All Forum Posts by: Carlos Ptriawan

Wow @Stephen E. you're a great entrepreneur, you're very brave when willing to spend $20K on a property that you down own. That's a different mentality altogether. The Airbnb arbitrager that I know of is only re-rent the property and not investing in the property itself. 

Are you renting out the room or the whole unit?

Great answer from Emily. It's also very easy to make everybody win-win in this game, eg: offer the landlord 10% of your net profit in addition to the monthly rental.

When we're buying a rental investment, what we are buying is actually pre-determined math calculation, there's no magic,the exception is if you do BRRR.

The best return of any SFR/MF investment generally would be like this :
- The best cash return is always on entry home price, mostly in C/B- neighborhood.
- Duplex is always better than SFR with 10-20% NOI difference
- If it's local, you increase your profitability by 1 cap rate compare if you buy OOS if you manage yourselves.
- The best place to buy is always the area that has large appreciation AND at the end still give you good or acceptable cash-flow, such as in Oakland California
- Oakland appreciation by average is 7-8%
- Rent growth is not too high, maybe 1-3%

Having said that, if you have a pre-plan to sell this property after 6-7 years or meeting 20% IRR in year 6, you are all good.

Alex, based on your number I guess your rental to value ratio is between 0.6-0.70. This is a pretty common scenario for Oakland area Duplex. 

If you want to be profitable, you have to manage it yourself, it's pretty easy. That NOI (1200x12) is okay but not the best. Actually, some other area beyond Oakland could give a better return than that but it's okay.

The actual question that's interesting is actually whether the rental arbitrage business model is profitable and successful or not during post covid times. This is what I would like to hear. I'm surprised if they're still making a profit by now.

I just came back from renting a cabin near your place in Tahoma. Everything is perfect. The ski resort is almost empty. Actually, these days is the best time to be on vacation. Just don't meet anybody. As for you as the landlord, If I were you, I will accept the tenant if they're from the same household. South lake tahoe hotels seems still accepting reservation though :)

The CA guy that you're talking about has a very efficient process. For his first Airbnb investment, he invests with his friend's property before expanding, so they're a friend to each other. The arbitrager uses a sophisticated virtual assistance team from the Philipines to manage and lookout for the property.

Hi Nati,

The realistic scenario would be the following:
1. You sell the house as 1031
2. You buy that triplex immediately as 1031 swaps
3. rent  an apartment or live somewhere for 1-2 year
4. move to that triplex after 2 years

The reason being is the IRS may consider your 1031 as invalid since you don't have the intention to make triplex as full investment. So wait for a full calendar year before moving to the triplex. Don't immediately move.

Timing the market is the key to everything. Otherwise, all these investment funds, hedge funds, private equity funds never make money. For stock, it's true the funds sometimes lowering the stock so they are able to fetch the stock at a cheaper price so they can, later on, sell it higher to the public. But it doesn't apply to the real estate market as RE market is hard to manipulate but more influenced by interest rate.

In 2007 we already would like to invest but we know there's a looming crash because the banking system is not healthy mainly due to subprime mortgages. Hence we wait until 2009 to invest. We buy at the dip. Today it's different, yes covid has the potential to crash the real estate market back in March 2020. I see there's no liquidity in the market, especially in commercial lending. Some highly leveraged mortgage funds /ETN is bankrupt.  Nobody willing to give a loan and unemployment is looming.

But in April-May then the gov made super-fast action to save the economy by printing the money so people can refinance and apply for forbearance. Many companies that plan to do layoff cancel their layoff plan and instead even hiring more after they issue new private debts to the company. Yes, there's crash still seen but the effect has only occurred in certain sectors such as hotels and brick-and-mortar stores.

Again. Timing market is everything and the key. The difference is your analysis, is it correct or not.

Thanks, Amit. In our Santa Clara County, we have a program to legalize the ADU as well.

When you bought the unpermitted ADU, did you face any problem with insurance or lender? There's one duplex in MLS currently with one unit is unpermitted ADU. Not sure I shall place a bid or not.