All Forum Posts by: Arlen Chou

@Raul Cesar cortes pass on the pool at home. The Y is a good option, but I don't think there is one in Fresno.  I would suggest you look into some of the local country clubs and join as a "social" member, unless you are into golf then go proprietary .  I have no idea what the costs are in Fresno for this type of membership, but they are usually only a few hundred a month in SF Bay Area.  You typically get access to the gym, tennis courts, and dinning facilities.  Also, you can hold business meetings and other events for very reasonable costs.  I have also heard of some clubs that will take corporate memberships, so there might be a tax benefit if you set it up right.

@Brion Spensieri no need the lawyer up at this point. Just go over to the RAP office and explain the situation. They should give you guidance. If your tenant bulks at it, you can tell them that your decision is based upon what RAP said. Try to get it in writing from RAP so that if the tenant does try to fight you, you will have RAP's support in writing.

@Travelle Mason are you looking to master lease the entire building, with existing tenants or are you talking about master leasing the empty units and turning over the other two at a later point?

I master lease several units in Oakland to furnished rental guys.  I have a lease in place with fixed yearly increase.  The lessee handles his turnovers and standard utilities.  I like this model as it eliminates the hassle of turnovers and small maintenance issues.  There really is no "playbook" on something like this.  The lessee is basically your tenant, they just happen to have several of your units.  The rest is just up to you to negotiate.

Good luck!

@Doug Huggala been there done that 3 times in Oakland within the past few years.  I won't go into the details of my issues but I have dealt with EBCLC and their play book is pretty open.  The Alameda system is really set up to force people to negotiate.  They stack their calendar so you could burn a ton of time each time you go.  The settlement conference is the very first step.  You basically show up and burn time.  Since your post came out yesterday, I assume you have already gone through this and hopefully settled.  But in case you have not, you could push on the 90 days and drive that down to 30 or 60 days.  

What you have to understand is that your tenant probably does not have any money or assets for you to go after, so dragging this thing out could be a waste of time.  You could fight this and potentially win, but you will go through at least 2 more days where you are sitting at the Alameda County Court house in Hayward to basically get an actual trail date.

In my case I was fighting for 6 digits of $ so it made sense to fight it.  But if you are fighting for a few thousand dollars, it might be better to negotiate the date they vacate. I would push for the mutual waiver.  Typically it is also in the best interest for East Bay Community Law Center to negotiate a quick conclusion.  They usually roll in with a dozen or 2 dozen cases on the docket that they have to handle with a handful of lawyers. They have to process these things like Big Macs and they don't want to take this to actual court unless they have a strong case.

Explain to your attorney that you don't want any loose ends once this is complete.  Therefore, you need the waiver.  Push them for a faster move out, EBCLC should also be anticipating this and they will probably push their client in good faith to settle.

Yes it sucks and it is wrong, but your focus should be to move forward as fast as possible. I am personally looking forward to December 1st, when my last problem tenant will have moved out of Oakland!

Good luck to you!

-Arlen

@Benjamin Romo where are you located? Doing a cost analysis also should include logistics. I know several firefighters that do REI on the side. They are typically on for a few days and then off for a block of days. I am not sure if that is normal, these guys are in the SF Bay Area, but they put in the labor to do their renovations on those periods of days that they are off and they seem to love the time fit between the two.

@Colleen Prescott you have been given a ton of good advice from both sides of the isle.  However, I don't think you ever stated your budget.  It appears that you are based in Concord, there are markets within 2 hours of your location that are "relatively" affordable.  But that clearly depends on your budget...

If you are budgeting to purchase a $100,000 MFP without heavy rehab, then you are correct CA is not for you.  If you are budgeting $400,000 with moderate rehab, it can be done within driving distance.  Obviously a $400k MFP is not going to be in a prime "Google" neighborhood.  However, if you are considering "flyover" states with low appreciation and cash flow only, then I really don't see the big difference with many of the markets that are close to you.

It's just a fact that it is easier to learn a market that is closer to home then something that you have to get on a plane to visit.  Yes, there are guys who buy sight unseen, but even the guy on the podcast today started local.  The guys who start OOSI usually have a STRONG boots on the ground presence.  It does not sound like you have one yet.

You should not be looking to hit a home run at your very first time at the plate.  Just getting on base is going to be hard enough, don't over complicate things by going to some place that you have never been, UNLESS that is your only play.  Either direction you go, the very first deal should do 2 basic things: be a learning experience and hopefully make you some money or at the very least break even.  I am sure that somebody is going to jump on me about this last remark, but reality is that everybody goes through a steep learning curve on the first few properties.

If you are looking at markets without appreciation, then make sure whatever you find, that you are in a property that you can get out if you must.  Don't be the investor left holding the bag of flaming dog s*&t.

@Account Closed just to put things in perspective, let me tell you a short version of my story.  I bought a condo, gave a rent increase, tenant fought it, RAP agreed with her, City supported her, I had to go to Alameda court and won, the City appealed, I fought in Superior Court and won, then she started some BS argument that the previous owner did not do the condo conversion correctly AND she wanted $220,000 cash for keys... I only paid $125,000 to buy the studio condo! What crazy, greedy person asks for nearly 2x the purchase price??? 

The entire process took a little less then 4 years a sh*t ton of money. But she will be out in December :-) 

No smoking... period.

@Jonathan M. you are correct. I get into a deal, and then after natural or forced appreciation I do a cash out refi to pull my money back out of the deal. If all goes well, I get all of my cash + some additional cash, reload my gun and go hunting again. This strategy has to be balanced with cash flow. I do not focus on max LTV at time of the refi. I look at what the property can carry and still throw off positive NET cash flow. Once my cycle is completed I have all of my cash back out, I have cash flow coming in and I control a nice asset in an appreciating market. The best part is that if you buy right and the property keeps appreciating you can refi again. Keep in mind that this is a NON-TAXABLE EVENT! Also, if the market does come crashing down I won't care because I have no money in the deal any longer. As long as I manage cash flow I am totally insulated from market swings. My process takes time, but I love the idea of infinite ROI, market swing insulation and having a goose that lays golden eggs forever.

@AJ Singh I understand that appreciation in general does not exist between the coasts.  However, the OP question was specifically about Austin and there is opportunity for both cash flow and appreciation in that market.  

I believe that there are regions in the "fly over" states that can see appreciation and my point is that if a person is looking for a remote investment opportunity then he/she should take the time to research specific markets that can obtain both cash flow and gain appreciation.  Doing the research is neither easy or fast, but those markets do exist.

As I have said I love Austin, but the tax implications just don't make it attractive to me. With that being said, it might make sense for other with the right deal/situation. The best part of REI is that there is a strategy for every person that fits their particular needs/criteria.