All Forum Posts by: Alvin Sylvain

I don't know if any of you have ever played that game from the "Rich Dad" author, Kiyosaki is it? About getting out of the Rat Race.

My family and I played it a few times, and what can be said in its favor is that there are a lot of opportunities to buy rental properties under different cash flow conditions. It's good practice in making the calculations needed to decide whether or not to pull the trigger on a potential deal.

You soon learn that starting off as a Doctor is less advantageous than starting off as a Janitor, because the game presets your income and expenses based on the job title. So the Janitor usually wins, defined as making more passive income than your expenses, because his expenses start off so low and stay low.

Unfortunately, after you play it a while, you get to know what to look for, like when that one stock becomes available for, I forget, $3 or something ... BUY ALL YOU CAN AFFORD! BORROW MONEY, BUY MORE! Because, based on prior experience, we all know that eventually the card will come up where that stock is now selling for $50, and you'll make a KILLING. I thought any number of times of pulling those cards out of the deck, it's too unrealistic and too much luck for the person who draws it. In the real world, most companies with stock prices that drop down that low are more likely to go completely bust, and whatever you invested will just be lost.

Regardless of the game's weaknesses, I think overall it was valuable learning experience.

Quote from @Nathan Gesner:

 It's like Whack-A-Mole: don't think about bad things happening until they do, then panic and run to BiggerPockets forum for advice. LOL!

Well YAH!! That's why you guys are here, right? Help out us iggorent noobs!!

Right, seriously, there's a game on Steam called "Tenants" which, I suppose, is a landlord business simulator.

On sale now for $17.49.

Quick blurb (not trying to advertise for them, honest):

Become a landlord and deal with problematic tenants
as you build your rental property empire. Decide how
to react to annoyed neighbors or police interventions.
Will you design your apartment for a group of gamer
friends or an aspiring musician looking for a new
home?

So I'm curious whether anyone plays it, or whether the consensus is the Real World provides Challenges enough? And if you happen to play it, what do you think of it?

Quote from @Bruce Woodruff:

You can get around it easily. It's not the Govt's business who you rent your property to. I spent years in Cali as a Landlord.

 I agree 100% but at the same time, this is the environment we live in. I do try to be as fair as possible, even beyond govt standards (really, I don't care if your hair is purple ... but no green), but no matter what you do, you have to say "no" to somebody, and some of those somebody's know they have access to free legal services in a monstrously tenant-friendly state and even more tenant-friendly city.

So I just keep skating along trying as best I can to avoid the thinner patches of ice!

Cheers!

Quote from @Richard F.:

Aloha,

I would only calculate based on the actual numbers on the SSI letter, and paystub gross YTD pay. If that meets your 3x rent criteria, I would not rule them out on that alone. Credit history and court records will show if they are habitually making bad decisions. People are often reckless when completing apps. It is common to see them write in net figures vs. gross, or just a close estimate. (The worst are those that sell online and try to show their total sales as "income", without accounting for the cost of those sale items.) I would also ask for proof of any other financial resources...IRA, savings, etc. Having NONE is not a great sign...

Now if there are other misleading statements or discrepancies on the app, such as addresses that do not match credit report or paystubs, job history, or other relevant bits, I would be more apprehensive and possibly ask for explanation. Or simply decline.

Aloha backatcha!

This is pretty much how they almost would qualify, using actual paystubs and SSI letter. My concern is not only that the numbers don't match up, but also that they don't qualify without the overtime. I'm concerned that the overtime is variable, different on two different paystubs. So what happens if business is slow for a bit an there's no overtime?

Otherwise, I think you have a lot of valuable insight in your posting. We'll see how this plays out.

Thanks!

Quote from @Bruce Woodruff:

I'd assume they're fudging. You don't need a letter, if they ask say you rented to  someone else....

Thanks for the reply!

I think in California you are required to give a Legal Reason, to make sure you aren't discriminating against purple haired people and such.

Not that I'd ever do that ... I just want to see the color of the money!

And I doubt it's lawsuit-safe to say it's rented to someone else until such time as it's actually rented to someone else.

Quote from @Account Closed:

I would install it on the ceilings just to confuse the tenants

Ten points for humor!

Quote from @Joe Villeneuve:

How is that asinine?  They're REI.  That means they invest in properties.  I'm not suggesting that they buy a house to "store" the floors in, I'm suggesting that they just save the floors for their next properties they buy.

What I don't understand is, if the OP doesn't want this product because it's not the kind of product he wants ("glue-down"), then why would buying more property help? That just means he has more places to use the wrong kind of product.

Forgive me if there is an important detail I'm missing?

As has been said, rental rates depend on supply and demand. The interest rate to purchase a property has no bearing on existing properties, except maybe somebody fool enough to get an adjustable rate and not refinance before the adjustment hits (coz it never adjusts downward).

What will make rental rates drop would be a immense influx of rental properties to increase supply, like 20% of homeowners move to a different state and rent out their old dwelling. Or NIMBY constituents of municipalities stop pressuring their city councils to make new construction as difficult as possible, resulting in a rash of new apartments.

As I don't see either scenario as being likely, I expect rents to level off at most, and probably not for long before they start going up again. Inflation has affected everybody and everything, and some companies are forced to raise wages to keep employees, and raised wages mean that more people can afford more rent.

Therefore, I expect the demand to remain constant or increase in coming years.

But remember, my prognostication abilities are no better than anyone else's.

Quote from @Jian Feng:

I appreciate everyone's responses. I just checked. You guys are correct. No-fault eviction is still not allowed yet. Hopefully, it does expire on the end of January 31. 

This is Los Angeles, California. Were I a gambling man, and could find somebody to take me up, I'd bet on another extension.

I doubt I could find anybody to bet the other way though, so it's probably just as well I'm not a gambling man.