All Forum Posts by: Arlen Chou

@Katherine Tsay welcome to BP and the Bay Area crew.  If you have time this weekend you and your husband should sign up for the summit this weekend hosted by @J. Martin!

http://www.sfbaysummit.com/

Out of state investing is one of the topics on Saturday!  

@Matthew Roberts great back story!  Even though you cannot make it out to the summit, you should try to connect with @J. Martin. He has been doing the REI thing and traveling all over the world. After the summit that he is organizing, he will be headed back to SEA. In February, J and I are planning to meet up in Ho Chi Minh City and take some donations to a few orphanages up in Hue, via motorcycle. If you are still in Cambodia in February come on out to HCMC and lets do mini meet up!

@Jay Hinrichs that was actually the model we did for our first pilot.  It worked out well, we got our money back with a little upside and our "partner/employee" got a great home in a nice school district within 5 minutes of our office.

@Lynn Currie your projects look great!  So much better then the cookie cutter homes all over Texas.  Do you do any work up in the Dallas area?  I have employees up in North Dallas (Allen), and I am considering expanding my partner/employee pilot program.  I would love to do "value add" homes so we can reap some equity and put my people into a nice product.

@J. Martin the summit has always been a great source of information and a better place to network.  I am a small fish compared to the rest of the speakers, but I am excited to share what little knowledge I have.

1) I personally got into real estate, after building my small tech related companies, to add additional revenue streams to my person income. I am not looking to build a REI firm or add doors to currently replace my W2. However, I do anticipate that my REI income stream will support me once I go into retirement mode.

2) My geography has not changed but may expand as my investment goals are starting to shift from a personal income stream to a "tool" to protect and bolster my competitiveness with my other companies. I see that housing is a key concern for my employees in my tech companies. I have recently started a pilot program to help my employees purchase homes. The dream of owning a home for manufacturing related people is quickly moving out of the grasp of my employees. Therefore, they look to moving out of the immediate area and deal with long commutes or in some cases leave the state. The drain of qualified technicians and operators is a direct threat to my companies. Therefore, I am now looking at purchasing SFR's and condominiums and then turning around and doing seller financing directly to my employees. In the end, I hope to hold "paper" instead of properties and protect my employee base.

Neither point 1 or 2 are generally applicable to a wide audience.  However, I like to stress to people that a business strategy must be tailored to the individual needs of the investor.  The more specific a person can be about their goals, the more specific of a comprehensive strategy can be created.

Looking forward to seeing everybody next week!

-Arlen

@Account Closed to "season a property" basically means to hold it for a certain period of time. It is usually 6 or 12 months. During this time, you can hopefully do repairs/upgrades and also raise the rents. A stand alone loan, would be a loan specifically for that property. The HELOC would typically be placed on your primary home. Therefore, you should take some time and look for a "cash out refi" loan to place on your investment property and use that money to pay down your HELOC. I hope this helps.

@Steve Logan tankless water heaters are great for several reasons.  I have 2 in my personal home that have been running well for 14 years.  Not a single problem in all of that time.

I recently installed them in several studios.  They free up a ton of space in the kitchens and look so much better then the old tanks.  My units are under 400 sqft each, so you can imagine how important every sq in is in my case.  Additionally, you will be surprised by the amount of heat a hot water tank generates in a small space.  Going to the tankless units helped with keeping the studios cooler in the summer.

As a side note, you need to verify that you have a large enough supply line running into your building.  There are some simple load calculations that should be done and are required if you get a permit. 

@Account Closed make sure you get estoppel certificates prior purchase.  This will document anything in the "handshake agreement" the tenants have with the current owner.  This should include the intent to vacate for the one tenant that they say will leave in October.  Without this the tenants can pretty much make up anything and say it was in the "handshake" agreement.  

@Amit M. interesting article.  The certificate of exemption is from RAP and certifies that the property is exempt from the Rent Adjustment Ordinance of Oakland.  The certificate basically is RAP stating that it has no jurisdiction over the property itself.  It does not keep tenants from trying to take you to court.

As for "construed eviction", I think that would be a pretty weak "legal" case against a rate increase to market rents.  However, in this atmosphere, people can take you to court over pretty stupid things just for the sake of doing it... So I am sure somebody will take that route sooner or later just to try it.

In both of the examples in the article, the LL raised rents substantially past market rents and that speaks to something totally different. I am pretty sure that if the LL had just gone to market rates, this would be a non-issue.  At least I hope it would...

@Arnuv H. you can just walk in to RAP and speak to somebody or give them a call.  Look up Costa Hawkins and it is very clear.  However, RAP is pretty much on the side of the renter, so they might hassle you.  Others that I have advised this strategy have been successful in getting the certificate... but "your mileage my vary."

I am not an attorney so don't take this as legal advice.

@Arnuv H. I own several units in Oakland and deal with RAP quite a bit... If you buy a condo it is exempt from RAP under Costa Hawkins.  That does not mean that they won't try to make your life harder...  As for raising rents,  what you can do and what you should do are 2 different things.  If you have the capacity to wait for the 1 year period, I would personally wait.  It just takes away a point of potential argument.  During your waiting period, I would suggest that you apply for a "certificate of exemption" from RAP.   Unfortunately, that process takes a few months, but once you have that certificate then it is crystal clear for everybody that RC does not apply to your property.