All Forum Posts by: David Song

We are not in a real bubble now, maybe in a few more years things might change. IMO. Most new owners need to put down a minimum of 20% down. Bay Area market increased 10% from 2016. Wage and minimum pay are also increasing. The inflation will kill more of your cash reserves, silently, in the long run. East bay is a good place. I am focusing on Hayward area.

REIT investing is basically like invest money as a lender, whereas REI by yourself is like a borrower. Completely different thing. For example, as a REI, you buy a property for $400k, with $80k downplay, $320k loan from lender. Rent covers moregage and PITI, with a few hundred dollars positive cash flow. In 10 years, the property value increase to $800k. Your equity increased from $80k to $480k. That is a 600% increase on your investment in 10 years, not considering cash flow income. Furthermore, you can refinance 70%, i.e., $560k out. With zero money in the property, you raise the rent to market and still cover the mortgage and PITI. Wait for another 10 years, that will be profit with no upfront investment. That return is way way higher than REIT investment. When inflation starts to increase, you want to borrow as much money as possible with fixed rate as REI investor. Let the inflation raise the property value and rent, and force the borrowed money to lose its value. For REIT investor, you are actually acting as the lender. Playing on the other side of the game.

Jack Baczek To do list: 1: full vacancy 2: evict tenants late on rent 3: raise rent There is an on site manager we inherited. We are keeping him for a year. There is an office trailer which is rarely used by the manager, he used to live there but bought a house nearby. Prior to closing the deal, we have sold the office trailer to a new tenant. There is also a brick storage room, which will be repaired to become the office. There a few tenants who are late on rent. One will be evicted, the other one will be on a payment plan.

Gulliver R. Ronald Bourgeois Thanks for the great suggestions. I need to check them out. In general, two bedroom apartment in the area rent for around 750-1000. The previous owner is a private lender, foreclosed on the park for about a year ago. So this is kind of like an REO. We have flipped a house in Modesto last year, and knows the area to a certain extent. B- to c+ neighborhood. Will keep you guys posted on our progress.

Aaron R. The movers, I never thought about them. Great idea!

Andriy Boychuk Thanks for the advice.

Just purchased a park in Modesto, ca. Total 59 lots, 49 occupied. The lots are small, fit single wide trailers only. The current lot rent is low, $355. Nearby parks charge around 400-450. Plan to fill the vacant lots first, then raise the lot rent slowly over time to $400ish. Anyone knows a good source of decent used single wide in Modesto area?

The repair cost and depreciation on houses are vastly different for 2 houses vs 12 houses. You can not assume they are the same percentage of total rent. The expenses to maintains the 12 houses in Baltimore will likely be 6 fold if that for the 2 houses in LA. The time and effort spent to manage 12 tenants will also be much greater than managing 2 houses. The chances of evicting people out of the 12 houses will also be greater. Just some facts.

To buy or not to buy, that is the question. I am buying.

In fact, the market does go up significantly in 2017. About 10% median price appreciation in 2017 as compared to 2016 in Bay Area. I looked at my post 3 months earlier and it seems not too far from what is happening. LOL.