All Forum Posts by: Arlen Chou

@Namit S. the high level comparison between cash flow and appreciation investing would be investing in dividend yielding vs growth stocks. However, in real estate you have a significant amount of control on both the cash flow and appreciation sides. That is where the real magic comes into play. You force appreciation and drive cash flow with higher rents and lower costs. No strategy in the stock market gives you direct control, so trying to find a stock strategy to fit REI is probably an exercise in futility.

@Hersh M. Not sure if you mean the ones that I mentioned or the current flooded areas.  Alviso is under sea level and the building codes now require that all new buildings have elevated 1st floors, so I am sure they are in a flood zone.  As for the current areas, I don't know for sure, just look online and you will find flood plane maps of the area.  If you find a property that you like, you can check the address at www.sanjoseca.gov and contact the the development services department.

@Tim McGarvey the best example in San Jose is probably the 1983 and 1995 flooding that took place in Alviso.  

@Ryan Parnow I am glad you took my comment positively :)  Don't be hung up on the 1031 exchange thing. There is a ton of info on BP about 1031 exchanges and how to set them up. It is not rocket science and even if you don't use the 1031 exchange rule you are probably still better off getting out of those negative buildings ASAP.  

@Donna Pattani What are you evicting him on?  Is it because he broke the lease and has people in the unit that are not on the lease?  

How long have the other 2 people been there?

How long have you known they have been there?

If you just found out about them, then you probably can get them removed fairly easily by servicing them notice.  However, if they have been there for a while and you have know about it, then you might be in a stickier situation.  I highly suggest you find an attorney who is well versed with squatters, because that is what those 2 other people could become if they don't leave.  But from what I hear Texas is more landlord friendly so things are probably not as bad as they could be.

-Arlen

@Ryan Parnow to put it bluntly; why are you holding on to anything that is cash flow negative in a non-appreciation market?  

You appear to have some limited upside in the negative buildings. You should sell those off and 1031 exchange into something that will actually cash flow. Even if you did not go buy another property, you would be making more money without those boat anchors and doing less work. If there are some building that you are emotionally attached to, then sell off the ones that you are not in love with and dump the money into the units that are negative and refinance a smaller loan so your PITI will go down and get you to a positive flow.

This part of REI is the easy part... get rid of the boat anchors before they drag you down.

-Arlen

@Bastian Kneuse I am a big proponent of "think globally but buy locally" and a big fan of the BA market.  Normally I would say invest in the place you will live for a ton of reasons.  I also really like CA because of prop 13.  I have no idea what the property tax situation is in Florida, but prop 13 really benefits long term buy and hold investors in California.

However, if you already have solid boots on the ground in Florida AND there is a strong possibility that you will be moving out of the BA in the near future, then I would say look at the Jacksonville market closely.  The only reason I say this is that once you move out of California, you automatically become an "out of state" investor, and all the headaches that come with that title land on you.  So why not start off in a city that you will have a stable team and then buy your "forever home" where ever you and your family decide to grow roots.

Good luck!

-Arlen

@LuAnn Vigen this is exactly what your insurance is for.  They should handle all of the communications and negotiations.  Do not get in the middle of this or her insurance agency will work you to death and drive down their payout.  Assuming you have a good insurance company behind you, they should ask you for the renters insurance company, policy number, contact info etc and handle everything for you.  Your guys should also bring in their own estimators to offset what ever her insurance company says.  Once both insurance companies are talking to each other the rest just becomes a waiting game for you.

Good luck to you!

Arlen

@Dino H., it sounds like you are already starting to do the right things.  As @Ricardo R. has suggested you need to document everything communication.  Be clear and firm that the unit will be taken off the rental market for your parents future use.  I don't know how much time is left until she is suppose to move, but I would send monthly reminders that the lease will be terminated on X date and that you want to arrange a timeline for the final inspection and hand over.  As time dwindles down, I would prep the 3 Day notice and get ready to pull that trigger.  I would suggest going through an attorney to do this portion.  You can do it yourself, but I don't think it is worth the hassle to save a little money.

If she does fight you, expect to loose a few months of time while you work through the system just to get to the judge.  At that point you have to decide if your convictions are strong enough to wait it out, or just offer her "cash for keys".  If she does go for the cash for keys, make sure you she is physically out and you have possession of the unit before you give her any money.

Good luck to you,

Arlen

@J. Martin cats out the bag about your "girl"!  Is she on BP?  @Account Closed to get back to your point about motivation, I believe that it can be found all around us.  Nearly 25 years ago when I graduated college success to me was defined by a job where I was not the lowest person on the totem pole.  That quickly changed when I had to lay off 8 production operators for no other reason then the company was not profitable.  Each middle aged woman cried as we went through the exit paperwork and I handed them their last check.  My perspective went from success to helpless depression within a few minutes. 20 years later, I came across tears from operators that I hired in the Philippines.  But this time they were tears of joy.  I gave people who did not have a high school education jobs in the tech industry.  We trained them in job functions that did not exist in the country until we opened our shop and gave them a future that they never imagined.  I was motivated by tears of sadness to create tears of joy.  It took a F-ing long time and I had to start my own business, but it got me there.  

My idea that J has alluded to has to do with teaching basic money based life skills that most people in a certain class of society are never taught or exposed.  Without those skills generations of people are locked into a never ending cycle of poverty.  The smiles of success of these people surrounded by poverty is another source of motivation.

The health and happiness of my children is a strong source of motivation.  

REI is just another tool, like my W2, to reach my goals.