All Forum Posts by: J. Martin

Awesome @Tony Xu!

@Katie P.'s meetup in Berkeley is great too. I recommend it. (I assume that's which one you are talking about.)
Some people buy a multi-unit to live in one apartment and rent out the rest locally, which is more affordable. But yes, I agree, even for the Bay, it's expensive right now. 

Would be happy to grab some Korean BBQ when I get back :) One of my favorites too.

I went to Taipei, Taichung, Sun Moon Lake, Manila, Cebu, El Nido, (great snorkeling!) , Puerto Princesa, and some time in Thailand from Jan through March this year too. Beautiful places!! I have a bunch of travel videos of it on my travel site, but don't think we're allowed to post links on the forums. It's on my BP profile if you want to check it out ;)

Happy to get any Japan and Korea tips! My gf is Thai and we're going together there, but open to those tips too :)
Say hi to Katie, @Account Closed, and the bunch for me out at the Oakland meetup!

@Amit 

@Amit Kumarundefined, 

Corporate Housing by Owner (CHBO) is a big one, and @Bac Nguyen, the CEO of CHBO, Kimberly Smith, will be coming out to share. Corporate housing.com

Bac, the 2-day tickets will be $395 at the door, so you're saving $70 by buying them at $325 right now!
Also, there is a $150 discount if you buy 4 tickets, so get Amit and some others together on the BP post for the Summit, and buy them together :)

@Tony Xu,

Welcome, from the Bay Area crew! 

You'll be in familiar company with other real estate investors in the Bay, as many are also tech folks investing in real estate. 

I'm a few years older than you, and quit my 9-5 job last year. Although I'm sure don't make as much as you! hehe I bought some properties in Oakland and Richmond during the GFC, and own a furnished rental business. I'm sure you'll get a lot of turnkey folks jumping on here offering their services. Just be sure to do your research on the operator and the area. 

I'm sure you'll also see the endless debate from coastal area folks about about buying local for long-term equity, versus going for cash flow out of state. I don't own out of state, but some Bay Area folks are doing it successfully. 

I definitely recommend going to local meetups to meet other BP members and investors in the area. @Ryder Meehan has an out-of-state investing meetup in SF each month. Good place to connect with other investors like yourself. There are also meetups in the > Community > Networking Events section of BP. (and look on Meetup). 

I'm in Seattle for the summer, but will be back in a few weeks to get ready for the Summit in Oakland. Then I'll be heading out to India, Thailand, Japan, Vietnam, and maybe South Korea. I love Korean BBQ, so figure I should go straight to the source ;)

Looking forward to meeting you in person when I get back Tony. 

 Dante,
I'm just going to jump in here and say that the BEST way to become an expert in the Oakland market is to go spend time in the neighborhoods. Talk to corner store cashiers, mail men, beat (local) police officers, local yokels. Drive on the local/surface streets instead of zipping through on the freeway. Stop in at the local bar. 

Obviously, it would take a lot of time to do this for every neighborhood, but it sounds like you've done some research. So hopefully you have an idea of what neighborhoods fit into your ideal characteristics/goals/price point. And now you can go do your "on the ground" research. 

Also, ask others who have properties in those areas or live there. I own properties in East Oakland and West Oakland, and operate one near Lake Merritt in East Lake, and have lived over there. @Arlen Chou has some in North Oakland and Fruitvale. 

Best of luck! And welcome to Oaktown!!

 Short term rentals are not a passive/retirement strategy. It is a business operation that cash flows. We do >30 days, where the net margins after paying someone else to do the work are around 15%. Maybe 20% if you get lucky or are better than I. And that's a pretty decent size biz. But not short-term. Smaller size has lower margins, unless you're doing it yourself, but not paying yourself.  To be honest, I thought the margins would be better - and while the gross margins are pretty decent - there's a lot of human "touch" that goes into running a hospitality business, which is what this is..  I don't do as well as Angelo, so would need to target areas and owners where short term rentals are allowed. Also, winter usually isn't very good, but summer rocks in the Bay. 

Another issue is that it is capital intensive to grow. When you look at a month's rent + security deposit + furniture & stocking + set-up cost by third party, it's $10K just for an apartment. So if you want to add 10 units per year, that's $100K in capital required. For you to earn.... how much? With how much time and effort? How many people, and how long to manage them?  And that $100K is not a permanent asset. Most of it is a depreciating asset that has to be replaced periodically, so is really an amortized expense. 

The better money/margins is truly in the short-term rentals. However, many cities (especially in the Bay Area) are passing ordinances against rentals under 30 days. So I'm ahead of the legal curve, but behind on the margins. For that reason, I still have to work. It fits my lifestyle of traveling from anywhere and makes enough for what I do. But hard to get rich on it. 

The people I've heard that are most successful do short-term rentals in high-demand areas, have multiple-bedroom houses in high-demand areas, or do more of a hostel-style rental with more bed/heads per bedroom. I'm looking into this more. 

Arlen, I might be able to split off an extra chunk for you, doing short-term rentals, rather than over 30 days ;) But they're banning it in Oakland. (surprise surprise). 

@Tim London,

Isn't it great seeing everyone crushing it on BP?! I remember one of the first meetups I held on the road while working at a bank in Santa Rosa at my old job (I think 2013?), this guy named @Brian Burke walked in, and met up with newbie me, and 2 other investors. He later ended up being the backbone of my Summit every year.

Point being, networking has been a huge part of my success in real estate, how I quit my 9-5 job to travel the world, and you never really know who you're going to meet and how they're going to impact your success and your life. I highly recommend getting out there and meeting face to face. There are some great meetups in the Networking Events section of BP and on Meetup. Get out there and make some connections! 

It sounds like you said you have some successful systems in place already. What's working for you already? 

@Hung Nguyen,

I have a property down in East Oakland not too far from the airport (4plex I bought for under $400k back in 2013 or 14) - but as @Account Closed said, the days of multi-units at the $200K mark will probably require a time machine.

Having said that, there are 6 multi-unit properties listed for under $400K in Oakland. 

https://www.redfin.com/city/13654/CA/Oakland/filte...

It looks like they are mostly small duplexes - and not necessarily by the airport. In the flatlands of East Oakand. I'm not an agent, but I know a few.. You might have to adjust your expectations if  you want to buy now. 

I'm a big fan of being close to BART / Muni / Caltrain, in their respective cities, no matter where you end up buying. Big plus IMHO. Overall, I expect the Bay Area to grow over the long term. But I do think we're approaching the latter stages of this expansionary cycle when you're talking about the macro economic / business cycle view. 

@Bob L.,

I have some small studios I rent out in San Jose furnished and over 30 days. There are travel nurses and student types that would be looking for a bedroom, and renting those out individually might do well. Some business travelers. And interns during the summer. I don't have any houses, but the people I've spoken with have said it's been harder to find 30+day tenants for multi-bedroom houses.. 

Summer is always busier than winter. 

@Ernie Espinoza, 

Congrats on getting a property where you can make some money while you live there, and making a little sacrifice to live in the in-law instead of the more spacious main home. Good work. I have some property in Oakland also. 

I am not an accountant, and you should check with one on IRS stuff, rather than take advice. Just be sure to document all the income and expense for now.

Basically, any expenses related to your rental property portion are deductible. And any portion related to your principal residence is accounted for slightly differently, as a non-investment property. 

1) Repairs to the main house for rental purposes are deductible. Longer-lived assets may need to be depreciated.
2) Yes, rental revenue is income. 
3) It's not called renters' insurance (that's for the rental). But you can get a "landlord" policy. Importantly, get umbrella insurance coverage. 

4) I wouldn't worry about the owner-occupant requirement on the loan, IMHO, if I were living at the property. 

As @Barry B. stated, there will be differences in capital gains exemption on the sale, or you would need to do a 1031 exchange. But the tax on sale can be either avoided or postponed.

Other advice) Understand rent control for Oakland. If there are 2 units on the property - even if one is non-permitted - the units are considered under rent control. You get an exemption from rent control if you stay for 2 years (while you live there), but doesn't sound like that's your intent. @Amanda Han, who wrote the tax book for Bigger Pockets, will be out in October on Oct 7. Read her book first, then come pick her brain with any follow-up questions.

Here is BP's tax guide: https://www.biggerpockets.com/renewsblog/2015/05/2...

Here is Oakland's rent control info: http://rapwp.oaklandnet.com/

Good luck Ernie! :)

 James, 
I have about 20 of these, which is why Arlen tagged me here.. 
There's a market here for it. Definitely slower in winter. Busier in summer. 
Travel nurses, business travelers, etc. Travel nurses will probably have a harder time affording a place in Emeryville, so will probably have to target business travelers more.

One way to test out is to start putting the monthly discount on your listing - and also try not to take a bunch of single reservations that would break-up a long-term stay. For example, don't book short stays so far out in the future. If you have a booking during the potential long-term tenant's requested stay, your listing won't show up in the search results. So you have to give them the chance to send an inquiry by leaving the calendar open. 

I'm in Seattle for the summer. But feel free to reach out on my BP profile, or come out and say hi in person in Oct in Oakland!