All Forum Posts by: CK Hwang

Hey Tanner,

I totally understanding what you're asking regarding advice, but let me give you a slightly different perspective.

If I knew what I knew now when I was 20, I don't think I would've done as well as I did then. I think when I was in my 20s, there was a certain reckless abandon that helped me win big on certain deals (deals that I wouldn't do now that i am older and more cautious) and taken on big losses. But without those big wins, I wouldn't have the capital and the investors I have today and without the big losses, I won't have the knowledge and experience that i have today. 

So my advice? Don't over analyze. Some lessons, even the failures can only truly be learned through experience. Had all the books to tell my do this and do that and don't do this and don't do that, but until I felt the sting for myself, the insecurity of taking on the debt etc, i had the knowledge, but I didn't have the experience.    

Just a different perspective. 

Devin, i'v done some commercial deals before and odds of the ownership of the hotel $300m belonging to one single person is fairly slim. It would normally be put into a trust, LLC or Investment group. If you can physically visit the hotel, I'd just drop by, pick up the brochure for the hotel, look at the name plates, or maybe just ask the concierge.

Otherwise, just ask the city for records on who owns or runs the hotel. At $300M, i doubt the ownership entity would be much of a secret.   

Personally, what is your net worth outside your rental? If it is significantly above the value of the rental, yes, i would get a insurance to cover that as well. 

Hey Shannon, having bought and sold some lowish high end properties in the past as an investor, I thought I would share my experience as a buyer and seller and perhaps that might help. 

For a start, I would define what high end really means to you so you'll know the range of market that you want to work in. For the average person in the street, a $4m apartment might be high end, but for the high net worth individual, it might just be their weekend get away or a place to store their excess furniture or a means to get a dock in the marina etc. So even within the high end market there are various levels and it's good to figure where you want to get into at that level of the market.

Once you have determined your definition of the market, start looking at listings, you'll certainly see certain brokers appearing over and over again. If you already have your license, you could hit those brokers up to work with them (it might not be in a sales capacity).

But personally, (and this is just from personal experience), I think in the long run, you'd want to get your own broker license. At the higher end of the high end market say roughly 10M and beyond I find that brokers tend to market the properties themselves rather than through an agent.

Just my personal observations.   

I think one of the problem with the metric is that appreciation is assumed to be linear at say x% per year. From experience, I have not found this to be so, even in Socal. Not even in some of the hottest markets in the world, New York, Tokyo, London, Singapore, the prices have never appreciated in a linear fashion and even in these hot market there have been prolonged downturns affecting both appreciation and rents. 

Instead, I find appreciation on individual properties i have invested in to take on a more S shaped curved with a flattish tail and top and dips etc. I think that is where the money is to be made, in the discrepancies of this price curve.

Not to mention as your property ages, wear and tear increases in a non linear fashion, the cost to repair can really eat up the returns. I've sold some properties just because the cost of rehab would have killed the returns.

As a side note though, I don't completely disregard appreciation if begin a rental. I've just learned not to use it as the primary motivation. 

Personally, I think you will go broke with this option. I'm not sure how conservative or frugal you are but some of the water and electrical usage by my tenants are astounding, and I am so so glad I am not responsible for their utility bills. 

Furthermore, if there is ever a dispute between you and the tenants, it is so so easy to put the responsibility on your for not supplying this or that.

Maybe some times like internet or cable (without pay per view) might make sense, but i couldn't imagine anything else.  

Personally, i think no one really knows. There are 2 schools of thoughts from talking to my investors in Asia

1. US housing market falls because Chinese nationals sell houses to cover margin calls

2. US housing market improves as Chinese investors look for alternative safe havens.

My personal thoughts is that the net effect will be close to nil. 

The other reason being that from what my friends who invest in the china stock market have told me, the small individual investors who got in late are the ones hardest hit, however this is not the demographics that has the means to buy houses in the USA. 

The ones that do are the ones that got in early (not because of the stock market but because they had the means to move the market), and even with a 30% drop, is still looking at a portfolio of 120% growth over the last year (I'm just talking about numbers based off the shanghai index).

Of course the wrench in the works is the Chinese govt that has imposed all sorts of trading regulations to halt the fall of the market. what that is going to do to the situation, no one knows. I don't get the feeling the govt themselves knows. 

The bigger question is whether the Chinese govt in the face of all this financial turmoil, is going to continue buying US bonds, i think this action will have great implications towards the housing market because it might have significant effect on the interests rate 

Now all this is based on very very rough conversations with friends who trade the chinese market out of HK, so take it with a grain of salt. 

simple test. Does your debt keep you up at night? if yes, then you're probably over leveraged. 

if it relates to real estate, I would say yes. If it's issues like does your city need more affordable housing or rent control etc. I am happy to have my business take a stance on it. 

Other issues like gay rights, abortion, etc that has nothing to do with my business I would say no my business has no stance on it.  

Given that there is a ton of equity in the property i would flip. Reason being that with a large cushion , there is plenty of "room" for you to make mistakes and it is not easy finding priorities that allow for this. I would instead wholesale deals off that are too marginal at this time for you to handle. As your processes get better and more efficient, you'll be able to take on deals with less margins.