All Forum Posts by: Arlen Chou

@Kin Leung the decision that you should be considering is not sell or hold, it should be deciding on a business plan.  From your brief outline it does not really seem like you have decided on what you want to do in the future...  Without first deciding on that, making a decision on selling or holding is unwise.  Buying out of the area multi-family properties is completely different then enjoying a small passive income.  I suggest that you take a look more at a 5 and 10 year personal income and time goal, before making any decisions.  Keep in mind, doing nothing is also a decision...

I would consider my personal short term goals and time requirements before embarking on potential changes in my financial situation.  

If you are worried about getting money out of the property, you could always refi out a chunk of money and invest that out of the area.  That money is essentially "tax free" too as it is a loan not a capital gain.  You could do that now or wait until you think the market is more tilted towards buyers, the only effect on you will be rising interest rates.  But if you sell your property now and just park your money, you will not see very good returns in any investment vehicle that is liquid and safe.

You have a hold of a "golden goose" that will keep laying cash flow eggs and appreciation eggs for a long time.  Don't let fear of paying taxes drive your decision process.  If you miss the window, you still have the 1031 exchange process to shield you on the tax side.  Granted this is a deferred tax strategy vs an optimization strategy, but the end effect is pretty similar if you plan to expand your rental portfolio in the future and pass on to later generations.  

Sit down and draw up a financial plan and then decide how your current property fits or does not fit into that plan.  Don't let your immediate actions dictate your future... plan your future and make the decision to get you to where you want to go.

@Shane Pearlman the purchase of property in Japan is fairly complex for foreigners.  My wife is from Japan and her family owns property there, and my parents also own a condo in Japan.  Like with any other real estate, the issue is all about location.  Even within "Tokyo" there is a difference between Tokyo "proper" and the expanded definition of Tokyo.  There is significant appreciation in value if you are in the right location... but this is like in any other market.

However, the difference in SFR's is that the cost and time it takes to scrape an old building and build a new home. The actual time required is significantly less then in the US. My brother in-law built a 3 bed 2 bath home within a span of a few months in an area called Kaminoge.

My in-laws get unsolicited calls from agents to sell their property on a monthly basis.  They have a fairly large lot, in Japanese standards, in Kaminoge, which is a very nice area of Tokyo.  I am sure that they could make a substantial amount of money if they ever sold and moved to the country side.

My parents on the other hand purchased an old condo in an area that was not that great, but it was still within Tokyo proper.  We did a full renovation of the property and they use it several times a year.  That property has substantially increased in value because we purchased in the path of gentrification.  That property is in an area called Daikayama.

Tokyo is out of land, just like any other large city.  If you can find a nice lot in a nice area I believe you will enjoy appreciation growth.

@Colton C. realistically speaking you are wanting to "have your cake and eat it too".  You cannot buy a property and leave it vacant most of the year without it being a drain on your income and exposing yourself to some serious dangers.

You cannot just leave the property vacant and not expect bad things to happen.  Somebody could move in while you are gone and claim residency, somebody could rent out your place to some unsuspecting family and then you are stuck again.  Best case, nobody takes over your property, but you are paying a mortgage, insurance and property taxes on a property that you barely use...

Ideally, you would buy a place furnish it and master lease the property to somebody who does furnished rentals.  It is almost like creating a "time share" for yourself.  The only major issue is that you need to get your wife to accept the fact that people will be "getting freaky" in your bed and possibly all over the house...

But if you are not going to put down roots you seriously need to set your "base" in a state without income tax.  That should help your cash flow immensely.  I am surprised your tax/accounting guy has not suggested that to you.  You are a nomad, take advantage of it.

Realistically, what you are asking for is a very tall order...

Good luck to you,

-Arlen

@Taylor Matthews I hope you are reading fast and that the people who have moved in have been told they need to move out... Time is against you on this issue.  If you leave the people in place they will essentially become tenants and who knows what they are paying and to whom...  Hopefully, the people have not been there very long and they understand the situation and will move out.  If they won't then you might have some serious issues.  If talking to them did not work and they don't want to leave, you need to get an attorney asap.  Did you contact the police that they were trespassing?  You need to establish a paper trail that they are their without your consent.

In the future, I would highly suggest that when you have tenants move out that you immediately put the utilities in your name with a notification that the billing cannot be changed without your specific consent.  

Good luck to you and let us know how it goes!

-Arlen

@Diva Deeva depending on the location of your unit, you might be able to hook up with somebody that is in the master lease space like @J. Martin. Since your unit would only be a short term prospect, it probably does not make sense for master lease  guys to fully furnish and market the unit, I would suggest that you offer the unit fully furnished so that it makes more economic sense for all parties.

@Rabeeya Khan Croker Highlands is a nice area. Just be careful about your ARV. It is hard to say without knowing more about the property, but there are some nice homes in the area for less then that. I believe that the flips in the lower price ranges go fast, but now you are getting into a higher grade of property which might see some softening moving forward. This also depends on the amount of work you are planning to do and when you plan to get the property back on the market. I am curious to know why you are looking for a structural engineer and getting soil testing and bids on foundation work. If there are red flags pointing to the potential need for all of this, I think you might zoom past $300k pretty fast and have a pretty long hold period...

@Ronald Neal you should probably reach out to @Chris Mason, I am sure he can help you or point you in the right direction.

@Jessica Scott you made a great first move with your initial purchase. The next step should be to step back and create a business plan. Many people jump into this field without much thought of a plan. I have yet to meet anybody that entered REI with an actual business plan in place before they were trying to hunt down deals. But with any other type of business it is expected to have a business plan in place before starting and reviewing the plan on a yearly basis. If you put a plan together, you will see that your second paragraph is all over the place with ideas... this is actually very dangerous in a business setting.

Sit back and focus and create a long term plan.  Your plan may cover all of the strategies you touched on, but over a longer period of time with definite transition points.  The plan does not have to be extremely detailed, but you should give yourself an outline.  If you find this difficult to do at this point because you are lacking details on these different strategies, do your research on BP and other places as to what is necessary for each strategy.  Also reach out to successful people in each arena, take them out for a nice lunch or dinner and talk to them about why they chose each of those strategies.  Spending a few hundred dollars for access to successful people is really nothing in the bigger scheme of things.  This is VERY different then paying some "guru" for a course... DO NOT DO THIS.  Most importantly, when you are creating a business plan you need to do some serious introspection and get to know what your weaknesses and strengths are, before you make any hardcore decisions.

You have a great start, good luck in moving forward!

-Arlen

@Jannah M. I have units in North Oakland (Santa Fe) and in East Oakland (Oak Tree/Fruitvale). I have both condos, in a small complex and a stand alone multi family in Oakland. As a side note, all of my units were on MLS and purchased within the last 3 years.

There are no "official" BP meet ups but there are a bunch of them on meetup.com that are run by people who are BP members.  Don't just go to one, check out a few and find one that you like.  The feel and the people who attend each one is very different, so finding a group that you like is important.

@Nick Burkhardt it is hard to say without knowing how much other debt you have and what those rates are, or without knowing how much potential equity you have in the property. I don't understand what you mean by "we'd have to wait for the 6 year (20% of 30-year fixed) to Refi or HELOC..." Why would you have to wait 6 years?

I would suggest spending as much time as you can to quickly force appreciation and then go out and get a good low rate HELOC to consolidate your debt away from any high interest rate loans. The value of this suggestion really rests in the amount/type of debt you have, the interest rates on that debt and your ability to force appreciation, but if they all fall in line you should be able to pay down your overall debt faster and get the rest of your plan moving.