All Forum Posts by: Arlen Chou

@Eddie L. I commend you for looking into Oakland.  I have several properties in North and East Oakland.  Have you spent some time near the properties in your example?  @Account Closed will know the area better then myself, but I usually stay north of 40th ave, but Saj is really rocking in the higher numbers! I am just not sure if this is the area to start your REI adventure unless you really know the area... But to answer your question, YES there are ways to cash flow in Oakland.

@Account Closed I cannot really answer your question as it is very generic.  There are many "family" dynamics and they are all unique.  My personal answer to which counts most does not necessarily translate to somebody else who has a different biological "family" dynamic vs created" family dynamic.  

The OP was talking about his father, so I was commenting on the need to separate his mind/emotions between "personal" and "professional" decision making.  I assume that they have a good father/son relationship or they would not have started to work together.  However, they are currently not "partners".  It is an employer/employee or mentor/mentee or father/son, what ever you want to call it, relationship.  The struggle especially in family money situations is to get past this point and move to a point of professional parity.

@Account Closed it is always difficult to follow in the steps of parents who have been successful.  Been there, done that and got the T-shirt...  What you need to learn to do is to see him as a business man, not your father.  By mixing the two you create conflicts of interest on both sides.  If he is an investor, then you need to approach him as such with the same detail (maybe be more) to planning and presentation as any outsider.  If he says "no", accept it as a business decision.  It is his money...  There maybe some "fatherly" advice thrown in, but you mentally need to accept it on face value as a denial from one business person to another.  Also keep in mind that he has been successful and you are just starting out, so weigh what he says accordingly.  I promise you that once you do this, dinner conversation will be much better.  But at the end of the day, it is your business decision.  If he does not invest in you, go out and cut your own path.  But make sure he understands that you are doing this while respecting his advice and concern.  If you go down your own path and become successful you will win respect.  What ever you do, remember that deals come and go, but family is what counts the most.

@Angela Yan Agents in general will not know anything about this. if the building was built as 2 separate units, then the process should not be all that complicated... but that is all relative. If the building WAS a SFR at one point, then you might need to some serious investigative work to make sure all of the utilities and plumbing are cleanly partitioned. Many of these older building have electrical running all over the place and not cleanly to the correct meters for each unit. The biggest headache you might/will have is with fire/sound barriers. This gets a little more complicated, feel free to contact me offline about more details.

@Josh Hawkins I would house hack 100%. I would get a SFR and get house mates and if I did not have a girlfriend, I might even get a room mate to off set the costs of ownership. I would extend my college life style and eat/live as affordably as possible. My main goal would be build up cash and knowledge as quickly as possible so that I could purchase another property. I would continue with this life style as long as I could.

@Angela Yan the process for a 2 unit building was about 4 months a few years ago.  Having the building is really very helpful. It depends on the amount of work you need to do to the structure.  It might take longer now because they have less inspectors, but the amount of work need is fairly reasonable.  Go to the City, they have a step by step outline on what to do.

@Anne Whalen actually it is like a "portfolio" HELOC. I am not sure if that is a "thing", but it the best definition of what I did. It basically gave me a larger HELOC at the end of the day, because the "value" was based on 2 properties. I do have a pretty long history with this lender, so I don't think that this is a product that offer "off the shelf".

@Angus Yang welcome to BP and specifically the Bay Area crew. First thing you should do is step back and look all profitability before you look at the product itself.  As an example, Texas is a great state to invest IF YOU ARE NOT from Ca.  The reason being is that Texas has crazy property taxes vs CA that has prop 13 AND Ca has crazy state income tax vs Texas that does not.  Basically by living in CA and investing in Texas you are placing a heavy tax burden on yourself.

If you are already qualified for a loan on a primary residence, that does not equate to a loan on an out of state investment property.  You should verify with your lender before going to far down the research road on specific OOS investments.  You may need to get qualified once again...

Going back to the topic of taxes, if you house hack you are shielded from appreciation gains for up to $250k when/if you sell.  You don't get that with an investment property.  There are some other potential tax benefits to house hacking vs doing an OOS investment.  Some people are just not able to do a house hack because of the living arrangements and not wanting to deal with tenants.  But I think from an overall perspective, it is one of the best ways to get into real estate investing.

Goodluck to you and report back on which road you decide to take.

-Arlen

@Ernie Espinoza most likely this will be coming out of your pocket.  You could try and get money out of everybody, but the process will probably be slow and potentially long.  Personally, I would have the work scheduled and also pursue the financial side in parallel.  Right now, if there is an electrical fire the first person that anybody will look at is you...  Take care of your liability first.

@Taylor Matthews it sounds like you are working through a "fear" barrier.  There is always an argument for more reserves and that can lead to "analysis paralysis".  My personal story lead me to take the jump and go all in.  I am not saying that is what you should do, but that is what I did.  I went as far as liquidating almost all stock holdings and going down to a very low cash position.  I basically went hand to mouth for 18 months and did all of my renovations myself after hours.  I worked a full time job, and supported my wife and 2 kids during the process.  

In the end, it was a great move because my property value went up 2.5x in 4 years and my rents increased 3x during that time. My units are in Mountain View near lots of tech companies and I was confident of my research, so I jumped.

It was EXTREMELY painful during that 18 month period, and I did nothing but work: W2, renovations, kids homework, kids sports, etc.  The words vacation, TV, relaxing were dropped from my vocabulary.  But I do not regret my decision for a minute.  Many on BP will say that I should have gotten contractors to do the work.  But the reality is that contractors are so busy they don't want to deal with small jobs, and more importantly I had no more cash.

Only you can decide if you can handle the stress and if you can fight to the end.  But in my case I know 100%, that if I had not jumped on the deal I found, I would never find another one like it.

Good luck to you and let us know what you decide to do!