All Forum Posts by: Arlen Chou

@Amit M. my demographic is very different then yours... SF vs Oakland. I go for low cost products.  Most recently I have tried butcher block counter tops in my studios in Oakland with white shaker cabinets.  I do put pulls on all of the drawers and cabinet doors.  The butcher block is very affordable, I think $100 at Ikea and easy to cut and install.  I stain and coat them with poly.  Very easy to repair if they get water damage or burn marks. They have been in my units in Oakland now for 2 years and I have not had any issues with them yet.  In Mountain View, I used a light color granite on oak cabinets.  Old school look, but the combo was very affordable too.  The granite was $160 for 8 foot pre-cut tops with a squared off edge.  I just got tired of transporting and cutting granite that is why I tried the butcher block.

@Ana Lesmez I master lease to somebody that does exactly what you are considering.  I am not sure about your area, but in my market the rents that the traveling nurses are paying are SUBSTANTIALLY higher then market.  Keep in mind that you are renting out a furnished rental vs. a standard rental.  They also appreciate the convenience of not having to deal with utilities and internet set up etc.  

Like I said, I don't do this directly. However, from what I have been told by my master lease tenant, it looks like once you are in the loop, you will have almost no vacancies.

Good luck to you!

@Carrie Maultsby-Lute like @Amit M. stated it is not really about the color but about the material... he is 100% right. DO NOT get cabinets that are made with particle board.  One leak under the sink and your cabinet will be trash.  There are many "knock down" Chinese cabinet sellers in the Bay Area that use full wood construction.  The prices are very good, but the selection on hand might be limited.  But if you plan well you will be ok.

I have come to the conclusion that adding pulls and handles is worth the effort and cost. It keeps the finish on your cabinets for getting worn out as quickly.  I prefer natural wood, because refinishing them is easier then painting.  I realize that the look is not as hip, but if it is a rental in the Bay Area, you will be able to find tenants not matter what the cabinet colors...

Post up pictures after you are done.

Good luck,

Arlen

I have 5 concrete goals for 2018:

1. Purchase a 40,000 sqft light industrial building in Milpitas or San Jose Ca.
2. Take my "shared equity" financing plan, for some of my key employees, from alpha testing to beta level deployment
3. Take my thesis of "distributed affordable housing" from concept to alpha level deployment.  This is a "not for profit" goal...
4. Work with some great people that I have met here on BP to get some deals going.
5. Lastly have a great time and survive motorcycling through Vietnam with @J. Martin!

@Natalie C. in regards to your question about BRRRR without the rehab, the short answer is yes it can be done in an appreciating market.  I just did this last Friday.  The property is located in Oakland. I purchased it for $678k and valued this month at over $800k.  I personally think the property is worth more, but I was not looking to pull the max amount out of the property. I really do not care what value they used as long as I hit the max dollar amount a "stress case" analysis of 15% below current market rents will allow.  For this property, the only things I have done over the past year was replace a failing water heater and fix a leaking faucet.  If/when rents rise and if appreciation continues, which it looks like it will, I will do another refi in a few years.

 Good luck to you!

-Arlen

@Natalie C. if you are going to do work, then go all the way and fix it as a flipper.  If you are just going to sell it somebody that will flip it or renovate the property to live in then, as @Wayne Brooks, has suggest clean it and leave it.  I would suggest that you DO NOT pull any reports.  In an old house like that you will probably run into a TON of issues that a buyer could use against you.  Put it on the market as what it is: a flippers dream/as is sale.  You may not get near the $1.2 number, but you will have very few headaches and the sale should happen quickly.  I am sure that if you wanted to you could EASILY go "off market" sale with somebody on BP in the Oakland market.  You would save yourself the agent commissions and you would be dealing with somebody that knows the area and product.  I am in the Oakland market, but I don't do any flipping.  But I am sure I could point you to some locals guys, pm me if you are interested. I am not an agent, so no fees or anything.

@Paul Bryzek there are several people in the Bay Area doing this. 

@J. Martin has been very successful with this strategy.  He quit his day job and is essentially a digital real estate nomad!  Currently he is backpacking through SEA, so I dont know how often he is checking BP. I am not sure about the AirBnB portion, but doing furnished rentals, using a master lease process is definitely an attractive strategy.

-Arlen

@Jeremy Lee it sounds like your parents want to just move the property out from under them and over to you and your brothers. The issue is that it is not that simple... are they planning to put all of you guys on title? Are they thinking of forming an LLC with you and your brothers as equals and moving the property to the LLC? There are so many ways to do this that it is really not as simple as they might think it should be. That is of course ONLY if they care about being tax efficient in the transition. Their focus might just be as simple as getting the property off of their books.

As far as the fudge factor, basically in all private "off market" transactions, the price is agreed upon between both parties.  There are no offical "comps".  Basically consider it as a "whole sale" deal among the family.  But if you price the property to low, then if anybody ever gets audited red flags will go up very fast.  You should take the time to create your own comps and base a "reasonable" price around those.  If your sales price for the property is below the comps,  you should be prepared to explain "why" there was a discount.  It could be because of deferred maintenance, it could be because of specific issues with the location... 

Again this is just my uneducated opinion and not legal or financial advice. 

@Jeremy Lee its a good problem to have...  But there are larger issues at play that you should take into consideration.  You have not touched on the overall net worth of your parents.  I assume it is high, but I don't want to make assumptions.  If they are a high net worth couple then you should definitely consult an accountant and potentially an attorney.  The reason being is that the transfer of the property will be considered "gifting" and will apply to their overall limits.  I would suggest that you get a third party appraisal so you can document the gift value.  You should hope for a low appraisal so that the gifting value will be low.  

As another strategy, you could just buy the property from them "off market" with a separate "private" loan from them.  In this case you have more "fudge" factor in the price and also save on the realtor commissions.  At the same time you will be able to protect their gifting limits for dollar figures that are less up to interpretation.

Please do not consider this legal or financial advice, I am not a professional in either of those professions.  I am just point out the fact that you should pay close attention to HOW you do the transfer, before you get into the mud about things like raising rents a few dollars at a time.  The key is to be as tax efficient as possible for everybody involved.

Good luck to you!

-Arlen

@Nathanael Troupe you plan is a very good way to start.  The only suggestion I would give you is to stay at 3 units or less in Oakland.  Rent control applies to 4 unit buildings.  At the start of your investment road, you should keep as many of the variables down as possible.  There are many subtleties in the RC laws in Oakland, so take the time to learn them on their website and you can always go into the RAP center on a walk-in basis and ask questions.