All Forum Posts by: Arlen Chou

@Brian Shum it sounds like you already have the finances together and you plan someday to buy a "forever" home to raise children in.  I also doubt you are planning to buy a house that is fully renovated and ready to go.  If all three of those are correct then the question is a lifestyle choice: do you want to do renovations before you have kids or after you have had kids.

You will most likely not be able to time the market, but you do have some control over when to have kids and when you want to do renovations.

To be clear, my comments are about buying a HOME, not necessarily an investment.

@Leland S. if you do go down the legal road, just remember the law is really about who is right or wrong.  It really is more about who can handle the most financial pain...  Figure out if it is really worth the money to chase this guy down.  In my case I have a fairly large 6 figure return if I win so it makes sense.  If you are fighting over a few thousand dollars, it might make the most sense to bluff and just come to a settlement of both parties walking away.  If he does leave the job site, you can claim that he abandoned the job site.  I got my clown to say he was not going to finish the job and I documented it.  I then promptly claimed he abandoned the job site without completing.  The key is really to find out if his license is in good standings.  If it is not then he won't have a leg to stand on, but everything else just makes your case stronger.  If he knows that you have all your ducks lined up then he might settle to sign a lien release and walk away.  If all of the other pieces fall into place you probably don't need the release, but it makes for a good psychological break for both parties.

@Kevin Phu I hear you about cars.  I started off as an audiophile with all of the stuff associated with it, then moved on to SCCA solo racing eventually to track days all over California.  Cars are expensive hobby still have my '98 993 C4S that is more track car then street car, but I plan to put it back to street mode one of these days.  I am just to old for an over tight suspension, especially on CA streets.  Do the uber and enjoy the side hustle while you can.

@Kevin Phu I totally believe in the power of the side hustle.  There will be a ton of people who will say "your time is worth more" networking, looking for deals, etc etc.  But those activities are fairly limited...  Driving an Uber for extra cash is what the side hustle is all about; you can do it whenever you have extra time.  You also are forced to drive neighborhoods and learn the lay of the land.

About buying a 2nd car... I personally would sell the "boy toy" and suck it up and roll with the 4 door as my only ride.  Dumping money into a pimped street ride is a waste of money, unless you are going with something that is collectable.  I know, because I now cry about all of the money I have blown on various cars.  Just keep in mind that once you have a ton of cash you will be able to buy better toys.

@Leland S. you obviously know you are in a S-ton of trouble... First thing I would do is research if the guy is truly licensed.  I don't know what the laws are in Nashville, but I would start with the State Licensing Board website.  

I had a similar issue where a "contractor" was getting payments and the project was getting delayed by months.  This was not a project of mine, but somebody that is close to me.  They asked me to look into and start working with the guy when the project was 6 months past the initial project completion date and way over budget.  The clown was saying many of the same things your guy is saying.  However, I found out his license was not active because he was not bonded.  I also found out that he did not have any actual permits and that there was no legal written contract.  All three of those are strikes against him.  

After I found out all of these things I went full offensive in dealing with him and took over the project myself.  I found a new GC with good references and pulled the permits myself.  I let the new GC know what was going on and asked that all deficiencies be documented.

I QUIETLY contacted all of the subs and got lien releases from them.  I demanded time cards of any person on the job site that was a direct employee of the fake GC.  Any sub that had not been paid, I paid directly to get the releases.  I was documenting everything via email and put together a 3" binder of communications and receipts and releases that I eventually passed over to an attorney.

The state of California is very much on the side of the consumer on this issue.  If I win I can recoup ALL monies that were paid to him, legal fees and because the clients involved are seniors there is an additional hefty fine and he can potentially face jail time for elder abuse...  Hopefully the state of Tennessee will also be of help to you.  PM me if you want to get together and I can give you more details of what I did.

Good luck to you,

Arlen

@Leland S. sorry to hear about your troubles.  Is your property in Mountain View?  I have had issues with several contractors over the years.  Are you sure that they have an active contractors license and that they are bonded and insured?  There are many guys in the BA running around claiming to be contractors with a license number, but after further investigation there are issues with the license.  I assume you have seen the actual permits, but if you have not confirm that they exist for the work that has/will be done.  Make sure all communications are documented in emails, don't do anything on verbal approvals.  If you do have a discussion, follow up with an email outlining your discussion.  You need to start building up a case...  Once you have enough information you can report them to the State Contractors Licensing Board.  The process is pretty simple and they will do much of the work for you.  If you do decided you want to have a lawyer on your side PM me, I have a really good guy but he is expensive.

By the way, does the contractors last name start with a "P"?  Just curious...

-Arlen

@Brian Shum from your post I am going to assume that you already have a budget and money set aside.  I say that because you are asking about deciding "yes or no" on a particular property.  I don't think you are asking IF you should buy something.  As you have read there are very differing opinions on if your "home" is an "investment" or a liability.  I personally think it can be either, depending on what you buy and what you do with it in the future.

Anyway, if my understanding of your question is incorrect I apologize as the rest of this post will be irrelevant.

When it comes to a primary residence I always ask people one questions: are you PRIMARILY buying an investment or are you buying a home?  Of course they are not mutually exclusive, but one thought path has to take more weight.  If you and your wife do not agree on which type of property you are looking for then you could have problems farther down the line.  The one constant will be that you are hoping for appreciation, but other then that I would be looking for different things in the property based upon my hierarchy of needs/wants.

As for a few examples:

If you are buying a first home that you will only be in for a short time, I would suggest looking for a neighborhood that would attract renters in the future.  I would look for accessibility to trendy restaurants. I would look for the things a young single person or couple would want.  I would look for these things with the knowledge that I will personally move out soon and that I want to get renters in the future.

If you are buying a forever home, or a long term home,  I would look for the things a young family would want;  safer quiet neighborhood, maybe a park, proximity to schools, etc.  Of course this is based upon the assumption you want to have kids.  If not then these criteria fall to the bottom of the search list very quickly.

Of course neither of these criteria are mutually exclusive either, but I believe the hierarchy of requirements change based upon the way you look at your long term goals.

What I have found is that to many first time primary residential buyers get lost in that emotional space between being a young couple who live in the present vs a young couple who are read to start a family.

Which are you? Once you answer that question finding a property and making a decision will become easier.

-Arlen

@Aaron Frances

I use to have a townhouse that had a similar problem. New people moved in next door and my tenants called me that night to tell me they could hear the woman, and she sounded like a cat being tortured.  I politely sent the new neighbors an email the next morning, and told them that my tenant could hear them "unpacking and moving furniture around late at night".  I asked them if they could keep the moving noise down as much as possible.  Needless to say the "screaming cat" was gone and never came back...

Anyway, you are describing 3 different issues:

1. You can hear them
2. You can feel your bed move
3. You are worried they can hear you

There is not too much you can do about hearing them walk around, unless you want to spend a ton of money.  However, you can use isolation pads under the feet of your bed, and theirs if you want to breach that subject...  I suppose you could get the ones off of Amazon, but I would personally get the industrial grade isolation pads used for vibration tables in labs.  They should have a higher psi rating then the cheap ones on Amazon.  This should at least keep you from feeling the "motion of the ocean".

In terms of noise going up to them (a little TMI... hahaha), you have to change the acoustics of your room, more specifically your ceiling. You can get the cheap acoustic foam used for sound rooms and put them up on your ceiling.  It might look strange or cool, depending on your personal taste and furniture.

@Maggie G. there is nothing out there that will give you a step by step process to do well in REI. This is because books about strategies are written for "general consumption" not specific application. On the other hand, books written about "specific events" are basically a historical recounting of a specific deal. So it is important for you to understand that the way that people do the "cash out refi" or use the BRRR strategy probably does not fit your particular situation. Over time, you might be able to change your current situation to more closely match the examples in the books, but right now there are a key points that don't match up. I believe that is why you are frustrated with the idea of "getting your money out" strategy.

In every one of the cases I have read about or done myself there was an appreciation aspect to each deal.  This could be through the market rising, or more likely through "forced appreciation".  In your case, you have your primary residence.  However, you live in a market where there has been no appreciation and it sounds like you might have negative appreciation.  This is the key to why your current situation does not align with what you are reading.  The books talk about tapping your "equity" in the property.  This is how you get your money out to invest in another property.  However, if your home is worth less then what you paid for it a few years ago, then there is no equity to tap.

This is actually one of the corner stones of the appreciation vs cash flow debates that rages on BP.  I don't intend to sound mean, but you are in the unfortunate position that many hopeful investors fall into; you have a home, but it is actually a liability and not an asset.  It is basically acting like a financial sea anchor and keeping you from making some forward progress.  

You are 100% right, "You have to have some money to invest!" However, it does not need to be your money...  Without knowing the details of your financial situation, besides selling your house, you have 3 basic options to TRY and get money:

1. Refinance:  I have no idea what your rate is, but if you can get your payments down you can eventually save some money to invest.  If your house is worth less than what you paid for it, then you will probably not be able to get any immediate cash out.
2. HELOC: Depending on your credit situation you could try to get a home equity line of credit. I personally like this method for myself, BUT I am in a high appreciation market. You must have a lot of fiscal discipline to use this strategy.  If you are not careful you can lose everything.
3. Other peoples money:  This could come in the form or loans from friends/family, investors or a "hard money" lender.  This strategy has obvious down sides and could also be disastrous

@John Kesner has some very good advice, but you have decided you cannot follow it because your house, the sea anchor, is a "home" not a "property" in your current mindset. Perhaps what you need to consider is to make your current home the rental and moving into the next property as your primary residence. If you make this mind shift you will open yourself up to the ability of getting a property for a lower down payment. I don't know your family situation or how many people are in your immediate household, but you could potentially get a small multi unit as John has suggested and add to your income. This is the "house hacking" strategy: buy a property as a "primary" residence live in it for awhile and then get another "primary" residence and move. After awhile you naturally fall into the BRRR strategy.

As a starting point, house hacking takes longer to achieve financial independence but it is an easier place to start if you already own your primary residence.

Best of luck to you!

@Diane G. I hear you on the point about patience, I work a W2 and don't do this REI thing full time either.

My tenants are made up of hardworking lower middle class families with stable jobs and kids who go to school in the neighborhood.