All Forum Posts by: Arlen Chou

@Ramsey Howard I find the HELOC to be an extremely strong tool, IF it is large enough and your market does not support long bank approval processes. In the SF Bay Area where people are competing against all cash buyers, having a HELOC in place makes you look like a cash buyer. Once the property is acquired, I start working on stabilizing the units and increasing rents. Once this phase is completed, I put a permanent loan on the building and pay down my HELOC. This in essence is like reloading the gun and I start looking for the next property. Because the HELOC is in place I don't have to go through a loan process.

Good luck to you,

Arlen

@Darren Horrocks I don't understand why people focus on the either or of cash flow vs appreciation.  As investors we should be running to door #3: BOTH cash flow and appreciation.  This type of market does exist all over the US, look for both pieces of the puzzle, don't settle for one or the other.  Just my 2 cents.

Take it easy,

Arlen

@David Zheng why are you throwing shade at somebody you don't even know? @Account Closed is tearing things up in the SF Bay Area the old fashioned way: through excellent capital raising skills and honest relationship building.  The guys seriously knows how to make money grow, find and analyze deals and frankly put most of us, including myself to shame.  Spend some more time and look at all of the guys investing in CA and making serious money.  @J. Martin is another great example of somebody who is just blowing the doors off of everybody in a very short period of time, and doing it here in the SF Bay Area. The guy started out in the red just a few years ago and is so deep in the black now he retired this year! He even has the time to put together one of the best REI Summits around. I would highly suggest you invest the money to come out to the next summit and meet some of these movers and shakers before you make general statements about the skills of people making serious coin in CA. If you do come out, I will buy you a beer and personally introduce you to some of these successful guys so you can get a flavor of the knowledge and skill required to make it big in this market.

-Arlen

@Cary F. I believe you are mixing up the ideas of "competitive advantage" and "product differentiation".  A competitive advantage is by default a skill set or trait that makes "you" more competitive.  An inanimate object cannot have a competitive advantage as it cannot compete without direct input from a user. The fact that your unit, or more appropriately defined as your "product", is bigger or better does not in and of itself make "you" more competitive. 

The ability to create a better product is definitely a competitive advantage.  The skill to make that product nicer at a lower cost or faster is definitely a competitive advantage.  The connections or negotiation skills you have to buy a property off market or at a lower price then everybody else is a competitive advantage.

An everyday example of product differentiation vs competitive advantage is the highly contested smart phone market.  Apple's advantage is not the iphone or what it can do.  On a feature set basis, I would argue that the Samsung S7 is just as good for most people then an Apple product, maybe even better for some consumers.  The competitive advantage of Apple is the ecosystem they created for all of their products.

It sounds like you have a nice product and I hope that it does well for you in your market.  I don't know if everybody will agree with me on my definitions, but those definitions work for me and my business model.  

Regards,

Arlen

@Jordan Sutherland you are getting some great advice from your grandfather and people on BP.  But real estate, investment style is very personal.  In the end we are all looking to make our lives better.  That may mean different things for different people.  So if slow growth is what made your grandfather happy and he thinks his investments gave him a good life, then he is 100% right.

Does that mean it should be a strategy you should apply? It depends on how hands on or off you want to be with your business: how much money you want to generate, in what length of time you want to accumulate that wealth , etc. There are so many things you can do in REI that the opportunities are endless.

Others have touched on the fact that the gem in his advice is to "find the right property".  That is the one universal constant in real estate investing.  No matter how good your strategy is, if you get the "wrong property" for that strategy you will more then likely get into trouble.  Keep in mind that same property might be the right property for some other strategy.

Good luck to you!

-Arlen

@Sean Mamola I started to seriously get into REI in 2013 and I am currently in my late 40's, so you are not late to the game. Slow down a little and take a look at your property a little more. You say you are currently $50-$100 in the red each month. Is this after PITI or just based on your monthly payments? I don't mean to sound condescending, but many people only take into account their monthly payments. On top of PITI, there are additional expenses that should be considered, but I won't go into that as there are many threads here about figuring this all out.

Where is your rent in the market place: high, low, middle?  Do you have property management fees or are you self managing?  If you have not looked yet, you should analyze where can you either save money in the operation of your rental business or increase the income.  If you can get yourself to breakeven or profitable, the picture changes very quickly.

The 800 units that are coming online could be good or bad for you, but it depends on many factors.  What size is your home and lot compared to what is coming online?  What does the neighborhood your property is in look like compared to where those cookie cutter homes are going in.  Is there planned infrastructure or public amenities that your tenants could take advantage of when the homes are done?  I would look for planned public parks, new shopping areas that might develop, etc. There are many points of analysis you should look at before deciding on a course of action and these are just a few.

I realize that making the jump into REI is fraught with uncertainty and self-doubt, but taking a little bit of time to really analyze what you have and where you have it can really help.  The grass is always greener on the other side of the fence.  In your case don't forget that you are ahead of the game in that you already have yard to look out from...

Good luck to you!

-Arlen

@Jelani Young one of the best opportunities to meet people and get connected is coming up in your old stomping grounds.  @J. Martin will be having his big summit on the 27th and 28th.  You can check out the line up and sign up at www.sfbaysummit.com.  There will be 20 BP podcast interviewees speaking at the event and hundreds of local and national investors and industry professionals.  No hard selling at the event, so it is a great relaxed way to gain some knowledge and meet some great people.

Hope to see you there!

-Arlen

@Rome Xu you might want to consider going to the big summit coming up on the 27th.  It is hosted by @J. Martin and will be held in Oakland.  You can check out the website at www.sfbaysummit.com.  There will be 20 BP podcast interviewees and hundreds of local and national investors.  It might be a good place for you to rub some elbows.

@Ben Rice the guy you need to talk to is @J. Martin!  He blew things up and is now the master of big summit coming up in a few weeks in Oakland.  If you have not done it yet, I would highly suggest you sign up and attend.  There will be a ton of great speakers and many successful local investors who could be great resources for you.

Good luck to you!

-Arlen

@Ida Lyons by reaching out this community you are moving in the right direction.  Where you look really depends on the time and skills you have.  This in and of itself is a very long and complicated discussion.  Much of this you can find through the search function.  Are you thinking local, out of city (driving range), out of state...

There are many experienced local people in the Bay Area that are very generous with their time and knowledge.  You should definitely consider going to the Summit next month that will be hosted by @J. Martin.  This event is going to be in Oakland, so no excuses for you...hahaha. 

http://www.meetup.com/Real-Estate-Networking-Summi...

There is a fee, but the line up is VERY strong.  If you are feeling overwhelmed this is the place to start getting some direction.  Just remember, everything does not have to be perfect for you to start.  Just take things one step at a time, learn, make a plan and proceed.

"The enemy of a good plan is the DREAM of a perfect plan" - Carl Von Clausewitz

Good luck to you,

Arlen