All Forum Posts by: Joe Kim

Everybody is trying to save.   Big ticket items like insurance is one area where you can get big savings.

I just got my escrow estimate for one of my rentals and the insurance went up by $200!  from $1000 to $1200.

I current use NREIG insurance.   Anyone have recommendations for cheaper insurance?

I just sent an email to my CPA that article.   It's not very clear.   previously the 500,000 in capital gains applied ONLY to primary home sale gains.    So not sure this applies to any rental properties.

I didn't get back in until it was at $330!   But then kept buying during a downturn down to $180/share.    Sold it around $730.

I am TOTALLY long on this company but I still want to buy low and keep it for the long haul (unless we have another black swan)

First reported case of Covid19 in the USA was Jan 21, 2020.   I looked at SARS as a comparison at that time and saw the stock market drop for 3 months before complete recovery in 6-9 months later.

So I made the move to sell 20% of all my stocks on Jan 24,2020.

Then the market continue to go up steadily up until mid Feb, 2020!    So I felt like I sold too soon.   Then by end of Feb, the market is finally dropping.  I sold all my rest of my stock in late feb (tesla at $730/share).  

Now as the cases are rising rapidly in the USA at more than 10,000 a day and we will eclipse Italy in a few more days as 2nd highest count of covid19 cases, the stock market rallies on news of a bailout bill.    

The way I see it.   It's like your house is on FIRE and the first thing you think about is calling the insurance company to get paid.   You have to PUT OUT the fire - call 911, call the firefighters, call the neighbors to get out of their homes because fire is coming.     

PUTTING out this fire of Covid19 requires us to massive focus on making test kids, masks, PPE (personal protective equipment), ventilators and the like to PUT out the fire.   To stop the spread.

Lockdown?   It totally works.   But the whole country has to do it quickly and once we start testing people - we can bring people out of lockdown safely.   

$500 billion dollars is insurance money for the economy.   But the economy is only the symptom of a disease.

What are we doing to combat the disease????    Not enough, and very late, absolutely poor leadership (last month) and currently.  

Open the country back up by Easter April 12??    That's magical thinking in a fairytale.

Introduction: I've been a real estate investor since 2013 and bought 13 properties in 5 different since then. In 2018, I switched over to STR/Airbnb with a goal of $200,000 in revenue and I went from 1 property to 6 properties that year. I hit $240,000 in my first year. Here is my profile on airbnb and properties:

https://www.airbnb.com/users/show/161660870

Here is my post about that first year in STR/Airbnb.

https://www.biggerpockets.com/forums/223/topics/632364-200-000-rents-in-1-year-10x-cash-flow

In 2019, My goal was to hit $350,000 revenues in 6 properties + 1 property (acquired late 2019).   I hit $400,000 in 2019! 

I sold two traditional rentals in 2019.    

Finally goals for 2020:

1) Hit $500,000 in revenues on STR/Airbnb business. And $125,000/year NET profit without adding a single more property.

2) Sell Two or Three of my traditional rentals (that do not make sense for STR). I would be down to ONE last traditional rental property with long term tenant and only ONE property management company (as opposed to having like 4 different PMs at the peak of my investing!)

Here are my more important goals:

1) Do less in 2020.  Do not buy a single new piece of real estate.   Do not expand in any way in my real estate portfolio except to optimize and create better systems

2) Do less investing overall.   Focus on health and family.

3) Do more nearly 100% passive investing.    In 2019, I accumulated over 1400 shares of ONE stock which has increased in value by 70% in 2019.    Goal is add another 300 shares in 2020. (Stock price has risen so much, it will be a challenge to buy so many shares).

4) Slowly grow my brand, educate others on what I have learned in the last 6 years.

5) Lastly, be more content and give more.  Being driven, growing ever so large, just pushing as hard as possible is no longer my modus operandi (I hope -investing can be addictive).  Creating wealth should only be one of the components of overall healthy living and NOT the main objective.  Giving life to my kids and family should be a bigger priority as well as giving to others who are in need.

To that end.   this is probably be my LAST post on Biggerpockets for 2020 (I hope) and keep to my promise to stop growing this year in real estate.

First thing that comes to mind is that the entire BP forum feels very different than what it was several years ago. In what way? A combination of lots of newbies + trolls. Content is completely watered down and difficult to discuss higher level topics in a meaningful way.    Comments seem to be much more unfriendly and less collegial than in the past.

Solution:  online mastermind for pro/premium members.   Trolls still will exists but I think the collective voice may drown out the noise.

Biggest value BP provides bringing great minds together and people with experience to share ideas and experiences to add to the whole group.   I wonder if many experienced investors have essentially left the forums entirely.   

We all have busy lives and I for one don't have the time to drive a local meetup but would be interested in meeting up online via zoom or other mediums to video conference with other investors.  Maybe set up criteria to ask experienced investors to lead these groups organically.   

 Hi Chris,

I thought there was a complete ban in Napa, CA.    That's why I thought I saw so many STRs in next door Sonoma and very few in Napa, Ca.  thanks for the info.

What are doing to enforce this law?   Neighbors reporting to the city?

Dublin, CA has no ban but city officials not very friends and will use existing laws on the books to force 30 day+ stays.

If you have not heard about a recent 5 person shooting death at a 100 person party in a quiet (quite affluent) surburb of SF bay area (Orinda), you can google it or read the synposis here 

https://www.cnn.com/2019/11/02/us/orinda-airbnb-party-house-trnd/index.html

When I first heard about this, I knew that it may have a big impact on how Airbnb runs their business.   

First things first, the host did not intend to let someone have a 100 person party at the home but the guest had replied saying that there were only have 12 person reunion. 12 person reunion is not the same as a 100 person party. So obviously the host was unaware that a 100 person party was the REAL plan of the guests.

Airbnb is now enacting a "no party house" policy.    

I've always had a "No party" and "No events"  policy at my airbnb homes.

I'm wondering what others are doing to face this challenge of screening the guests?

1)  Security camera-   External security cameras to track who is coming into home? Cameras are a bit controversial - there have been reports of HOSTS having indoor cameras (which is obviously a violation of privacy for the guest) and will result in IMMEDIATELY shutdown of Airbnb accounts. Unfortunately, Airbnb does not seem to do it's due diligence and even just an accusation by a single guest can lead to account shutdowns

I have had no issues in all of my homes with no security cameras. But now, you have to wonder if a security camera to show proof to airbnb and to track in real time if guests are #1 violating your house rules  #2 violating local laws.

2)  Screening -   I always demand an answer to two simple questions (sometimes I have to ask multiple times to get answer) 

                A)  What brings you to my home?     B) How many total adults and total children are staying at the home?

I also ask for contact information of one or two adults who are staying at the home especially if if the person booking is NOT the person who is staying at the home. This is one of the easiest ways to get in trouble. (not because of a party) but mostly because of breakdown in communication. The people staying at the home do not get any of the messages I send to the person who is actually booking the home.

The morning after the 5 person shooting. I had a request that asked to stay at my home for a "birthday party". But then went to say in detail that this was a "black tie affair" and 100 people will be attendance!     

Now, what to do if you own a large home that attracts people who are gathering for a special occasion? Gathering of family and friends does not constitute a "party" (loud, too many people, ETOH in large quantities).  

I have a low threshold to say "NO" or decline many requests that don't feel right or if the guest is not communicating clearly.

3)  Making sure your house rules are CLEARLY stated on your platform listings and in your home guide at the home itself. 

4)  I also have a 2 day minimum and longer minimums depending on the season. Lots of 1 night bookings can be trouble.   And I do not allow "events" at my homes - even though they are large (5 or 6 bedroom homes). Guests say there would "only" be 15-20 guests. Which really means 20-30 guests. Anytime there is a RANGE ...always go with the highest number and add a few more. I always ask for EXACT guest count.

Any other suggestions you have for making sure our homes do not become a "party house" as airbnb calls it?

Anyone feel like they are in this state of "middle ground" or "in between"?

I'm sure there are not so small amount of investors who are in this stage where you are not a newbie but also you don't feel like you have quite "made it" yet.   

I've been investing since 2013 which is not a long time but have done a good number of buy/hold rentals, private lending, and now STR/Airbnb for the last 2 years. I had a rapid growth in my STR portfolio - I did my first two homes (rental arbitrage) in the first two months! Then added 3 homes that I owned into STR/Airbnb 4 months later. I did 5 properties for airbnb in 6 months time. That first year I did one more arbitrage to make it to 6 total. Now this 2nd year is coming to a close and I did only 1 property more to total 7.

Why did I not do another 6 properties in year 2?   I'm in the middle stage.




Challenges:

1)  Time.  (or lack of time)

I work full time so real estate is a side gig and not my primary work.    Unlike some, I do not intend to quit my day job anytime soon.  Also, the stage in life I am right now with a young family, my time is precious and a battle between -dayjob, family time, investing time.

One thing I have come to terms is that there are more things important than investing.   In fact, those three things I mention - dayjob, family time, investing - out of the 3  investing is my last priority (or it should be).   Remember I have no plans to quit my dayjob.(too many reasons- I love my dayjob, etc...)

2) People  (or lack of people)

Like in any business, you need good people to help you grow your business.   I find it that this is one of the biggest challenges.  Finding good people to work for you is especially difficult in this low unemployment stage in the economy.   There are fewer people who are willing to work part-time in a type of work I have for them.  For example, my cohosts or assistants who manage my Airbnb homes work  variable times and make variable commission pay based on bookings.  

The biggest challenge is the not finding "more" people, but finding the "right" person for the job.  

3)  Money/Capital

Surprisingly, this is the least difficult problem for me.   In real estate there are rate-limiting steps that prevent investors from growth and capital may be what's lacking to get them to the next level.   So far I'm needing more time and people than money.  

4)  Maintenance

The other challenge in my time is maintenance.   Now that I'm at 7 properties in Airbnb.  I'm also selling off traditional buy/hold properties that don't fit my current goals.  I've already sold or selling 3 properties in 2019 and plan to sell at 1 or 2 more in 2020.  I'm trying to hone my focus on what works for me and eliminate distractions.

The challenge is continuing maintenance - bookkeeping, tax prep, keeping all things running and paid (paying all bills).    I've hired a bookkeeper, have a real estate CPA, pay almost all bills on autopay.      I still see this as a challenge because this is my least favorite activity.

Again, I would love to hand all these non-desirable tasks (for me) to someone else.  

Solutions:

1)  B student mentality.

I've learned that trying TOO hard to be perfect is a barrier to success.    Has anyone heard that Valedictorians are rarely the most successful person in their class?   or that CEOs tend to be the B or C students?      

I now understand what that means.    A+ students are not allowed to fail.   They can be cautious and not take risks.   In the world of business and investing, that can be recipe for failure or just never getting started.   

Also, pushing forward even though things are not perfect is key to growth.   If you waited to make everything perfect, growth will be slow or never realized.

Accept some level of mediocrity= B student.   You cannot be the best at everything.    I see that in my Airbnb business, I cannot recruit the absolute best people to work for me.   I'm not Tesla, Apple, or Google and I should have no pretense that I can recruit the worlds best minds or hardest working people.   I'm not saying, I don't push people who work for me to be better or help improve.   But you cannot expect to always get the most polished or experienced people to work for you.   And...even more true for contractors who may working to repair or create an addition to your homes.

2)  Systems

Create better systems.   Honestly, we all know this to be true.  Not going to go into bloody details.  Everyone needs better systems.

3)  Delegate or learn to love it.(doing tasks that are important but you hate doing)

Delegate the tasks you hate to do or learn to prioritize the things you hate to do first.     I'm trying both things but still struggling to do both well.   Once you delegate you need to accept a level of mediocrity or at least lower than your personal standard.   I know people will say no to this but the reality is that it is very difficult to both train and maintain good people.   I have to walk the fine balance of working with the people I have to improve their quality but not push them OUT of the business with harshness and high standards that are not reachable.  

Keeping to my B student mentality - I don't have time to proof read this post.   Please forgive grammatical or spelling errors.   

I love to hear what challenges you are facing and what solutions you have found.

I would rent in a cheaper place to live and save money.   appreciation can only be done (ideally) in two ways - timing/location + forced appreciation.   

But why not get both.   The housing market is primed to drop (nothing like in 2009-2011) but still we should be seeing a steady decline in the coming years.   

House hack is a great idea and way to get started as soon as possible but again, don't overpay for properties in this current market.

Two more tips -  a base Tesla model 3 can be had for less than $40,000 and you will save both gas and toll fees ($3) for bridge toll.   Free carpool/express lane access for easier commute. almost NO maintenance.   Lastly,  you have to "live" and enjoy.   investors are going to hate me for saving this but use it as motivation to invest more.

Why not live in Newark (rent or house hack).   I think that is one of the best places for investors.   Newark, CA is such a great location (close to everything) and yet prices are still fairly good compared to other parts of the SF bay area.

Joe