All Forum Posts by: Manch Hon

Going back to the OP's question, maybe his letter sounds too formal? If he makes it more like a mom-and-pop kinda deal it may not come across as too threatening. So scratch the legal-sounding phrases like "partners" and write the letter like you are writing to your mom.

On a recent Justin Williams podcast Joe McCall said he intentionally crumbles his yellow letters to make them less formal. Response rate is actually much higher on these less formal looking letters he said. Same deal with hand-written letters. Now imagine the homeowner got this crumbled piece of hand-written paper, there is no way the attorney looks at this and says "this guy is a RE broker looking for business!". It simply doesn't look like a business letter. Is it illegal for your neighbor to send you one of these asking you to sell your house? I think not.

In legal gray areas it's all about appearances and perceptions.

Hey Minh, the book "Equity Happens" completely changed my investment strategy. I now positioned my RE investment to be cash-flow neutral or slightly negative, just so I can max out the equity growth.

I think Kathryn's situation is typical. Younger folks should focus on appreciation to build up equity base, At a later stage of life turn that sizable equity into cash flow to fund retirement. That's exactly what the "Real Estate Guys" preach in their book "Equity Happens". I did a 180 in my investment strategy after reading that book.

I can come up with a lot more situations where selling would make better sense. It all depends on the specific situation. The only constant should be reinvest every dollar back to RE in my opinion.

Take this example. Crappy shack in the Glen Park neighborhood of San Francisco that looked like this in 2004

It was sold for 200K in 2004. Pretty much lot value only. It was turned into this

and sold for 2.1M in 2014.

Now let's say you were the owner of that crappy shack back in 2004. You were collecting market rent for whatever the market will bear for a crappy shack. It was cash flowing good. Should you just keep it as is?

Or would you kick the tenants out, demolish it and build that modern piece of art? Do you then rent that good looking house out, or sell it for 2.1M?

I know this example is pretty extreme. But smaller version of it happens everyday. It's hard to just say "Never Sell" and don't look at market/strategy specifics.

I think the advice should not be "never sell". Rather it's "never move $$ out of RE." So if you sold a piece of RE but use the proceeds to buy another that's fine.

I have been thinking whether I should sell my primary in San Jose when time comes to trade up. As my primary I added bells and whistles throughout the years, upgrades you will never do if it were a rental. You can't really charge a lot more in rent just because you had landscape done by award-winning gardeners. But a home buyer will appreciate that and pay extra for the house. Now should I not sell and just hold onto my old primary? Or should I sell it and buy some no-frill rentals in other parts of town?

Different areas have different demographic dynamics. Your old RE may be in the path of progress and appreciate rapidly because of gentrification in the last 10 years. Maybe you can sell it and deploy your capital in another area that is now in the path of progress and gentrification is just starting out? It's about catching the waves of appreciation.

I think appreciation is like tooth fairy for middle America. You look at cashflow-mecca like Dallas and you see appreciation that barely keeps up with inflation. That skews people's views.

It may be an offbeat opinion but I feel super fortunate to be in the Bay Area RE market. People complain about high house prices and tough competition but I see opportunities very few others have.

When I first set out in RE investing I too thought cash flow is all that matters. And then I read the book "Equity Happens" by the "Real Estate Guys" and my view changed completely. It so happens that the two "Real Estate Guys" hail from San Jose. So that makes sense.

What the book preaches is that there are two stages to investing. The first stage is building up your equity. Only after you got big equity-wise do you switch over to cash flow so you can live off that in retirement. It's not just hand waving on their part. They do go over some math that's fairly convincing in my mind.

SF Bay Area is in the same league as NYC in my opinion. It will always be expensive and getting more so every year. Limitation of buildable land is one thing. But the NIMBY'ism and the anti-growth element is a much bigger deal. The Bay Area core just doesn't have the stomach to go high density, so RE price has no way to go but up.

5% annual appreciation for the next 20 years is very likely IMO.

Interestingly enough, I wonder what will self-driving cars do to local RE. If I can just sit in a self-driving car napping or whatnot I won't mind commuting to Tracy.... Sci-Fi? Maybe. But you never know. :)

Epic! Sign me up.

I have rentals in Oakland, Santa Rosa, Sacramento and Stockton, and I live in San Jose. So I am exposed to a lot of markets in NorCal. It looks to me SAC and Stockton appreciation has hit a wall lately. Both have gone up a bit too fast in the last 18 months and digesting gains right now? But Oakland is still on fire and North Bay is moving along at a steady pace.

Oakland should benefit from overflow from SF if gentrification continues. I would put more money to work in that market.

Hi Melvin,

Welcome to BP. I am looking for rehab opportunities in SF and Oakland. Will ask you for contractor referrals if I landed any deal.