All Forum Posts by: CK Hwang

Personally, I find those numbers to be very very low. I generally find construction costs for a low to middle of the line house in Socal to be around $200/sqft, of course the extent of the word finished being up for debate.

Dennis, in some cases, owners of property on leased land has the option to buy out the land now or in the near future. I would ask if there has been talks of such an arrangement on the table.

Jonny, personally, from my perspective, I would look at being a hard money lender ( and let some servicing company take care of the loan for you) instead because in my opinion, it's quite a big risk to find good deals and purchase sight unseen, unless you want to take the time and effort to fly up to the US.

Hi Laura, I've thought about stock piling before because you're right, sometimes it is possible to get incredible deals, but after doing my sums, it didn't make sense to do so because the cost of rental/storage here in Socal is pretty expensive and houses here tend to be a little smaller so not as much room to store stuff at home. Not to mention the additional costs of transporting the materials from storage to site adds another layer of costs.

Hi Annunciata, this is kind of off topic but I thought it might be relevant base don the information you have provided. Just went to a talk the other night regarding the EB-5 visa, and just want to caution you to be very very careful right now. The EB-5 visa has started to come under the surveillance of the SEC in the last year because they have deemed it as a way of selling securities along with selling visa.

So besides a good immigration attorney, I would strongly strongly recommend a good attorney to ensure that you comply to SEC regulations and Exemption S for foreign investors if necessary. In fact, the attorney who was giving the talk recommended steering clear of EB-5 schemes until the "heat" from the SEC dies down.

The way that i found has worked best for me is that I requests a very detailed quote from my contractors and then I pay them as per line item completed. This motivates them to finish the work fast because they get paid faster, sometimes as quickly as being paid everyday, and it motivates them to give me more detailed quotes. So instead of say a line item line "tile bathroom," the quote gets broken down to purchase floor tiles $x, lay hardee backer boards $x, level floor $x, lay tiles $x, grout $x, seal tiles $x, caulking $x etc

The thing I like about detailed quotes is that if the contractor isn't performing or leaves the job and disappears for days, I'm not out of pocket for anything, and the contractor can't come after me and say that he hasn't been paid either, so it's easy for both parties to just walk away in the event of a disagreement with no hard feelings.

I thought this blog post also made a good point regarding location versus yield and why sometimes a lower yield might make sense,

http://www.biggerpockets.com/renewsblog/2014/04/04/real-estate-principles/

Hi Chang Maeng,

The question you ask is the question I get asked by lots of investors because many of them can't understand why I would invest in properties only returning 3-5% rental returns. Personally, the way I look at it is like this.

Assuming the current properties I am invested in are just like what you are asking about. Turning rental returns 3-5% in a city with high population and high upward job mobility (in my case, mine are near beach, limited land, high demand due to weather and environment). Factor in a capital appreciation of say conservatively 8% per annum to give a total of say 13% returns per annum over say a holding of 5 years.

Now compared to places like Arizona or Atlanta, this might seem like very low yield when people are getting 15-20% yield, but what do I get in return? My thoughts are that in exchange for yield I get liquidity because the property is almost always easy to sell. Low risk because demand is constantly high due to strong factors like weather versus say dependance on one industry that could pack up and leave town suddenly. The capital gains generally tends to be higher in more desirable areas, especially where land is limited.

So as an investment, a low yielding piece of real estate dis not always completely irrational as an investment and personally, I am a strong believer that in todays market with so much information at our finger tips, prices and percentage returns and yields tend to be a good reflection of risk.

Just my opinion base don my investment style. BTW, I think Brookline MA is a great place to live.

I found the spreadsheets, and legal documents included in the purchase to be very useful. Those alone were worth the price of the book. Seriously for like $30, buying the book is probably one of the most cost efficient ways to building wealth.

Hi Bruce,

it's hard to advise you not knowing what your full financial situation is, but personally, I would take the cash and run. My threshold is basically if capital gains exceeds 5 years rent, i cut out, the reason being that the odds of seeing one real estate boom bust cycle is high.

The only exception I use is for very high quality real estate where in a down cycle, you will not see much for sale. for example I am currently holding onto a SFR rental walking distance to beach which meets my 5 year rule, but i'm not selling due to the rarity of finding real estate walking distance to beach. In that case, I will normally use a 8 or 10 year capital gain in place of rent before I will sell.