All Forum Posts by: Ced Chan

@Michael Hyun It'll be a good idea to compare cashflow for house hacking a place in EPA after purchasing and house hacking a place after renting the entire house. If I didn't live in the same city where I worked, I'd definitely look into moving closer to my workplace. This is mainly because time is money and I'd rather stay sane rather than getting stuck in mind numbing traffic.

Most of the properties I've analyzed in the bay will fall into negative cashflow. I suppose getting a duplex - four plex might work a bit better for cashflow but definitely don't overpay for a property in this heated market. 

 I'll definitely get more details on it but it did sound like his PM just told him the HVAC needed replacing and he discovered the fee after receiving the bill. Do you happen to have tips on how to vet an OOS PM? 

Btw, this investor had purchased a few properties in Detroit last year in case anyone was curious. 

Hi all! I've been a long time lurker and I'm a somewhat new investor being that I purchased a property in Oakland, CA, in 2009. I was only able to get private funding from my father's real estate network. I had worked tons of overtime at my federal security job in order to pay it off as there was quite some pressure from the investors to get back their capital. At the time, I spoke to a couple mortgage brokers who for one reason or another declined me for refinancing. So just like David Greene, I worked hard to pay it off in 2014. 

Since then, I hadn't looked back into REI as I had believed all the markets were too hot to get back into. Fast forward 4 years, my home appreciates by 400% and I began listening to all the amazing BP podcasts and began showing up to meetups. Locally, REI seems to favor those that can purchase properties with all cash. Which is the reason why I read David G's book on out of state investing.

I've met a few investors whom seem to be losing money on OOS investing due to a poor property manager or contractor. One individual told me that the PM they had charged them a "15% PM fee" on top of the labor and parts that was charged for a HVAC replacement. I do like the fact that David Greene stated in a podcast that he leverages the power of scale. So if a PM or contractor attempts to cheat him, he can instantly pull many properties from them and give it to a competitor. Not sure how that would work if an individual only owns 3-4 properties in that region.

Welcome to BP Chris! I've been a long time lurker here but from what I've seen, OOS is where it's at. Investing locally in the Bay is speculation in terms of hoping the market will continue to appreciate. By going into negative cashflow in local properties, how long can you lose money before giving up? 

That was one of the lessons from one of Robert Kiyosaki's books as he was about to lose money on a negative cashflowing condo. It was his rich dad who asked him how many years of negative cashflow he can sustain. 

Also, if you're renting out the unit, you can only take advantage of the 1031 tax benefit in upgrading to a larger property without paying tax on your sold property. However, if you were to sell the property, you could keep 250k tax free if single or 500k tax free if married ONLY if you've lived in said property for 2 out of the last 5 years. But by living in there, you'd be further negative in terms of cashflow. But I'm not an accountant so it's best to consult a tax professional.

 I second the Lowe's suggestion. You can often get the giftcards for 10% off through one of the slickdeals sales. Combine that with the 10-20% off coupons with free shipping and it's a great deal.

Otherwise, if you don't need brand new appliances and have some extra time, San Francisco Craigslist always has cheap appliances. Being that San Francisco is full of wealthy folks, they're always upgrading their 1 year old high end appliances. They'll sell it for cheap just to get rid of it and sometimes they'll even give it away. This applies to both furniture and appliances which are often times in nearly new condition.

 That gets really close to the "1% rule" I keep hearing about. How much are the property management fees for such a location? What are your greatest expenses being that it's most likely rented to students? Are vacancy rates an issue? Do you usually have parents' co-sign on the single lease? Have you had any issues with tenants partying and trashing the house just before the lease ends?

Sorry to hi-jack the thread but I've been looking for a closer rental market versus investing out of state. Seems everything in the bay area has negative cashflow but everyone is counting on appreciation to bail them 

https://www.sacbee.com/news/local/article233802817.html

I also noticed Sacramento government passed a rent control law, "Sacramento Tenant Protection and Relief Act" which takes place on Oct 12. Any houses built prior to 1995 will be limited to a 6% rent increase per year plus inflation.