All Forum Posts by: Arlen Chou

@Noah Levenson you have a great opportunity here to learn from your father and brother. The only reason to go with #1 is if your pride will not allow you to suck it up and take a back seat to your family. Working with family is incredibly hard, been there done that and I have the T-shirt. If you can get really humble, step up and do all of the grunt work for your father and brother, you will accelerate your learning rate tremendously.  You have to remember you will not be a peer, even if you put money into the deal. Especially when working with family, you have to prove yourself before you get respect.  If you go into it thinking you want to show them what you know, you will butt heads and create a tremendous drag on yourself emotionally and intellectually. 

Suck it up, put your head down and be humble. You will have many chances to pull down deals on your own, but this might be your only chance to learn from your father who sounds like a very successful investor.

@Dillon Lopez I don't know your personal status, but if I was young and single with no kids I would resolve myself to grind the next 5 years. Live like a monk, and also double my earning time.  Meaning, I would go full digital as a realtor and work mostly out of my car.  I would dress well and drive Uber/Lyft as I was working digitally as a realtor.  I would keep my eyes open to the neighborhoods that I drove and keep track of changes that I see over time.  You would be amazed to realize the changes over a year if you actually track them.  I would put business card holders on the head rests of my car and on the dash so my ride clients could take one if they needed an agent and also talk them up about my professional skills if they started a conversation.  I would also spend spare time doing retail arbitrage, buying neighborhoods that interest me so I get more real intel.  I would spool up my social media skills and start a vlog and post to Instagram about my grind, my riders and my financial climb.  

To do all of this you really have to focus on the long grind and embrace the monk life style... But after 5 years, you will have no debt, a ton of cash, know the neighborhoods better than the cops and hopefully have a huge social following.

@Alan M. it sounds like you want to be pretty much hands off and cash flow focused in a local market.  IF that is the case, @Amit M. has a very good suggestion in getting into NNN properties. What you do have to understand is that you will need to be refinancing every few years as there are no 30 year fixed rate mortgages. There is much more of a business component in this type of investment. Understanding the building and the type of business that is going into that space is VERY important. Properties with little parking might be ok for certain types of business where as other will demand lots of parking. If you get a tenant that is automotive will have other issues like environmental impacts that can/will effect your property.

With that being said, if you get a strong tenant that has a good customer base you will be able to just sit back and collect checks every month with little interaction. But also keep in mind that the exit is not always easy as the pool of potential buyers is much smaller than residential types of investments.

@Noor Gill I am going to give you an answer that you probably don't want... I would put the breaks on and focus on patients and savings.  There is a TON of crazy stuff going on right now in the economy that could create potential dangers in 2019.  I have been aggressive these past few years in acquisition mode, but there are many indicators that are starting to pop up that make me rethink my plans for 2019.  I realize that your question is about getting to FIRE as soon as possible, but real estate is a long game.

If I was your age and in your situation, I would go full cash accumulation mode. I would get my side hustles going, get my spending down as low as possible, get my credit score as high as I could, and try to get some real experience by working with/getting to know experienced guys in the market/business type that I am interested in exploring.

-Arlen

@Franklin Bird TECHNICALLY the types of loans are different and the process is different. HOWEVER, since you are new to the game they will still want a ton of personal info from you and they WILL NOT loan to you even if it is a good deal if your personal balance sheet is weak. The banks realize that a person with a little to no experience is a greater risk than a person who has taken down several deals and ran them smoothly.  Once you build up some experience and history, the banks will back off on your personal information and start to analyze a property on its own merits. Until that point you are basically being assessed both on the deal and your personal income history.  This is not really discussed on BP or in the open market.  However, once you start the process you will see that the banks ask you for as much, if not more, personal information as they would for a residential loan.

@Dave Martin just keep in mind that if you go down the road of having multiple companies that also means multiple business structures: payroll, insurance, billing, etc. If everything is going to be in a similar/related field it might make more sense to have separate "divisions" within your company.  You can assign separate P/L's so you can track each group and their profitability. Additionally, you can leverage your accounting and HR support into 1 organization.  I have several companies, but they are in very dissimilar fields, so I keep them apart.  However, for my real estate business my company is called Golden State Ventures or GSV for short.  I chose "ventures" as it could apply to pretty much anything, but it has the "ring" of investment.

@Abel Sanchez I am assuming that since you are going to appear in court that this property is in CA. Based upon that assumption, I would say that the process should be very straight forward for you.  Assuming you provided the appropriate notices in the correct time frame, this is just and expensive waiting game for you.  What you have to decide is if it is worth it to you to press for back rent or to just get them out of the property. That decision should be based on many factors like; how much do they owe vs how much in legal fees will it cost you to chase them down, even if you get judgement can they even pay, etc. 

It kind of sucks, but you will probably end up -$ out of your pocket at the close of this issue. The judicial system when it comes to rentals is not based upon who is right or wrong, it really is more about who can withstand the financial pain the longest.

@Dave Martin you are smart to be thinking about branding and name value and it is not trivial. Keep in mind that most businesses now have very strange names, this is typically on purpose so that the company pivot in the future without having to change their name/brand think Amazon, Google, etc. The issue is that if in the future you decide to change the direction of your company, you may have to go through a rebranding if you need to drop REI or Real Estate Investing. In 10 years, maybe you get into construction or lending or something completely different. What ends up happening is that you spend tons of money and time changing your brand. Examples of this would be like International Business Machines that became IBM or Apple Computers that became Apple. Just something to think about...

@Aamir Shah when I reference a partner, I mean real partners that have their own money.  They can be the money partner and you are the real estate side. You need somebody that has a pretty high net worth so you can get the bank loans you need to buy properties.  Once you have established the business you will not need to rely upon personal finances to guarantee the loans. People will say that commercial buildings need commercial loans and those loans are based upon the numbers on the deal.  That is true once you are established, but the reality is that a bank is not going to give a new face a big loan without having some assurances even if the deal looks good on paper.

@Aamir Shah are you rentals here in CA? If you dig into the guys who are pulling down large numbers of doors in a year, they are doing it out of state and they have money partners.  Not to many guys go from zero to 100 without investing in a cheap market and having partners. If the number of doors is what float your boat, you need to find a money guy and get to a fly over state/area. Personally I am a lone wolf so I go with the slow and steady approach in CA.  The first few years are tough, but if you are lucky and and you handle your financing well, the ball starts to roll faster every year.