All Forum Posts by: Arlen Chou

@DG A. your question is valid, but that is like asking Pai Mei, in Kill Bill, to teach you the Five Point Exploding Heart Technique at the beginning of your training.  Like I said earlier, read between the lines not just what you find on Google.

@Alexander Araniba first of all congrats in taking the first step toward financial independence.  Regarding your strategy, there are a ton of posts about IS vs OOS investing, so I won't go down that road.  Texas looks great to many people, but as a Californian you need to carefully look at the tax consequences of investing in that state.  They have high property taxes compared to our Prop 13 protected base.  On the other hand, we have high state income tax, Texas has none.  What this all means is that you will be taxed high on property taxes in Texas and then you will be taxed high on California state income tax if you invest in Texas.  CA taxes income earned in other states... so remember that fact as you decide on a market.  You might want to spend time looking at states that don't have property taxes or even other parts of our state.  I am not a tax professional so please consult with your own tax person regarding these issues.  

@David J. does your tenant pay on time?  Unless it is in the lease, I don't think you can force the issue.  What is the problem if the tenant is depositing to your account at the bank?  On the flip side, I realize that electronic payments are very convenient, but I personally go old school and require checks delivered to me by the 1st.  If there is an eviction issue, I can always deny payment and send the check back.  I believe that if they deposit it directly to your account that constitutes acceptance and that may cause you troubles.  I personally don't have experience with this, but I have been told that if you are going through an eviction dispute, that you should not accept funds. I realize that you are not currently going through an eviction, but that day will come.

@DG A. @Phil Sharp @Mary M. @Myesha Kendrix @Vince Scolari the key to investing in a hot market is all in @Account Closed posts, but you have to read between the lines.  Once you decipher the code, tailor it to your own situation and crush it. What is that code you may ask... Maybe Master Oogway's disciple will enlighten you on his tour ;-) 

Looks like fun, I am looking forward to meeting everybody!

@Michael Bouzaglou your future steps depend on your timeline.  If you need to sell quick, freshen up the units with a quick paint job, then sell as is.  Moving tenants out will be costly and time consuming. @Dan H. is right, this building will trade on comps and not income.  However, investors will still be thinking about income potential.  If you have a few weeks or months, then I would suggest that you renovate the unit that your father is currently occupying.  It will give potential buyers a visual reference as to what the property can look like.  Don't go overboard with the renovations.  Make sure that outside looks nice and throw it up on the market. 

Good luck to you!

@THU NGUYEN, @Eamonn McElroy makes a very good point.  My children are teenagers.  They actively help me with renovations, and finding deals.  I document their work with photos and with a work journal.  If your kids are very young, it would be very hard to justify paying them a large sum for doing nothing besides being cute.  However, I do have a friend that uses his young children in promotional campaigns for his work and pays them for this work. 

@THU NGUYEN If you are paying them through a LLC, this is a great option. As of 2018 you can pay them up to $12,000 without paying Federal Income Tax: no social security tax, no medicare tax, no federal employment tax. Being in Texas they will also avoid State income tax. You get a business tax deduction because its an employee wage expense. I don't really think it matters if you do a 1099 or a W2. However, I am NOT a tax professional so please consult a professional before you move forward. The above is just based upon my personal experience and not professional advice.

@Maya V. please feel free to PM me with any questions.

@Maya V. congrats on getting past the reading phase, now on to the action part. I am not sure about what part of Oakland you are in, but there are many areas that have been rising fast. I have doors in North Oakland and Fruitvale and the appreciation and cash flow have been great. Don't sell your home, go pull yourself a HELOC so you will have cash ready in case you find something you like.

Wholesaling is great, but I think it is pretty hard here in Bay Area.  I personally don't understand why a seller would take a discounted rate so a wholesaler could make a profit when the market is so hot.

I am not saying the next part as a knock... if your work ethic is second to none, then you should leverage your electrical experience and get your side hustle going to build up cash.  Use your time between side jobs to drive different neighborhoods so you know the blocks like they are your own hood.  It does not matter if it is your passion or not, you have to grind to build/save cash so you have bullets to take down projects later.  

I personally have a W2 and have nearly 20 doors in the BA, 2 kids in high school, but I still grind on the weekends. Yesterday I tore out kitchen cabinets and did a dump run on a small renovation that I am doing in North Oakland. On the way to the job site, I looked at 4 buildings that I am considering. Stopped at 2 local shops in the areas that I am considering and shot the sh*t with the people working there to get a feel for the area.

There are guys on here that will say that I am F-ing crazy for doing the demo myself. But the reality is that the cost of having somebody come in do the demo and disposal would have cost me some serious coin in this crazy market. The total time it took to rip out the cabinets and break them down was 1 hour. Try finding somebody that is willing to come to a job site for just $20... not happening here in the BA.

You have a skill that most don't, leverage it.  You have appreciation that most don't, leverage it. Get ready for the next buying opportunity, it is coming.

The grind can be your best friend!