All Forum Posts by: Arlen Chou

@Account Closed I know, I know.. I totally did it wrong.  It would have been so much more fun to deal with 96 doors over that 13 year period!  I only got to call the plumber 2 times during my time of ownership!  I feel so cheated :-(

I personally believe that any strategy for REI must match the particular market and the resources a person has available. There have been some recent discussions about the buy and hold strategy and of course there is always a debate about appreciation. As my market is the SF Bay Area, I strongly believe in both.

A large part of my strategy is to purchase properties, force appreciation and pull out dollars as values and rents go up.  I then invest those new dollars into additional properties.  For many markets outside of the BA, this might not seem sustainable nor prudent.  However, for me this has worked for a fairly long period of time. The single example I give today spans 13 years:

• 2002 Purchased single story 3/2 ranch style home in Los Altos (my primary residence).  approximate price $1.1MM
• 2003 Approximately $600k of additions/improvements.  Nearly doubled the size, now a 4/2.5 two story home.  For those outside of the Bay Area, a $600k improvement budget is fairly modest in this area.
• Current market rental price is approximately $6k (source Craigslist)
• 2015 Appraisal received today $3.2MM

Keep in mind that this takes into account any appreciation slow down that hit the property during the "crash".

Was buying a $1.1MM house in 2002 scary?  Sh#t straight it was!  Was spending an additional $600k to upgrade scary?  F*&k yeah it was! Am i glad I jumped in and did it? Hell yes I am!

I am looking forward to getting my cash out refi check and to go shopping for a multi-family residential.

The point of this post is to shed a little light on some recent history in the Bay Area market. Hopefully it will give some people who are on the fence about investing in the area something to think about.

I wish you all good luck.

-Arlen

@J. Martin thanks for setting that up.  It was great to get my daughter and her friend out into the community!

@Raja Minhas welcome to the crazy RE world that is called the San Francisco Bay Area. Being in Milpitas, you should definitely come out to @Johnson H.' next meet up. I work in Milpitas, so feel free to reach out if you ever want to chat about RE.

Good luck to you!

Arlen

Hey that looks just like the current state of my renovation!  Maybe I should just sell instead of trying to fix it up...

@Joe Doman typically this would be considered a capital improvement and it should be carried over time.  The simple way to look at this question is: did you repair something or replace something.  If you replaced it then you probably should amortize it.  There are "grey" strategies to fit things into expense instead, like using dollar limits to define generally expensed items vs amortized items.  However, you really should talk to a tax professional about those grey areas if you really want to expense your carpet.  To be clear, I am neither a tax or accounting professional and these are just my opinions and not recommendations.

Good luck,

Arlen

@Adrian Smude historically people liked to name the business after themselves and often with a some type of defining word of their industry or product niche:  Heweltt Packard, International Business Machines, Apple Computers, etc.  However, in more modern times people began to realize that companies need to change over time: HP, IBM, Apple.  This is because a company focus may start off as one thing, but often times moves over time because of industry changes and the company may need to change its product or market focus.  Additionally, a name that is tied directly to an owner becomes more difficult to pass on or sell at a later date in time.

A company name is just that, a name.  But in this day and age that is the wrong thing to focus on.  You should be creating a BRAND.  All of the companies I have mentioned made that transition from a company with a NAME, to a company with a BRAND.  Look at all of the newer large companies, they don't make mention at all of what they do: Google, eBay, Cisco, Amazon, etc.  They do this so that they can pivot their business easily in the future if they need to do it.

In our industry good examples would be Zillow.com or Redfin.com.  Both of these brands could pivot and become anything they wanted.  However, Realtor.com would be hard pressed to do anything else without re-branding.

My point is that you should think about creating a brand.  The work you do or the area you focus will define the market area your business competes.  But if you find that one area is not something you like to do, or you want to go from flipping, to property management, to general contracting, to whole selling, etc., it is easier if you have a flexible company name.

Let us know the name you decide on!

-Arlen

Every married person knows it is easier to ask for forgiveness then to ask for permission. This is especially true if checks are flowing in on a monthly basis!

@Account Closed  it sounds like you are just looking for somebody to do some grunt work for you on occasion.  When you start to work with people, you need to be very careful about the employment laws in your area.  You could inadvertently have somebody as an employee that you thought was a "contractor".  Paying them cash does not protect you if they get hurt while they are running around doing things for you...

VA's are great, but that is really for online type of work. If you are looking for somebody to actually do some running around for you on occasion, I would suggest you use a service like taskrabbit. It will cost you a few extra dollars, but you will have that added corporate layer between you and the temp. They do the background checks etc, so I think you are much safer legally.

I have to throw in my disclaimer that I am not an attorney nor am I a HR specialist.  Therefore, please take my suggestions with a grain of salt, and do your own research into the labor laws of your area.

-Arlen

@Dooreuhn Cee do you happen to know what that apartment you were living in rents for now? It would be interesting to know the rate of change over the past 10+ years.