All Forum Posts by: Andrew Luong

@Luke Carl - Incredible, thanks for the intel.  Have you started writing up offers?

Hey @JR Silva - 

Yep, that's right where some of my properties are and would say it's C/D properties with a similar C/D class of tenants.  Neighborhood-wise, I think it really varies from street to street but I would definitely agree that some parts of Oakland appear to be rougher.

Ultimately, I think it'll really just boils down to exactly what your objectives are.  Somethings that I consider: 

• ROI (cash flow) - This is the obvious one but definitely isn't my end all and that's gotten me in some trouble chasing high returns in rough neighborhoods.
• Distance - Being a remote investor, I prefer to have a certain level of access.   Now most of my rentals are in Texas (direct flight and I'm comfortable with some distance)
• Quality - Quality has a certain correlation with passive a property is.  Multi-million dollar homes in SF tend to be more passive (albeit lower/no cash flow) vs. an old, beat up home in Sac.

Hey @Celeste Fikiri - I also think there could be a happy medium as well.  In Bay Area, it could get quite tough to cash flow with a low downpayment (something that you have to your advantage that most don't is the cash).  I think you could take a hybrid approach and do a higher downpayment than most (eg - 50%?), use some bank leverage, and save some cash for future deals!

Hey @John Heffner - Great questions, I would say this requires a deep analysis of exactly what you're looking to do (I was/am in a similar situation where I have heavily appreciating SFRs in Sac that I've chosen to begin 1031ing into SFRs elsewhere. I think it was a good time for me to lock in the gains and upgrading to higher quality neighborhoods with higher cap rates). The goal for me is not simply to maximize CoC returns but also homes that could low maintenance so I could focus on other ventures.

Eg - 

1. If your goal is simply to chase cap rates, I would say the appreciation presents a good opportunity to lock in the gains and move elsewhere - where presumably cap rates are higher.
2. If your goal is to hold forever in a local area, it could make sense to simply tap into the equity (via LOCs, refis, etc)

Cheers!

Andrew

Awesome responses, typically don't lean heavily towards any one side but it sounds like theoretically SLT sounded like a great idea but that'll be put to rest with regulation.  I'm surprised the demand hasn't outdone the supply (limited supply due to regulation) and effectively driven up prices even more.

Hey Team,

Had a theory that I've been pondering for some time and thought I'd open up the discussions.  From a personal standpoint, I'm 1031ing some LT rental properties in Sacramento and was thinking of diversifying into a short term rental in South Lake Tahoe.

Theoretically:

• South Lake Tahoe hedges seasonality to some extent due to the lake in summer months and snow in the winter
• Prices look interesting: ~$400k home that rents ~$300/night on Airbnb

Curious what everyone else's thoughts are on a short term rental in South Lake Tahoe!

Hey Team - Looking to source a new contractor.  Did you have any referrals for a light fixer in Humble?

Hey @Victoria C. & All - 

Wow - I'm a bit surprised at how polar the responses have been in opposition to the AirBnB.  I tend to think that the AirBnb exposes you to certain liabilities as mentioned in previous comments but this could be resolved with an addendum to the existing lease agreements.

Ultimately, being that they had already (successfully) operated their AirBnb business without harm to your home (AirBnb's obviously must be kept in much better condition than a personal residence).  The ABnb income indirectly benefits you in providing a long-term tenant with a consistent source of income to pay you rent.

My opinion would be:

• Mention to the residents that they broke the lease but you understand.  Agree to sign an addendum to prevent exposure to liability
• Continue to allow them to do this under the belief that the home is kept in good shape (only you could determine this)
• Continue you increase rents in accordance with the market (these increases don't have a significant impact of a business' bottom line whereas a traditional, long-term tenant would freak). 

This ultimately becomes a partnership between yourself and the tenant without the direct compensation.  In all honesty, I wish my tenants were savvy and found ways to hack their rents like this.

Curious to hear everyone's thoughts?

+1

Hey Team - Also looking for a few contractor referrals as well.  Goal is to expand more aggressively in Houston this year (latest deal is by way of a wholesaler) and looking for a few contractor referrals.

Hey @Dave Foster - Thanks for the detailed explanation! Ultimately did the purchase (though it was tricky since the replacement property was bought in a single-member LLC). Still have more funds to go reinvest!