All Forum Posts by: Arlen Chou

@Rizalene Acosta  welcome to BP, you have found a great resource.  A few months ago I was in the same boat you are in now.  I had just joined BP and I was looking at cities from San Jose all the way up to Richmond.  After talking to @j.martin, and visiting Oakland I zeroed in on that city.  Within in a few a few weeks I had found a great deal that I am very happy about.  Below is a link to my deal.

http://www.biggerpockets.com/forums/223/topics/161...

Just this past weekend I found a triplex that is very close to the 1% rule in the South Bay.  The point is that there are deals in the BA that are attractive.  You just have to turn over a ton of rocks to find the gem!

Good hunting to you and your husband, make sure to post up when you find your deal!

-Arlen

@Ed Schell it is great that you are planning your future so early in life. I wish I had that kind of focus back when I was in HS. Your first step is obviously building up as much cash as you can for your investment war chest. Hustle as many jobs as you can, especially if they relate to your long term goals of REI. You can work job sites, or intern for RE agents or PM's. If you can handle it, get a paying gig driving: pizza delivery, Uber etc. You will be exposed to the streets of your town and you will start to learn trends and signs of change. Be prepared to do the grunt work, but find something that will add to your knowledge base!

Getting a loan to purchase your first property is going to be tough. You need to build up credit and also a W2 history. It is not clear if you plan to jump into REI right out of HS or if you plan to go to college. Either way, if you don't start building some type of credit history the financing of your plan will be very difficult.

Once you get your finances in place, go and buy something as a primary residence. This could be a single family or a small multi-family. Continue to hustle and build more cash as you do this. Once you have your first place under your belt the doors will slowly start to open up for you. Hopefully during the years you intern in HS, you will get a taste for different niches in REI and you will know the direction you will want to take your REI adventure!

Good luck and post up when you start your progress!

-Arlen

@Chris Farrugia I think your question is more about how to learn the skills that are applicable to your current situation.  If I understand correctly, you are looking to do the rehab with a limited budget and to learn some new skills.  If that is the case go to Home Depot and buy your self the orange Do It Yourself 1-2-3 book.  Next go to youtube and watch as many videos as possible on the specific skills you need.  Also many of the guys working the isles at HD are retired tradesmen.  Ask them questions and get advice when you need it.

Most of the basic rehab skills you mentioned are really not that difficult to acquire.  The most important thing to know is that buying the right tools makes a huge difference in the frustration level you will experience. Live in the place like you plan, learn the hard way, what it takes to do the various jobs.  

Don't do anything that might create hidden dangers, like trying to pull your own electrical wiring or framing.  When you do call in licensed people to do work, follow along watch them and ask questions.  The knowledge you gain by going through the process will be a valuable tool in the future when you negotiate with contractors and you will be saving yourself some cash!

Good luck!

-Arlen

@Jessica Skupien if none of the above guys workout for you, PM me and I will introduce you to my guy in Oakland. He helped me find my recent deal and is very in tune with investor needs.

@Robert M.  I think it would be helpful to get a little more detail regarding your situation. Firstly did you buy the property recently and then get the tenant or did the person come with the property? You stated that you are under market rents, but it is not clear how far under market. Is your market a renters or landlords market? Meaning are there lots of vacancies in your area? As a final question, is your unit at market quality?

I believe your issue is that you are under market pricing and that you are rightly concerned about falling farther behind market prices.  However, your PM does not seem to be helping you catch up to market rents.

First thing I would do is find a new PM. A good PM should know the prices in the area and put a plan together to get you to that level. Their job is to protect you from exactly this type of dilemma. 

If your market is strong then there should be no problem in increasing rates over a short period of time to get you to a good income level.  However, if the quality of your unit is below market or there are not that many renters in your area, then you might want to take a more conservative approach.

Aggressive rent increases, to get you to market rents can work. I did it over the past 18 months in my market. The tenant was paying $850/month, now they are paying $1475 and I still plan to go up. I have not done any updates to this particular unit. I just made it very clear at the time of purchase that we would move to market prices over 24 months. I should be more clear, my PM told the tenants for me. I do not interact with the tenants for exactly the reason you are facing. Units that I did renovate went from $850 to $1700 within the same time period.

I had other tenants tell the PM they could not afford the increase. They did move out, but they BOUGHT a place of their own with the money they saved from the last owner. The takeaway should be that this is a business, and you have to run it as such. Get a new PM who will act as a true firewall and also implement your goals and strategies. That person should be active in giving you advice and raising flags if they think your plans do not meet the market conditions.

Good luck and let us know how this turns out!

-Arlen

@Eric Z. if you find something interesting, let me know! Good luck!

@Jeff Pollack , I am definitely looking forward to this meet up! As both @J. Martin and @David Cheung know, Michael's pod cast definitely helped me on my last deal in Oakland!

@Johnson H. Thanks for pulling the meet together. It was great to see so many people there!

@J. Martin your completed place in Oakland looks great! I am really impressed on the work that you have done. Good luck in getting it sold, I am sure it will go fast! 

@Johnson H. I will plan to be there by 6pm and stay as long as I can, unfortunately it can be long. Hope to see you and J tomorrow!

@David Affonso welcome to BP and the REI world that is the Bay Area. You have picked a tough market, but one that can be lucrative. You just need to do some serious leg and back work! I got a seriously exciting deal in the East Bay that I am closing on at the end of this month, but more to your target market, I closed on a couple of nice ones in Mountain View back in 2013.

Both the MV properties were 4 plexes that needed a TON of work.  They are all 1/1 units with individual car ports and a small laundry room.  At the time of purchase they were renting for an average of $900 per unit.  After 16 months they are renting for $1675 each and I have not completely renovated all of the units.  I think I am still under market rents but I am taking a slower approach to hold on to the renters this I like.

I have done most of the renovations myself, everything from demo, to plumbing, to the install of cabinets and tile.  I did not know anything about renovation at the start of the process.  But I learned and got faster as I went through each unit.  My first renovation took 2 months of part time work.  The last one I did took me 3 weeks of part time work. I became smarter about my purchases and my construction techniques. Keep in mind that I did not do anything that was structural.  All work was done with permits that I pulled on my own.  All of this while I holding down a W2 job that has me traveling every month.

My point being is that it can be done in Santa Clara County, but you have to seriously be willing to put a ton of effort into finding the deal and repositioning the units.

Hope to see you at one of the many meet ups in the area.

Good luck!

-Arlen