken my the "turn key" guys. I am not sure what pulled you to Indianapolis, but there is money to be made in California.  You are living proof of the dangers of "turn key" investing, so I am not going to go into that issue. Regarding CA, you are in a region that does not have the crazy appreciation potential that coastal cities have. With that being said, I am sure that there is opportunity in the CV. More importantly you will be closer to your investments so you will be able to keep an eye on any renovations or repairs that your buildings may need. If you are strategic about it,  you could probably self manage the properties until you have enough cash flow to offset a PM. Look for areas of employment or housing needs.  I am not sure how the student housing market is in Merced with the UC Merced in place, but that might be an option.  Additionally Amazon has multiple distribution centers North West of your location.  I am not sure where the employees live, but I would guess Modesto, Manteca and Tracy are good bets. It's real easy to get sucked into the idea of buying cheap homes far away and think that profits will be high.  However, you really should consider your exit strategy as much, if not more than your entry strategy.

Good luck to you!

@Anil Bansal EPA is an interesting market. As you are probably aware there is strong RC in EPA. There has been a steady increase of gentrification in the city for many decades, but it has accelerated over the past few years. The city itself was very limited in tax revenue for decades because of its small size.  However, they have done a great job of building up the area on both sides of the 101 near Palo Alto. If you follow the growth of the tax base, the infrastructure of the city has gotten much better. All of this has lead to lower crime rates and increasing property values. Million dollar homes are becoming the norm in what was considered the "hood". I am sure your 2 homes have seen great appreciation since you purchased them! If you have the cash to invest in this town to make your properties cash flow positive, I think the appreciation play is strong in this little city.

@DJ Cespedes there a bunch all over the BA. There is the EBREI Network hosted by @Katie P. There is one tonight in the South Bay hosted by @Account Closed in SF. Just jump on meetup.com and you will more meetup than you have time for!

@Nina Singh the first thing you need to do is go to the City Planning office. Just be straight with them, tell them the address and ask if you can proceed with your plan. They might just straight up tell you that the zoning will not allow it or you lot size won't allow, etc. As for setting up the HOA fees, that "cost" is up to you. Basically, you are setting up the HOA to pay for things like maintenance and gardening of the common areas. There are other "shared" costs that go into it, but you get the idea. There are a TON of financially under-funded HOA's and that is dangerous for the owners, but it can and does happen.

It is not really clear what your end financial goal is in building 2 condos.  Are you trying to figure a way to make your living area free to you? Are you trying to create a big paycheck to put into your pocket and you think selling 2 condos will make that check bigger vs. just renovating the existing property?

More detail will allow people to answer you with more clarity.

@DJ Cespedes you have received some great responses from @Chris Mason and @Account Closed . I wanted to elaborate on Saj's last comment about holding it forever. When building a company or a business plan it is extremely important to consider the "exit". Take what Chris and Saj have said and take into consideration that you will on the other side of the coin when you go to sell the property. Meaning that you might have issues trading up at a later date. Real estate is already very illiquid, this property will be even more so...