All Forum Posts by: Arlen Chou

@Account Closed meet up next week.  I will buy you a beer and we can talk more about the topic.

Take it easy,

Arlen

@Account Closed stated Richmond is a very interesting market.  I have picked up 11 doors in Oakland over the past 2 years and I am always looking.  However, I do have to caution you about a statement you made about rents:

"But rents are also increasing here and always have been. They're never going down."

There have been dips down on rents and recently there are indicators that rents are getting soft.  Additionally, there is a HUGE amount of inventory being built all over the Bay Area that will come online over the next 12 months.

Again, I am a local guy who believes in the local market and I believe investors should stay close to home if they can.  Just be careful believing that there won't be a correction in prices and rents in the near future.  Make sure wherever you choose to invest you can weather a storm, because it looks like there are clouds forming on the horizon.

Good luck to you,

Arlen

@Ari Archer the generic "rules of thumb" on BP really don't apply in the Bay Area.  As @Michael Simpson has pointed out, you need to find the hidden value in the property.  Most of this hidden value will mean that you need a good amount of working capital to get your building to a BP "rule of thumb".  If you really want a VERY simple rule I would go with 1% after your stabilization period.  But remember cash flow will be dependent upon how much you put into the deal at purchase, how much you spend to improve, and your ability/mount you refinance money back out at a substantially later point in time.  

I highly doubt you will be able to find anything on Redfin or any other service, for Bay Area proper, straight out of the box.

-Arlen

@Simcha Davidman your friend is correct, but I would not call it "seasoning". As part of their loan verification process, the bank will want several months of bank statements. Three months of statements should be enough for them to do their verification. They just want to see that you have liquid assets. They will also see that you have HELOC in place, but as long as your DTI can cover you, you should be fine. This is basically what your friend is talking about.

@Shawn Ackerman, you are correct, do not accept partial payment.  You will set precedent and you don't want that, especially if you have other tenants.  You can be compassionate without giving out a 0% interest loan, which is what you will be giving the person if you don't tack on a "late or administrative fee".  Issue the 3 day notice and explain to them that all rules must be applied fairly and equally to all of your tenants.  Be professional about it and explain that it is not your personal decision that is dictating the need to enforce the rules, but it is the desire to provide a professional equal application of the rules to ALL tenants in the pool of units you own/manage.

I full agree with @JJ Conway that there is something wrong with your PM if they are not already going down the outlined path.  They should be the ones that are applying the rules, and you should not be worrying about this at all.  This is what your PM should be getting paid to handle.

Good luck to you,

-Arlen

@Johnson H. I wonder if that makes you Po!  Even the panda did not understand what the level of his powers were until he just accepted it... then he just naturally kicked ***! hahaha

@Account Closed great topic and thread.  You always bring up insightful discussions and inspire many!

@Amit M. I totally agree with you.  Deep diving into a specific market to learn its nuances is critical to implementing a "code breaking" strategy that will allow an investor to find the right deals and make some serious money both on appreciation and cash flow.

@Johnson H. Minh is like the Master Oogway of REI. His subtlety in words and actions are his strength in teaching. Even in this string of posts, the majority of what is needed to succeed is here!

@Dino H., @David Kyo is correct.  You are NOT doing an eviction... yet, and you are NOT getting RID of a tenant.  What you are doing is terminating the month to month lease and pulling the unit off of the rental market for your personal use.  This is a public forum that can be googled, and correct terminology is critical for potential legal issues.  

Just be nice about the situation and approach the tenant and let her know that you will be taking the unit out of the rental pool for your personal use.  Ask her if 60 days will be enough for her to move out.  If she agrees, have her sign a termination of lease with the agreed upon move out date.  If she says she will need longer, ask her how much time and get to an agreed upon date.

Disclaimer:  I am not an attorney and you should consult one  The above is just what I would personally do and should not be considered legal advice.

Good luck to you and let us know how it goes.

-Arlen

@Account Closed I don't do this either for my rentals, but I know people do this for primary residences.  When I bought my home I had my agent present a hand written letter that I wrote, giving the sellers some background on my family and why we wanted the house so much.  I am not sure what drove them to choose us over 12 other offers, but I like to think the personal connection helped.

Basically in a competitive market, standing out and being remembered can make the difference between a win and a loss.  So I would vote that you continue the practice.  But it might get a little expensive if you are always buying the food... maybe you should learn to bake hahaha! 

Good to see you are still pushing forward!

-Arlen

@Troy Longtine as @Evelyn Roper stated many insurance companies will not cover you, so this is the first question you need to address. If they say they will then the next thing you should do is step away from the personal aspect of the decision and base it on business. Is this property a SFR or a multi? If it is a multi, then your answer should be no. It is not based upon the individual dog or tenant, but the precedence you set for other existing and future tenants. Don't spiral down the path of making exceptions for individuals. Set your rules and always follow them. It will keep you from potentially getting into a lawsuit at a later date. This may sound heartless and cold, but you have a business to protect. If you accept this tenant and this dog, you will be creating a situation where every "dangerous breed" dog should then legally be acceptable in your building. I personally allow dogs in my buildings but they must be under a certain weight and cannot be a "dangerous breed" as defined by ANY list found in publication. I also charge more rent and require a higher deposit. I am sure that there are plenty of really nice and sweet pit bulls. However, I am not willing to risk getting into a lawsuit to go against perception.

Good luck to you and let us know what you decide.

-Arlen