All Forum Posts by: Arlen Chou

@Wilson Cheung I am a buy and hold investor in the SF Bay area.  In less then 5 years I have been able to put together a portfolio of nearly 20 doors and the fact that this topic comes up so often is just mind boggling to me.  As an investor the discussion should not be about cash flow OR appreciation.  I personally believe investors should look for properties that provide BOTH.  The basic equation that I follow is: cash flow + appreciation = financial freedom.  To all of the people who believe that there are "no cash flowing deals" in the Bay Area, based on my short personal experience, I say they are wrong.  I can say that, because all of my units cash flow AND I have had incredible appreciation during my holding period.

Is there going to be a correction in the near future?  Probably...  But if I have done my research properly, my units should continue to cash flow and also retain a NET appreciation value during a market down cycle.

Don't settle for 1/2 of the financial freedom calculation, look for both. It takes hard work, planning and diligence, but the deals can be found.   The real question is how do you get both in any market.  A strategy must be devised for each particular market and even down to the individual property. 

Good hunting to you!

-Arlen

@Kevin Lefeuvre I don't have any experience is with a "non-doc borrower" situation, so I cannot really comment.  As for banks, right now I like Everbank and First Republic.

Good hunting!

-Arlen

@Gabriel Benavidez you are at a cross roads to your future right now and you basically need to decide if you want the safety of working for somebody, or the freedom of being "the man".  Engineering is a great field and many people have accelerated to great heights with that career choice.  From my little view of the world petroleum engineering is a fairly specific niche, but I am sure it pulls down a great salary.  Personally I am surrounded by software, hardware, electrical and material science engineers and the market is screaming for more of them.  

But if you are not in love with petroleum engineering and you think you might enjoy being a boss, in REI or any other field, I would suggest that you look into finance. Finance is the backbone of all businesses and is a skill set that can be moved from one industry to the next. Also, as a boss it will give you insight into your business that most business owners have to pay others to mine. A degree in some type of business management will give you some exposure to finance as part of your course studies, so I think that is a worth thinking about. The downside to these degrees is that if you need to feed yourself through a W2 with either a business or finance degree, it might be harder to find a high paying job out of school... unless you are a rock star from a top tier school.

If  you are unsure of your path, perhaps the road to take is to continue with a degree in petroleum engineering but get a minor in finance.

@Albert Ng I think you are still ok. RC is usually for 3 units and above.

@Albert Ng your strategy is exactly why RC was created... if you try to do that you will find yourself in court.  You need to arm yourself with more knowledge about RC and work within the rules.  

@Account Closed The end result will be the same, but the process will be more expensive and take longer.  Even when you work within the rules you will find that some tenants will fight you just because they don't believe they have anything to loose.  We will also see overall rent increase, at turn over, in larger jumps so owners can "catch up" to market rates.  Also there will be more tension between tenants and the majority of "nice" property owners, because it will force "nice guy" owners to stop being nice.  Basically it just makes the "them vs us" position more defined and eliminates any reason for a property owner to give any slack to a tenant.

Mountain View also just passed RC AND they are doing a rent roll back!  This really screwed all of the "nice" mom and pop property owners who did not raise rents over the past years.  But it rewards, professional property owners who religiously raised rents and have tight rules.  You can bet that any tenant who asks for an extension on rents will get a big fat NO now.  Before, I am sure that there were many owners who would let it slide for "good tenants".  Owners just cannot be "nice" any longer because it can come back and bite them in the legal *** later down the road.  It is extremely sad that we have legislated humanity out this process...

The take away from what is happening in the BA should be that all property owners should learn to run professionally: keep rents at market and enforce all rules.  If RC hits you at that point, the impact should be minimal.  However, the owners who never raised rents for years because they "liked" Mary Jane tenant, will find themselves way behind the 8 ball and those units will quickly start to go down the slum road because costs for maintenance and improvements do not stop rising just because of RC.

@Alex Chau what you are considering building is called an accessory dwelling unit (ADU) or often times called an in-law unit or granny flat. In Daily City, you must live on the property and you must have a total of 4 parking spaces on the lot. If either of those are not met you will not get a permit. But if you do meet those requirements, then the process should be pretty straight forward.

Good luck to you!

_Arlen

@Simon Stahl be careful of the sharks in the water... you just put a ton of chum in the water.  Take the time and go to a few of the local meet ups and look people in the eye and ask for references.  @Johnson H. has a big meet up in Milpitas that attracts many helpful people that might be able to help you without taking a fee.  Just buy them beer and pizza and take a ton of notes.

-Arlen

@Miguel Ochoa the fastest and the least cost prohibitive option would be to build an ADU better known as the "granny unit". I think you are already thinking about this option and its advantages. Your return on investment will really depend on the rents you can pull from a studio. You could even go the route of getting a "prefab ADU" and have it installed on your lot. The cost is apparently 5% to 25% cheaper then doing a traditional "stick build" or addition. Comps will tough to get if you there not that many in your area. However, I would assume the appraiser will just base things on the total sqft and number of beds/baths on the lot if they don't have anything directly comparable. This should at least give you some ball park figures to work with in your analysis.

@Andy Whitcomb your paying market rent PLUS 20%, that is great for the owner! I might have to put some more thought into this... ;-)

@Leslie Pappas the forum is cynical of your intentions because your replies have been in personal in nature.  You have not answered with any detail as to WHY you believe the OP should use the DST.

Am I incorrect in my understanding that he would incur fees over the cost of doing a cash out refi or a HELOC?

Are you helping everybody who reaches out to you to complete the entire DST process for free? If that is not the case then just admit that you are pitching and make your case in the "market place" and don't pitch people who are looking for unbiased advice in the open forums.