All Forum Posts by: Arlen Chou

@Account Closed  Thanks for the shout out, but I am not sure I am at the level with guys like you, @David C. and @J. Martin !

@Derrick Reyes there are definitely many people here in the SF Bay Area that have a wealth of knowledge and they have all been great in sharing their time and knowledge. I have only been on BP for a few months.  However, I was able to push myself forward and lock in a great deal because of the support of the great network of people in this competitive market. 

You will find people with many different strategies and experiences in this hot but small market. But two things I have found in common with ALL of the people I have met is the mutual excitement for REI and the great willingness to share knowledge.

Congratulations on making the decision to become active in REI!

See you around and good luck to you.

-Arlen

@Joe C. Yeah @J. Martin and I have been talking about that for a little while. With the turn outs at the most recent meet ups being so high, I am a little concerned that people won't fit in these studios. It's still a little cold out at night to hold it outside. Maybe when the renovation is done the weather will be warm enough to do it. 

@Benjamin S.  thanks for the vote of confidence!

@Joshua Durrin  A little later in the evening, but I do plan to attend.  Maybe I will see you there!

@Sean Conway are you doing the full service in Oakland now or just the virtual support? I ran my property address through your estimator and it came back at a very impressive return, substantially higher then a standard month to month rate.  What variables effect this return and do you have recommendations on setting up a unit for max return?  As a final question, there is a fixed income model on the website, but the calculator does not indicate a return.  How does one go about finding this fixed rate number?

Hello @Account Closed  you got some great comments from @Joe Villeneuve and @Chris Kennedy .  They have covered both the angles of the analysis side and the support side of the decision in front of you.  You definitely need to ask yourself the questions that Joe has posed to make a decision on any property.  But with the assumption that you have already gone through that exercise and you are asking the forum knowing the answers, then I believe you really need to look at what Chris is pointing out.

If the numbers work well on both the buildings and they both cash flow, but at different levels, then you really need to ask yourself how comfortable you are with the "bad area".  You will find that the definition of a "bad area" varies widely on the forum or person to person.  What I think is an "ok" neighborhood is a "bad area" for my wife.  However, in my experience I have found that the worse the neighborhood the more issues pop up.  These might be as simple as more turn over, to more complex "personality" issues with the people you will have as renters or even as neighbors.

It looks like you are just starting out in REI. You have decades to become successful! My suggestion is that you ease into the business and take on potentially less cash flow (safe) projects but also have less potential problems. That does not mean take on projects that you have to pay into waiting for appreciation! Your comments above seem to indicate that that both properties will put money into your pockets on a monthly basis.

Don't underestimate the amount of headaches that you encounter, both financially and emotionally.  If stuff hits the fan the financial side can be repaired.  It is the emotional stress that sinks people in this industry and often times in their personal lives.  I like to buy the best deal in the best area I can afford.

Make sure to report back when you have made your decision.

Good luck on which ever house you buy!

-Arlen

@Long Khang, personally I am still very new to REI so I would try to stay local. I am a buy and hold investor in a very "challenging market" as well. If my cash on hand was not enough to do another deal on my own, I would consider partnering up with somebody who is in the same boat I am. Potentially I would look for somebody who has a skill set that I don't have, like a flipper. By pooling cash and time/skills, I think a partnership on a project would be a great way for people to learn new aspects of REI and also to get your cash working for you.

Let us know what you decide to do!

Good luck,

Arlen

@Matt Heath I use a very similar process to @Marcia Maynard.  The only slight difference for my process is that I tell the tenants during my first introduction that the units are well below market and that we will be addressing that issue.  The day you tell them this, they will be on Craigslist and they will know market rents by the end of the day.  

I explain to them that we will immediately tackle physical problems with each unit, one unit at a time, but the increases will not be implemented until we complete those repairs/upgrades. If the rents are substantially low, I will tell the tenant that we will not go directly to market prices. Some landlords are concerned that this will scare tenants away.  However, I have found that when you buy a building, the tenants are already expecting an increase and after they do their own quick research on market rents they usually quiet down.  I also do 1 year leases, so that they know they will be higher then their old rent but under market for the next 12 months.  This also gives them some time to adjust their personal finances over a long period of time.

The only word of caution I would have for you, would be to spread the increase from unit to unit over a few different months, not just weeks or days.  The reason I do this is so that I have less of a potential for multiple vacant units when lease terms are up.

Good luck!

-Arlen

Hello Austin BP clan,

@James Sinclair @Lynn Currie @Roberto Andrade @Jean Norton @Mike Walker 

I currently do buy and holds in the San Francisco Bay Area.  I am planning a trip down to Austin for my W2 job, and I was wondering if there might be a meet up coming up in February.  I realize that this is a little early, but I wanted a little time to set my business schedule around potentially joining the meet up.

Thanks,

Arlen

As John D Rockerfeller had once said: 

"A friendship founded on business is better than a business founded on friendship".

Take it for what it is worth, but I NEVER do business with friends or family, even if it looks like a killer deal, unless I am willing to write off the money as a 100% loss.  

Good luck,

-Arlen